DEF 14A of Merit Medical Systems Inc
Filed Apr 1, 2025 · FY20240000856982-25-000017
Nominees for Election as Directors
Nominees for Election as Directors Each of the following nominees currently serves as a director of the Company. Our Board and its Governance Committee believe that the nominees possess the experience and qualifications that directors of the Company should possess, and that the experience and qualifications of each nominee complement the experience and qualifications of the other directors. The experience and qualifications of each nominee, including information regarding the experience and qualifications that led the Board to conclude that she or he should be nominated to serve as a director of the Company, are set forth below:
Nominees for Election as Directors
| THOMAS J. GUNDERSON Independent Director Age: 74 Director Since: May 2017 Committees: Finance (Chair), Audit Other Public Boards: TransMedics Group, Inc. Education: B.A. (biology focus), Carleton College; M.S. (cell biology), University of Minnesota; M.B.A., University of St. Thomas Term Expires: 2025 | | LAURA S. KAISER Independent Director Age: 64 Director Since: May 2022 Committees: Governance, Compensation Other Public Boards: None Education: B.S. (health sciences management), University of Missouri; M.B.A., Saint Louis University; Masters of Health Administration, Saint Louis University Term Expires: 2025 | | | Career Highlights ● Member of the Board of Directors of TransMedics Group, Inc., a medical technology company focused on developing organ transplant therapy for end-stage organ failure patients, 2019 to present ● Chair of the Minneapolis Heart Institute Foundation, (Director from 2011 to present, Chair from 2015 to 2020 and 2024 to present) ● Executive in Residence at the University of Minnesota’s Medical Industry Leadership Institute, 2016 to present ● Member of American Heart Association Science and Technology Accelerator Committee, 2015 to 2017 ● Managing Director and senior research analyst at Piper Jaffray (focus on medical technology companies), 1992 to 2016 ● Project Director at American Medical Systems (private medical device company acquired by Pfizer in 1983), 1979 to 1992 ● Recognized by several industry publications, including the Wall Street Journal, Institutional Investor, First Call, Thomson Reuters, and Medical Device and Diagnostic Industry (e.g., in 1996 and 2000, he was named an All-Star Analyst for medical stocks by the Wall Street Journal and in 2014, Thomson-Reuters named him “Top Stock Picker” in the medical technology sector) Qualifications of Particular Relevance to Merit Mr. Gunderson provides the Board with more than 30 years of substantive experience in the medical device industry, with a seasoned perspective on the challenges, trends and opportunities of publicly-traded medical device manufacturers, as well as a keen understanding of the Company’s competitive position within its industry. Mr. Gunderson also contributes a strong background in financial and economic analysis and valuable insights regarding business development and acquisition opportunities. Mr. Gunderson’s financial background and industry experience have been beneficial in his service as the Chair of the Finance Committee. | | Career Highlights ● President and Chief Executive Officer of SSM Health, an integrated multi-state health system with more than 40,000 employees and 35 hospitals, medical group, health plan and pharmacy benefit management company, 2017 to present ● Former Chairperson of Catholic Health Association of the United States, representing more than 600 hospitals and 1,600 long-term care and other health facilities in all 50 states, 2018 to 2024 ● Board Director, American Hospital Association, 2024 to present ● Served on the Board of Directors for Nuance Communications, a multinational computer technology company acquired by Microsoft Corp., 2017-2022 ● Previously served as the Chief Operating Officer of Intermountain Health, an integrated multi-state health system with 24 hospitals, 2012 to 2017 ● Named one of the “100 Most Influential People in Healthcare” by Modern Healthcare for the past seven years Qualifications of Particular Relevance to Merit Ms. Kaiser is a seasoned executive with more than 35 years of experience in the healthcare industry. The Board believes her senior leadership experience in healthcare and her consistent delivery of operational results, strategic expertise, market growth and innovative partnerships with organizations such as Costco, Medica, Civica and Siemens, enable her to provide valuable industry and organizational perspective to the Board and the Company’s management team. The Board also believes Ms. Kaiser’s deep industry experience allows her to provide insight regarding merger and acquisition opportunities and transactions, regulatory initiatives and compliance, and governmental policies. | |
Nominees for Election as Directors
| MICHAEL R. MCDONNELL Independent Director Age: 61 Director Since: May 2022 Committees: Audit, Finance Other Public Boards: None Education: B.S. (accounting), Georgetown University Term Expires: 2025 | | F. ANN MILLNER, Ed.D. Lead Independent Director Age: 73 Director Since: July 2015 Committees: Governance, Compensation Other Public Boards: None Education: B.S. (education), University of Tennessee; M.S. (allied health education and management), Southwest Texas State University; Ed.D (education administration), Brigham Young University; Completed medical technology program, Vanderbilt University Term Expires: 2025 | | | Career Highlights ● Chief Financial Officer of Biogen Inc, a multinational Nasdaq-listed company engaged in discovering, developing, and delivering therapies for people living with serious and complex diseases, 2020 to February 28, 2025. ● Executive Vice President and Chief Financial Officer of IQVIA Holdings Inc., a global provider of advanced analytics, technology solutions and contract research services to the life sciences industry, 2015 to 2020 ● Executive Vice President and Chief Financial Officer of Intelsat, a global provider of satellite services, 2008-2015 ● Chief Operating Officer (2006-2008) and Chief Financial Officer (2004-2008) of MCG Capital Corporation, a publicly-held commercial finance company, 2004 to 2008 ● Chief Financial Officer of EchoStar Communications Corporation (dba Dish Network), a satellite television provider, 2000 to 2004 ● Partner of PricewaterhouseCoopers, LLP, 1996 to 2000, other positions, PricewaterhouseCoopers, LLP, 1986-1996 ● Director of Catalyst Health Solutions, Inc., a publicly-held pharmacy benefits management company, 2005 to 2012 ● Certified public accountant Qualifications of Particular Relevance to Merit Mr. McDonnell is a financial executive with more than 35 years of experience providing financial and accounting advice and oversight to life science and technology companies and over 24 years serving as a public company CFO. The Board believes Mr. McDonnell’s depth of understanding of financial management, accounting principles and practices, capital markets and financing transactions strengthen the Board’s oversight of the Company’s finance and accounting policies, procedures and practices. The Board also believes Mr. McDonnell’s industry experience enables him to contribute to the Board’s evaluation and oversight of merger and acquisition and capital funding transactions, as well as the Company’s investor relations and shareholder outreach efforts. | | Career Highlights ● Regents Professor and Professor of Health Administrative Services at Weber State University, 2013 to present ● Member of the Utah State Senate (member of multiple committees and subcommittees), 2015 to present ● Executive Committee of National Conference of State Legislatures, 2023 to present ● Member of Board of Trustees of Intermountain Health (integrated multi-state health system), 2005 to present ● President of Weber State University, 2002 to 2012 (first female president of a Utah state university) ● Vice President of University Relations at Weber State University, 1993 to 2002 ● Associate Dean of Continuing Education and Assistant Vice President of Community Partnerships at Weber State University, 1985 to 1993 Qualifications of Particular Relevance to Merit The Board believes Dr. Millner's qualifications to serve as a director of the Company include her executive leadership skills and her experience in the areas of organizational administration, operations and financial management, and business strategy. Those skills and experience have been particularly valuable to the Company in the course of Dr. Millner’s service as Lead Independent Director. During her service, Dr. Millner has played a significant role in the development of our corporate governance practices and engagement with our shareholders. | | | : 57 None Pharmaceutical Chemist ], University of the Republic (Uruguay); Industrial Pharmacist, Federal University of Parana (Brazil) New Nominee | | | |
Directors Whose Terms of Office Continue
Directors Whose Terms of Office Continue In its regular discussions regarding Board composition, our Governance Committee works with the Board to determine the appropriate mix of professional experience, areas of expertise, educational background and other qualifications that are particularly desirable for our directors to possess in light of our current and future business strategies. The Board believes that its current members have the right combination of experience and qualifications to continue to lead the Company to success. Information regarding the specific experience, qualifications, attributes and skills that led the Board and the Governance Committee to conclude that each continuing director should serve on the Board are set forth below:
Directors Whose Terms of Office Continue
| LONNY J. CARPENTER Independent Director Age: 63 Director Since: June 2020 Committees: Compensation (Chair), Finance Other Public Boards: Novanta Inc. Education: B.S., United States Military Academy at West Point Term Expires: 2026 | | DAVID K. FLOYD Independent Director Age: 64 Director Since: June 2020 Committees: Governance (Chair), Finance Other Public Boards: None Education: B.S., Grace College Term Expires: 2026 | | | Career Highlights ● Member of the Board of Directors of Orchid Orthopedics Solutions (a privately-owned orthopedic medical device outsourcing company), 2019 to present ● Member of the Board of Directors of The Boler Company, (a privately-owned auto part manufacturing company), 2019 to present ● Member of the Board of Directors (Lead Independent Director) of Novanta Inc., a manufacturer of precision photonic and motion control components and subsystems, 2018 to 2024 ● Group President, Global Quality and Business Operations, Stryker Corporation, 2016 to 2019 ● Group President, Global Quality and Operations, Stryker Corporation, 2011 to 2016 ● President, Instruments and Medical Division, Stryker Corporation, 2006 to 2008 ● Captain in the U.S. Army and helicopter pilot having served in leadership roles for the 101st Airborne Division Qualifications of Particular Relevance to Merit The Board believes Mr. Carpenter’s broad business background and experience in setting enterprise-wide direction, experience in quality, manufacturing, procurement and logistics strategies from his tenure at Stryker provide the Board with practical, real-world knowledge and guidance and have strengthened the Company’s efficiency and cost-reduction initiatives. Mr. Carpenter’s business background and experience have been particularly beneficial to the Company in the course of his current leadership of the Compensation Committee, his leadership of the Operating Committee prior to its consolidation into the Finance Committee and the development of our CGI Program. | | Career Highlights ● Board Chair, Corin Group LTD, a privately-held global orthopedic enabling technology company, 2020 to present ● Board member and Operations Committee Chair of Health Outcomes Performance Company (HoPCo), a privately-owned musculoskeletal and value-based care company focused on transforming the patient care experience and improving the practice of medicine, 2020 to present ● Senior Advisor, Permira, a leading global private equity investment firm ● Group President, Orthopaedics, Stryker Corporation, 2012 to 2019 ● U.S. President and Worldwide President of Johnson & Johnson’s DePuy Orthopaedics, 2007 to 2011 Qualifications of Particular Relevance to Merit Mr. Floyd possesses more than 35 years of experience as a leader in the life sciences industry, including serving as president and CEO within several leading medical technology companies. Additionally, the Board believes Mr. Floyd’s over 20 years of general management experience provide the Board with expertise on a broad range of matters, including mergers and acquisitions, strategic planning, global business and operations, corporate governance and product commercialization. The Board believes Mr. Floyd’s industry and management experience have been particularly beneficial through his service on the Governance, Finance and Operating Committees and his guidance in the Company’s development of our CGI Program. | |
Directors Whose Terms of Office Continue
| LYNNE N. WARD Independent Director Age: 66 Director Since: August 2019 Committees: Audit (Chair), Finance Other Public Boards: None Education: B.S. University of Utah (Accounting) Term Expires: 2026 | | REAR ADMIRAL (RET.) STEPHEN C. EVANS Independent Director Age: 60 Director Since: June 2021 Committees: Audit, Compensation Other Public Boards: Alarm.com Holdings, Inc. Education: M.A., U.S. Naval War College (National Security Affairs), B.A., The Citadel Term Expires: 2027 | | | Career Highlights ● Executive Director of my529 (formerly known as the Utah Educational Savings Plan), offering municipal fund securities, 2004 to 2019. Underlying investments were with Vanguard, Dimensional, PIMCO, Sallie Mae Bank and U.S. Bank. ● Member of the University of Utah’s Investment Advisory Committee, 2018 to 2024 ● Member of the Board of Directors of the Blue Healthcare Bank, 2007 to 2009 ● Member of the Board of Directors of Stampin’ Up!, 2010 to 2016 ● Member of the National Association of Corporate Directors (Utah Chapter), 2017 to present ● Walker Institute at Weber State University board of directors, 2012 to 2021 ● Senior leader and advisor to Utah governors Olene S. Walker and Michael O. Leavitt ● Senior leader for Utah state government’s central accounting office and Utah State Auditor’s Office ● Certified public accountant Qualifications of Particular Relevance to Merit Ms. Ward demonstrated her diverse skills by leading my529’s rapid growth of $950 million to $14 billion assets under management. The Board believes her high standards, strategic foresight and business development fueled that growth. Her cost management, and investment and marketing innovations of a highly regulated product led to year-over-year Gold ratings from Morningstar. The Board believes Ms. Ward has strong career experience, including financial oversight capabilities and leadership of a rapidly growing organization. The Board believes her contributions strengthen the Company’s strategic direction while encouraging operational excellence. The Board also recognizes the valuable perspective and significant service Ms. Ward provides to the Company as Chair of the Audit Committee of the Board (Audit Committee). | | Career Highlights ● Served in the United States Navy, most recently as Special Advisor to the Commander, Naval Operations, before retiring in 2020. During more than 20 years of service in the United States Navy, Admiral Evans held a variety of leadership positions, including Senior Advisor, Deputy U.S. Military, NATO Military Committee; Commander, George H. W. Bush Carrier Strike Group; and Commander, Naval Service Training Command ● Served on diplomatic missions in over 64 countries, delivering results in international diplomacy and military relations to establish enduring, productive global partnerships ● Commanded U.S. naval forces in six operational theaters ● Served in a senior strategic advisory role to the 75th Secretary of the Navy ● Represented the U.S. in deliberations and actions of NATO, providing counsel to Heads of State in Europe and around the world Qualifications of Particular Relevance to Merit Admiral Evans possesses extensive experience in handling complex, international relationships. His prior leadership experiences, particularly within the last two decades, involved extensive cybersecurity oversight, and he has broad experience in anticipating and identifying cyber risks and digital vulnerabilities. Admiral Evans’ cybersecurity experience is of particular importance to the Company as we seek to secure our information technology and build secure and effective information systems and to assess and mitigate potential cybersecurity risk. Admiral Evans has extensive insight on geo-political matters, and the Board believes that, together with his experience in handling global partnerships, he provides valuable counsel to the Company as it seeks to expand its operations and sales efforts across the globe. | |
Directors Whose Terms of Office Continue
| FRED P. LAMPROPOULOS Chair, President, Chief Executive Officer Age: 75 Director Since: July 1987 Other Public Boards: None Term Expires: 2027 | | SILVIA M. PEREZ Independent Director Age: 58 Director Since: May 2024 Other Public Boards: None Committees: Audit, Governance Education: Pharmaceutical Chemist, University of the Republic (Uruguay); Industrial Pharmacist, Federal University of Parana (Brazil) Term Expires: 2027 | | | Career Highlights ● Chair of the Board, Chief Executive Officer (CEO) and President of the Company since its formation in 1987 ● Chair of the Board and President of Utah Medical Products, Inc. (medical device manufacturer), 1983 to 1987 ● Filed more than 300 domestic and international patents and applications on medical devices ● Serves on multiple community and advisory boards ● Recipient of numerous community and industry awards, including the 2019 Salt Lake Chamber of Commerce “Giant in our City” and 2003 and 2018 Utah Governor’s Medal for Science and Technology Qualifications of Particular Relevance to Merit The Board believes the Company benefits immensely from Mr. Lampropoulos’ experience as founder, President and CEO. He plays an essential role in communicating the expectations, advice, concerns and encouragement of the Board to our employees. Mr. Lampropoulos has a deep knowledge and understanding of the Company, as well as the industry and markets in which our products compete. Mr. Lampropoulos also performs an essential function as the Chair of the Board, providing decisive leadership and direction to the activities and deliberations of the Board. The Board also believes Mr. Lampropoulos’ leadership, drive and determination are significant factors in our growth and development and continue to be tremendous assets to the Company and its shareholders. | | Career Highlights ● President of Commercial Branding and Transportation, a $2.6 billion revenue division of 3M Company, a multinational NYSE-listed company operating in the fields of industry, consumer goods and worker safety, 2023 to present ● President and General Manager of Commercial Solutions Division of 3M Company, an approximate $1.8 billion division, 2020 to 2023 ● Interim President of Acelity acquisition, overseeing the integration of Acelity into 3M Company, which was the largest acquisition in the history of 3M Company, 2019 to 2020 ● Various leadership roles within the healthcare business of 3M Company, both domestic and international, 1994 to 2019 ● Obtained Six Sigma Black Belt and Master Black Belt Certifications Qualifications of Particular Relevance to Merit Ms. Perez brings a 25-plus year career in the healthcare industry with a broad background spanning clinical, regulatory, operations, marketing, and business leadership. The Board believes her broad experience and proven track record of leadership success enable her to provide valuable industry and organizational perspective to the Board and the Company’s management team. The Board also believes Ms. Perez’s first-hand experience with post-acquisition business integration aids the Company in its strategic merger and acquisition endeavors. | |
Our Board of Directors
Our Board of Directors Our business affairs are managed subject to the oversight of the Board, which represents and is accountable to the shareholders of the Company. The Board advises and oversees management, which is responsible for the day-to-day operations of the Company. The primary mission of the Board is to represent and protect the interests of our shareholders. As a result, the basic responsibility of our directors is to act in good faith and with due care so as to exercise their business judgment on an informed basis in what they reasonably and honestly believe to be in the best interests of the Company and its shareholders. The Board reviews and assesses our strategic, competitive and financial performance.
Director Compensation
Director Compensation We use a combination of cash and equity-based incentive compensation to attract and retain qualified candidates to serve as directors. In setting director compensation, the Board considers the significant amount of time that directors expend in fulfilling their duties to the Company as well as the skill level required by the Company of its directors. The following table shows the annual retainer amounts payable by the Company to non-employee directors.
Director Compensation
| Director Retainers(1) | 2024 | | Annual Retainer | $86,000 | | Lead Independent Director | $30,000 | | Audit Chair | $20,000 | | Compensation Chair | $15,000 | | Governance Chair | $15,000 | | Finance Chair | $15,000 | | Operating Chair(2) | $15,000 |
Director Compensation
| (1) In February 2025, the Board unanimously approved a resolution noting the substantial time contributions of the Lead Independent Director and the Chairs of the Audit and Compensation Committees to the Company and the Board, and adjusting the fees payable to those directors (in addition to the annual retainer paid to all non-employee directors) to $50,000, $30,000 and $20,000, respectively. Those adjustments will become effective following the completion of the Annual Meeting. |
Director Compensation
| (2) Effective May 15, 2024, the Board combined the Operating Committee and the Finance Committee into a single committee. The combined committee is now known as the Finance and Operating Committee and is referred in this Proxy Statement as the Finance Committee. |
Stock Awards
| Name (1) | Fees Earned or Paid in Cash ($) | Stock Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total Compensation ($) | | A. Scott Anderson(3) | 37,875 | — | — | — | 37,875 | | Lonny J. Carpenter | 101,000 | 199,974 | — | — | 300,974 | | Stephen C. Evans | 86,000 | 199,974 | — | — | 285,974 | | David K. Floyd | 95,375 | 199,974 | — | — | 295,349 | | Thomas J. Gunderson | 101,000 | 199,974 | — | — | 300,974 | | Laura S. Kaiser | 86,000 | 199,974 | — | — | 285,974 | | Michael R. McDonnell | 86,000 | 199,974 | — | — | 285,974 | | F. Ann Millner, Ed.D. | 131,000 | 199,974 | — | — | 330,974 | | Silvia M. Perez(4) | 53,750 | 199,974 | — | — | 253,724 | | Lynne N. Ward | 106,000 | 199,974 | — | — | 305,974 |
Role of Consultants
Role of Consultants Since 2019, the Compensation Committee has engaged Pearl Meyer & Partners, LLC (Pearl Meyer), an independent compensation consulting firm, to review our executive officer and director compensation practices and advise the Compensation Committee with respect to those compensation practices, including salary, bonus, benefits and equity awards for our executive officers and retainers, meeting fees and equity awards for our directors. Representatives of Pearl Meyer meet regularly with the Compensation Committee and the Compensation Committee has generally evaluated and considered Pearl Meyer’s reports and recommendations. During 2019 and 2020, the Compensation Committee consulted with Pearl Meyer to revise and update the Company’s executive compensation programs. The Compensation Committee engaged Pearl Meyer to help revise the Company’s executive composition practices to establish a long-term equity incentive program that was not based solely on the award of time-vesting stock options, but was based upon the achievement of pre-determined performance measures, utilizing a combination of stock options, PSUs and annual performance-based cash bonuses. Through this collaboration, the Compensation Committee adopted an executive compensation program which became effective during 2020 and continued through 2024. For 2024, this executive compensation program was comprised of (i) an equity feature that aimed for an equity compensation mix of 60% performance-based PSUs and 40% time-based RSUs (vesting on a ratable basis over four years of service) and (ii) performance-based cash bonuses determined as a percentage of each executive officer’s base salary. As more fully described below under the heading “Performance Stock Units (PSUs),” a portion of the targeted award amount under the PSU award agreement entered into with our CEO are payable in cash in lieu of the issuance of Common Stock. This executive compensation program is designed to increase the alignment of executive compensation with the Company’s achievement of Board-approved performance measures, as discussed below.
External Pay Comparisons
External Pay Comparisons In its oversight of the compensation practices for our CEO and the other NEOs, the Compensation Committee reviews industry and peer compensation data for medical device companies to confirm that executive compensation is within an appropriate competitive range. The Compensation Committee considers external pay comparison data as a market check on its compensation decisions, but not for specific benchmarking. With input from Pearl Meyer, the Compensation Committee identified a peer group to guide its compensation decisions for 2024 executive compensation that consisted of the following companies:
External Pay Comparisons
In 2024, Pearl Meyer performed an assessment of the Company’s then-existing executive compensation peer group and provided to the Compensation Committee recommendations for adjustment of the Company’s executive compensation peer group based on revenue, market capitalization, market peer indices and Pearl Meyer’s assessment of the strength of comparability, as well as overall business characteristics, including product offerings and end markets. The Compensation Committee reviewed Pearl Meyer’s recommendations and considered the application of the foregoing factors to the Company’s executive compensation practices. Following that review and based upon the recommendations of Pearl Meyer, the Compensation Committee approved the Company’s 2024 executive compensation peer group as shown above, which reflects the following modifications from the Company’s 2023 peer group: (i) NuVasive, Inc. and Shockwave Medical, Inc. were removed from the 2024 peer group; and (ii) Haemonetics Corporation and Orthofix Medical, Inc. were added to the 2024 peer group. Neither the consultations with Pearl Meyer nor the Compensation Committee’s internal review yielded any significant concerns regarding our executive compensation practices.
Other Considerations
Other Considerations The Compensation Committee also relied on its experience and judgment in making executive compensation decisions after reviewing our performance on a quarterly and annual basis, and evaluating each NEO’s individual performance and responsibilities with the Company, as well as current compensation arrangements. The compensation program for the NEOs and the Compensation Committee assessment process have been designed to be flexible in an effort to respond to the evolving business environment and individual circumstances relative to Company and individual performance, shareholder value, as well as internal equity for compensation levels among our executives. Our executive compensation program is divided into the following two general categories: fixed pay and variable pay. Fixed pay consists of base salary and is intended to provide each NEO with a level of assured cash compensation appropriate for his or her position within the Company. Variable pay includes annual cash bonus awards and equity-based awards in the form of PSUs and RSUs, each as explained in more detail below. The Compensation Committee believes that a significant portion of total compensation of the NEOs should be both at-risk and tied to the Company’s achievement of predetermined performance goals. The Compensation Committee’s development and implementation of the Company’s executive compensation program reflects its efforts to shift an increased portion of the total compensation payable to the Company’s NEOs away from fixed, time-vesting compensation to at-risk, performance-based compensation. Pursuant to our revised executive compensation program, at the beginning of each year, the CEO and other members of the Company’s executive management team identify performance goals which are intended to align the efforts of our executive officers, including the NEOs, with our achievement of our strategic business plan to maximize shareholder value. The CEO then reviews those performance goals with the Compensation Committee. Those goals then become targets for the PSUs and annual performance-based cash bonus component of our executive compensation program. Because the performance goals are generally established at the beginning of each year and market conditions fluctuate throughout the year, the performance goals may not correspond to subsequent annual earnings estimates released by the Company.
Pay Mix
Pay Mix The allocation between cash and non-cash NEO compensation is influenced by the practices of subjective and objective analysis conducted by the Compensation Committee and is intended to reflect the Compensation Committee’s determination of the appropriate compensation mix among base pay, annual cash incentives and long-term equity incentives for each NEO. Actual cash and equity-based incentive awards are determined based on the performance of the Company and/or the individual NEO, depending on the position of the NEO, the type of award and our performance, compared to established goals. The Compensation Committee also compares the compensation mix relative to our executive compensation peer group. No specific benchmark with respect to the peer group is targeted, but the Compensation Committee may be influenced by the peer group data to adjust our executive compensation mix if it significantly deviates from the median of the peer group. For 2024, the elements of the compensation mix for the NEOs included:
Pay Mix
| ● | annual performance-based cash bonus (designed to focus on business objectives established by the Compensation Committee for a particular year); |
Pay Mix
| ● | long-term equity-based incentive compensation in the form of RSUs, PSUs and, in the case of our CEO, long-term cash-based incentive compensation (designed to align NEO pay with long-term performance); |
Long-Term Incentive Compensation
Long-Term Incentive Compensation Historically, long-term equity awards, in the form of stock options, have been granted at the discretion of the Board and Compensation Committee to the NEOs annually in an effort to provide long-term performance-based compensation, to encourage the NEOs to continue their engagement with the Company throughout the vesting periods, and to align management and shareholder interests. Beginning with our 2019 fiscal year, long-term equity awards were made under the 2018 Incentive Plan, and the Compensation Committee anticipates such awards will continue to be made under the 2018 Incentive Plan. Although we have traditionally made long-term equity incentive awards to our NEOs solely in the form of stock options, during 2019, the Compensation Committee developed a program, which was implemented in 2020 and continued through 2023, to grant to the Company’s executive officers long-term equity awards in the form of stock options and PSUs, with the objective of more closely aligning management and shareholder interests. Beginning in 2024, the Board and Compensation Committee granted the Company’s NEOs RSUs instead of stock options. Accordingly, for 2024, the Board and Compensation Committee awarded PSUs to each NEO at a level of approximately 60% of the total target long-term incentive compensation amount for each NEO, with the remaining portion (approximately 40%) of the NEO’s long-term incentive compensation amount awarded in the form of RSUs. In making awards under our 2018 Incentive Plan, the Board and Compensation Committee consider grant size, the appropriate combination of equity-based awards, the impact of the grant on our financial performance (as determined in accordance with the requirements of the Financial Accounting Standards Board ASC Topic 718 (ASC Topic 718)), and the corresponding compensation value used by the Company in determining the amount of the awards (which may vary from the ASC Topic 718 expense). Generally, the amount of long-term equity awards granted to the NEOs has been based upon the Compensation Committee’s assessment of each NEO’s expected future contributions to the Company and other factors. The amount or existence of those awards may also be influenced by external factors such as general economic or industry-specific conditions. The Compensation Committee generally grants long-term equity awards at its regularly-scheduled meeting held in February or March of each year but may vary the date of grant from year to year.
Performance Stock Units (PSUs)
Performance Stock Units (PSUs) During 2019, the Compensation Committee, in consultation with Pearl Meyer, developed a program to grant to the Company’s executive officers equity awards under our 2018 Incentive Plan consisting in part of PSUs, with the objective of more closely aligning management and shareholder interests. Subject to the terms and conditions of PSU award agreements executed with the Company’s executive officers, each executive officer is entitled to receive a payment in shares of Common Stock based upon the target number of shares, as determined by the Compensation Committee and set forth in the executive’s PSU award agreement (Target PSU Shares), and the Company’s performance during the applicable performance period with respect to the achievement of (a) free cash flow (FCF) targets (Free Cash Flow is calculated as GAAP operating cash flow less GAAP capital expenditures, adjusted for the cash effect of any non-GAAP adjustments to the Company’s financial statements, as further defined in the PSU award agreements) and (b) targeted levels of the Company’s relative total shareholder return (rTSR) compared to the Russell 2000 index as further defined in the PSU award agreements (collectively, Performance Goals). To reward NEOs for long-term performance, the program developed by the Compensation Committee aims to only grant PSUs with a three-year performance period. However, during the first two years of this new program (2020 and 2021), PSUs with one- and two-year performance periods were granted to help transition into this long-term approach of having PSUs with only a three-year performance period. Commencing in 2022, PSUs awarded to the NEOs have had three-year performance periods. The actual number of shares of Common Stock to be issued to each executive officer under their PSUs will be determined at the end of each performance period by the Compensation Committee by multiplying (i) the Target PSU Shares for that performance period by (ii) the applicable FCF multiplier, which may then be adjusted by the applicable rTSR multiplier, based on the Company’s performance during the applicable performance period. The Compensation Committee has the sole authority and discretion to determine the achievement level with respect to the number of shares of Common Stock earned at the end of each performance period. The Compensation Committee consulted with Pearl Meyer in determining the target long-term incentive compensation levels for the NEOs, from which the Compensation Committee established the target number of shares of Common Stock subject to the PSU awards granted to each of the NEOs in 2024. During 2024, the NEOs were granted PSUs with the following Target PSU Shares:
Performance Stock Units (PSUs)
| Named Executive Officer | Target PSU Shares Three-Year Performance Period (2024-2026) | Intended Fair Value of Target PSU Shares ($) | | Fred P. Lampropoulos | 16,402 | 1,254,900 | | Raul Parra | 10,979 | 840,000 | | Neil W. Peterson | 10,979 | 840,000 | | Brian G. Lloyd | 10,979 | 840,000 | | Joseph C. Wright | 10,979 | 840,000 |
Performance Stock Units (PSUs)
The actual number of shares of Common Stock to be issued upon settlement of the PSUs depends on the Company’s level of performance during the applicable performance period. If the Company’s performance during a performance period does not meet or exceed the applicable FCF Metric Threshold (see the “FCF Metrics and Multipliers” table below), no shares of Common Stock will be issued or paid out with respect to the PSUs for such performance period. The actual number of shares of Common Stock to be issued upon settlement of the PSUs will be determined by multiplying the total Target PSU Shares by the applicable FCF Multiplier (determined on an interpolated linear basis if between the Threshold and Target or between the Target and Maximum) and, if the Company’s level of rTSR performance falls at or below the 25th percentile (Threshold) or at or above the 75th percentile (Maximum), adjusting the number of shares of Common Stock to be issued by applying the applicable rTSR Multiplier from the “rTSR Metric and Multiplier” table below. If the Company’s level of rTSR performance falls between the 25th and 75th percentiles, the rTSR multiplier will be determined on an interpolated linear basis between the 25th and 50th percentile or between the 50th and 75th percentile. In no event will the number of shares of Common Stock to be issued to any NEO upon the settlement of PSUs exceed 250% of the Target PSU shares for that NEO. FCF Metrics and Multipliers
Performance Stock Units (PSUs)
| FCF Metric Level | FCF Metric Amount | FCF Multiplier | | Maximum | $480,000,000 (120% of Target) | 200% | | Target | $400,000,000 (100% of Target) | 100% | | Threshold | $320,000,000 (80% of Target) | 50% |
Performance Stock Units (PSUs)
rTSR Metric and Multiplier
Performance Stock Units (PSUs)
| rTSR Metric Level | rTSR Percentile Rank | rTSR Multiplier | | Maximum | At or above the 75th percentile | 125% | | Target | At the 50th percentile | 100% | | Threshold | At or below the 25th percentile | 75% |
Performance Stock Units (PSUs)
Because our CEO is a substantial shareholder of the Company and, by virtue of his ownership of Common Stock, the Compensation Committee believes his financial interests are closely aligned with the interests of other Company shareholders, the Compensation Committee determined to provide in his PSU award agreements that approximately 55% of the targeted award amount, if any, earned by him at the end of the applicable performance periods would be paid in cash in lieu of the issuance of a portion of the shares of Common Stock that otherwise would have been awarded under his PSU award agreements. Accordingly, the PSUs awarded to our CEO also include a feature providing for the payment of a long-term cash award based on the degree of attainment of the same designated Performance Goals that apply to the award and issuance of shares of Common Stock under the PSUs (each a PSU Cash Incentive). The actual amount of a PSU Cash Incentive to be paid is determined by multiplying the Target Cash Incentive provided in the PSU award agreement (Target Cash Incentive) by the same FCF Multiplier and rTSR Multiplier that are used to determine the number of shares of Common Stock issued under the PSUs (from the tables above). The Target Cash Incentive included in the CEO’s PSU award is as follows:
Performance Stock Units (PSUs)
| Target Cash Incentive Three-Year Performance Period (2024-2026) | | $1,565,100 |
Performance Stock Units (PSUs)
If the Company’s performance during a performance period does not meet or exceed the FCF Metric Threshold, no PSU Cash Incentive will be paid with respect to the CEO’s PSUs for such performance period. To be eligible to receive any shares of Common Stock or, with respect to the CEO, payment of a PSU Cash Incentive under the PSUs, the executive in question must remain employed by the Company until the second day of the calendar year following the end of the applicable performance period (Vesting Date). However, a pro rata portion may be paid after the end of the applicable performance period if, before the Vesting Date and at least one year after the PSU grant date, the executive (i) ceases employment on account of his or her death or disability (as defined in the PSU award agreements), (ii) is involuntarily terminated from employment without Cause (as defined in the PSU award agreements), or (iii) resigns from employment for Good Reason (as defined in the PSU award agreements). If the Company experiences a Change in Control (as defined in the PSU award agreements), the NEOs shall receive the total Target PSU Shares (and the CEO shall also receive the Target Cash Incentive) within thirty (30) days of such Change in Control regardless of the level of interim performance attained with respect to the applicable Performance Goals.
2024 PSU Award Determinations
2024 PSU Award Determinations The Compensation Committee and the Board determined that the maximum level for the FCF Metric had been met with respect to the Three-Year Performance Period for the PSUs granted in 2022, as summarized below:
2024 PSU Award Determinations
| FCF Metric Level | 2022 PSU grants - FCF goals | Adjusted Non-GAAP FCF Achieved | FCF Multiplier | | Maximum | $396,000,000 | $475,000,000 | 200% | | Target | $330,000,000 | | | | Threshold | $264,000,000 | | |
2024 PSU Award Determinations
The Compensation Committee and the Board further determined that the 1st Quartile of the rTSR Multiplier had been met with respect to the Three-Year Performance Period for the PSUs granted in 2022. Accordingly, the following shares of Common Stock were issued to the NEOs in 2025 under the PSU agreements having three-year performance periods as follows with respect to the 2022 fiscal year:
2024 PSU Award Determinations
| Named Executive Officer | Year Granted | Target PSU Shares | FCF Metric % | rTSR Multiplier % | Total Payout % | Number of Shares Issued | | Fred P. Lampropoulos | 2022 | 12,302 | 200% | 125% | 250% | 30,755 | | Raul Parra | 2022 | 8,304 | 200% | 125% | 250% | 20,760 | | Neil W. Peterson | 2022 | 4,613 | 200% | 125% | 250% | 11,533 | | Brian G. Lloyd | 2022 | 4,613 | 200% | 125% | 250% | 11,533 | | Joseph C. Wright | 2022 | 4,613 | 200% | 125% | 250% | 11,533 |
2024 PSU Award Determinations
The Board determined that the maximum level for the FCF Metric had been met with respect to the Target Cash Incentive for the Three-Year Performance Period for the PSUs granted in 2022. They further determined that, with respect to the Target Cash Incentive, the 1st Quartile of the rTSR Multiplier had been met with respect to the Three-Year Performance Period for the PSUs granted to Mr. Lampropoulos in 2022. Accordingly, the Company paid a PSU Cash Incentive of $2,500,000 to Mr. Lampropoulos in 2025 as follows:
2024 PSU Award Determinations
| Named Executive Officer | Year Granted | Target Cash Incentive | FCF Metric % | rTSR Multiplier % | PSU Cash Incentive | | Fred P. Lampropoulos | 2022 | $1,000,000 | 200% | 125% | $2,500,000 |
Stock Options
Stock Options During 2024, the Compensation Committee did not grant stock options to the NEOs.
Restricted Stock Units (RSUs)
Restricted Stock Units (RSUs) In 2024, the NEOs were granted RSUs with respect to the following number of shares of our Common Stock:
Restricted Stock Units (RSUs)
| um | | | | Named Executive Officer | Number of RSUs Granted (#) | Intended Fair Value of RSUs ($) | | Fred P. Lampropoulos | 24,572 | 1,880,000 | | Raul Parra | 7,319 | 560,000 | | Neil W. Peterson | 7,319 | 560,000 | | Brian G. Lloyd | 7,319 | 560,000 | | Joseph C. Wright | 7,319 | 560,000 |
Restricted Stock Units (RSUs)
The RSUs granted to our NEOs in 2024 vest in four equal annual installments, becoming fully vested on the fourth anniversary of the grant date. Shares of our Common Stock will only be issued in respect of vested RSUs. RSUs also are subject to the terms and conditions set forth in the form of Restricted Stock Unit Award Agreement entered into with each NEO. The Compensation Committee grants RSUs to promote retention by providing a level of value to recipients based on the price of our Common Stock at any point in time. In addition to their strong retention value, the Compensation Committee believes that RSUs reinforce an ownership mentality, encouraging our NEOs to act in a manner consistent with the long-term interests of the Company and our shareholders.
Annual Performance Cash Bonuses and Executive Bonus Plan
Annual Performance Cash Bonuses and Executive Bonus Plan Our general practice is to provide our NEOs with the opportunity to earn annual performance bonus compensation under a program that recognizes attainment of key objectives. The key objectives that underlie our annual incentive compensation programs are established annually by the Compensation Committee based upon recommendations made by the CEO with respect to the other NEOs, and may vary between years and between NEOs, but generally include objectives that reward attainment of targeted levels of sales, earnings and operating margins. After reviewing our executive incentive compensation practices, and based upon the preferences communicated by the institutional shareholder community, in 2019 our Board adopted the Merit Medical Systems, Inc. Executive Bonus Plan (Executive Bonus Plan). The purposes of the Executive Bonus Plan are to motivate and reward our executive employees by making a portion of their annual cash compensation dependent on the achievement of certain pre-determined corporate performance goals, to align the interests of those executives with those of our shareholders, and to attract and retain superior executive employees by providing a competitive bonus program that rewards outstanding performance. The Executive Bonus Plan is administered by the Compensation Committee. Each year, the Compensation Committee establishes a target bonus amount (based on a certain percentage of base salary) and performance criteria and goals for each participating NEO other than the CEO and the Board establishes a corresponding target bonus amount and performance criteria and goals for the CEO. At the conclusion of such year, the Compensation Committee determines the bonus amount payable to each participating NEO other than the CEO and the Board determines the bonus amount payable to the CEO and we will pay to the CEO and other NEOs the determined bonus amounts not later than the 15th day of the third month following the conclusion of the applicable year. In determining the amount of each award to be paid, the Compensation Committee or the Board, as applicable, may reduce, eliminate or increase the amount of an Award if, in its discretion, such reduction, elimination or increase is appropriate. The amounts payable to NEOs participating in the Executive Bonus Plan will be determined and allocated based on the performance criteria established for the applicable year, and our performance relative to those criteria. In setting the performance bonus amounts that an NEO other than the CEO is eligible to earn for achieving specified objectives, the Compensation Committee and the CEO consider bonus and total cash compensation levels for each NEO. Although bonus opportunities for achieving objectives are generally established for each NEO other than the CEO based on job scope and contribution, the Compensation Committee retains discretion to positively or negatively adjust performance bonus amounts based on factors that are not included in the pre-determined objectives. NEOs other than the CEO also have the opportunity to earn additional discretionary bonuses for extraordinary performance, as determined by the Compensation Committee. Similarly, in setting the performance bonus amounts that the CEO is eligible to earn for achieving specified objectives, the Board considers bonus and total cash compensation levels for the CEO. Although bonus opportunities for achieving objectives are generally established for the CEO based on job scope and contribution, the Board retains discretion to positively or negatively adjust performance bonus amounts based on factors that are not included in the pre-determined objectives. The CEO also has the opportunity to earn additional discretionary bonuses for extraordinary performance, as determined by the Board. The decision as to whether to provide an annual performance bonus program to any NEO for any year, the type and funding of any program offered, and the objectives that underlie any program, are subject to the discretion of the Compensation Committee (or the Board, with respect to the CEO), taking into account the recommendation of the CEO with respect to the other NEOs and industry-specific conditions existing during the applicable year. The Compensation Committee (or the Board with respect to the CEO) may also exercise positive or negative discretion based on its assessment of the individual NEO’s contribution and accountability for the objectives that are the subject of the bonus recommendations from the CEO and any other factors the Compensation Committee (or the Board with respect to the CEO) considers relevant. For 2024, the Compensation Committee and the Board established incentive cash performance bonus objectives for the NEOs. The incentive cash performance bonus objectives for the NEOs were based on sales, operating margin (calculated on a non-GAAP basis) and earnings per share (calculated on a non-GAAP basis), and subject to modification based on achievement of the following two equally-weighted operational targets aligned with our CGI Program:
Annual Performance Cash Bonuses and Executive Bonus Plan
| ● | Gross Margin: realization of 51.05% Non-GAAP Gross Margin; and |
Annual Performance Cash Bonuses and Executive Bonus Plan
| ● | Employee Engagement: attainment at or above the 50th percentile of Gallup’s customer database related to the question “My team has made progress on the goals set during our action planning sessions after the last Employee Engagement Survey.” |
Annual Performance Cash Bonuses and Executive Bonus Plan
The Compensation Committee established the Executive Bonus Plan performance objectives for 2024 following a review of the Company’s performance and payouts under the Executive Bonus Plan for the preceding year, consultation with the CEO and an assessment of potential objectives designed to align the interests of the NEOs with those of our shareholders. In particular, the Compensation Committee, with the input of the CEO, sought to establish financial incentives for the NEOs to drive the Company’s achievement of the performance metrics underlying our CGI Program. Following its review, the Compensation Committee retained the core Executive Bonus Plan objectives aligned with the Company’s financial targets established in 2023. However, the Compensation Committee (and the Board with respect to the CEO) adjusted the modifiers noted based upon the belief that the revised modifiers would more closely align the financial interests of the NEOs with the targets established pursuant to our CGI Program and the interests of the Company’s shareholders. In no event will the Executive Bonus Plan payout to any NEO exceed 165% of the target performance bonus payout for that NEO. For 2024, the Compensation Committee (and the Board with respect to the CEO) established the performance range for the Executive Bonus Plan to provide for incentive cash performance payments based on the following levels of attainment of each of the individual bonus objectives and modifier:
Annual Performance Cash Bonuses and Executive Bonus Plan
| Payout | Threshold 50% | Target 100% | Maximum 150% | | Sales | 90% | 100% | 110% | | Operating Margin | 95% | 100% | 105% | | Earnings Per Share | 80% | 100% | 120% |
Annual Performance Cash Bonuses and Executive Bonus Plan
The specific 2024 performance bonus objectives and modifier established by the Compensation Committee and the Board, together with the level of our actual 2024 performance in those categories, were as follows.
Annual Performance Cash Bonuses and Executive Bonus Plan
| Performance Bonus Objectives and Modifier | 2024 Goals | 2024 Results | Target Weight | Attainment | | Sales Objective | $1,325M | $1,357M | 40% | 44.76% | | Operating Margin (Non-GAAP) Objective (1) | 18.90% | 18.98% | 40% | 41.69% | | Earnings Per Share (Non-GAAP) Objective (2) | $3.35 | $3.46 | 20% | 21.64% | | CGI Modifier | | | 100% | 110%(3) | | | | Total Attainment | | 118.90% |
Annual Performance Cash Bonuses and Executive Bonus Plan
| (1) Non-GAAP operating income is calculated by adjusting GAAP operating income for certain items which are deemed by Merit’s management to be outside of core operations and vary in amount and frequency among periods, such as expenses related to acquisitions or other extraordinary transactions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, performance-based stock compensation expenses, certain employee termination benefits, expenses resulting from non-ordinary course litigation or administrative proceedings and resulting settlements, and changes in governmental or industry regulations, as well as other items. Non-GAAP operating margin is calculated by dividing non-GAAP operating income by reported net sales. See “Non-GAAP Financial Measures” presented on page 82 of this Proxy Statement for additional information. |
Annual Performance Cash Bonuses and Executive Bonus Plan
| (2) Non-GAAP Earnings Per Share is calculated as GAAP net income excluding items set forth in the definition of non-GAAP operating income above, as well as for expenses related to debt issuance costs, gains or losses on disposal of certain assets, changes in tax regulations, and other items. All excluded items are tax affected and total Non-GAAP net income is divided by the diluted shares outstanding. See “Non-GAAP Financial Measures” presented on page 82 of this Proxy Statement for additional information. |
Annual Performance Cash Bonuses and Executive Bonus Plan
| (3) Achievement of the CGI Program objectives acted as a modifier to the performance bonus objectives established by the Compensation Committee and the Board. The bonus modifier is summarized in the table below. The total modifiers were capped at 110%. |
Annual Performance Cash Bonuses and Executive Bonus Plan
| Bonus Modifier | Modifier Goal Set | Bonus Payout Modifier % | | Gross Margin | 51.05% | 105% | | Employee Engagement | 50th percentile | 105% | | Total | | 110% |
Annual Performance Cash Bonuses and Executive Bonus Plan
Based on the attainment level calculated above and the target bonus amounts set by the Compensation Committee (and the Board with respect to the CEO), each NEO received performance-based bonus payments under the Executive Bonus Plan as follows:
Annual Performance Cash Bonuses and Executive Bonus Plan
| Named Executive Officer | 2024 Base Salary | Performance Bonus Target | Attainment | Performance Bonus Payment (1) | | Fred P. Lampropoulos | $1,890,000 | 60% | 118.90% | $1,348,326 | | Raul Parra | 630,000 | 50% | 118.90% | $374,535 | | Neil W. Peterson | 630,000 | 40% | 118.90% | $299,628 | | Brian G. Lloyd | 630,000 | 40% | 118.90% | $299,628 | | Joseph C. Wright | 750,000 | 50% | 118.90% | $445,875 |
Annual Performance Cash Bonuses and Executive Bonus Plan
| (1) These amounts are shown in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table below. |
Discretionary Bonuses
Discretionary Bonuses In addition to the cash bonus opportunities under the Executive Bonus Plan described above, the Compensation Committee (with the input of the CEO) may choose to reward extraordinary performance and achievements by awarding discretionary bonuses to the NEOs other than the CEO and other executives from time to time that are not part of the Executive Bonus Plan or any other plan. Similarly, in addition to the cash bonus opportunities under the Executive Bonus Plan, the Board may choose to reward extraordinary performance and achievements by awarding discretionary bonuses to the CEO from time to time that are not part of the Executive Bonus Plan or any other plan. Neither the Compensation Committee nor the Board determined to pay any discretionary bonuses to the NEOs for the year ended December 31, 2024. There is no standing expectation that all (or any) NEOs will receive discretionary performance bonuses in any particular year, and the criteria for such bonuses are not established in advance.
Employment Agreements
Employment Agreements The Compensation Committee has determined that executive employment agreements are necessary to provide competitive compensation arrangements to our NEOs, particularly because such agreements are common in our industry. Moreover, the Compensation Committee believes that the change in control provisions within the executive employment agreements help to retain the NEOs by reducing personal uncertainty and anxiety that may arise from the possibility of a future business combination. We have entered into employment agreements with each of the NEOs. In 2016, the Company entered into an employment agreement with each of Messrs. Lampropoulos, Wright and Lloyd. These employment agreements were amended in 2017. In 2018, the Company entered into an employment agreement with Mr. Parra. In 2022, the Company entered into an employment agreement with Mr. Peterson. On June 8, 2023, the Company entered into an Amended and Restated Employment Agreement (the CEO Employment Agreement) with Mr. Lampropoulos. The CEO Employment Agreement was recommended by the Compensation Committee and the Governance Committee and approved by our Board. The Board made its decision based upon a review of best practices and the interests of the Company and its shareholders and in consultation with external advisors to the Board and the Compensation Committee. The CEO Employment Agreement amended and restated Mr. Lampropoulos’s prior employment agreement to (i) extend his term of employment through December 31, 2025, (ii) provide additional severance and incentive benefits (including, but not limited to, increasing his base salary and allowing him to terminate the CEO Employment Agreement for Good Reason (as defined therein) if the Company fails to maintain his base salary or annual bonus above certain thresholds) and (iii) make certain other changes. The foregoing description of the CEO Employment Agreement is a summary only and is qualified in its entirety by reference to the CEO Employment Agreement, a copy of which is attached as Exhibit 99.3 to our Current Report on Form 8-K filed with the SEC on June 8, 2023. The CEO Employment Agreement and the employment agreements of the other NEOs described above are sometimes collectively referred to in this Proxy Statement as the Employment Agreements. The annual base salaries paid under the Employment Agreements for 2024 were:
Employment Agreements
| Named Executive Officer | Base Salary(1) | | Fred P. Lampropoulos | $1,890,000 | | Raul Parra | $630,000 | | Neil W. Peterson | $630,000 | | Brian G. Lloyd | $630,000 | | Joseph C. Wright | $750,000 |
Employment Agreements
| (1) The base salary amounts shown above were effective January 1, 2024, except for Mr. Wright, whose salary became effective on May 26, 2024. Amounts paid to the NEOs during 2024 are reflected in the Summary Compensation Table shown on page 56. The annual base salary amounts for fiscal year 2025 as approved by the Compensation Committee are: Mr. Lampropoulos, $1,890,000; Mr. Parra, $630,000; Mr. Peterson, $630,000; and Mr. Lloyd, $630,000. |
Employment Agreements
The amount of the base salary payable to each NEO may be subject to change based on review by the Compensation Committee on an annual basis. Although the employment status of each of the NEOs is “at will,” the Employment Agreements provide for mandatory severance payments to each NEO in the event the NEO’s employment terminates for certain reasons in connection with a “Change in Control” (as defined below under the heading “Potential Payments Upon Termination or Change in Control-Employment Agreements”). Additionally, in certain circumstances, the CEO Employment Agreement provides for mandatory severance payments to Mr. Lampropoulos other than in connection with a Change in Control. Those severance arrangements are discussed in greater detail below under the heading “Executive Compensation Tables—Potential Payments upon Termination or Change in Control.” In addition to the annual base salary described above, the Employment Agreements also allow the NEOs to receive an annual cash bonus payment in an amount to be determined in the sole discretion of the Board (which has delegated that authority to the Compensation Committee). Notably, in fiscal years ending after a Change in Control, the annual bonus must be at least equal to an NEO’s average annual cash bonus for the last three full fiscal years ending prior to the Change in Control. The NEOs (and to the extent applicable, their spouses and eligible dependents) are eligible to participate in all incentive, savings and retirement, health insurance, term life insurance, long-term disability insurance, deferred compensation, employee stock purchase and other employee benefit plans, policies or arrangements we maintain for our employees generally and, at the discretion of the Compensation Committee, in the 2018 Incentive Plan and other benefit plans maintained by the Company for our executives. The terms of the Employment Agreements reflect in part the concern of the Board and the Compensation Committee that a future threatened or actual Change in Control, such as through an acquisition or merger, could cause disruption and harm to the Company in the event of the resulting loss of any of its key executives. The Change in Control provisions in the Employment Agreements are intended to provide a measure of incentive and security to our key executives until the resolution of any such threatened or actual Change in Control. However, the Board and the Compensation Committee believe that such agreements should not include provisions that would obligate a potential acquirer of the Company to make large payouts to the NEOs simply because a Change in Control has occurred. Because of this concern, the occurrence of a Change in Control event alone will not trigger any payment obligations to the NEOs under their respective Employment Agreements. Additional Change in Control payment obligations under the Employment Agreements only arise in the event the NEO’s employment is terminated “without Cause” in connection with the Change in Control or the NEO resigns “for Good Reason” (with each capitalized term in this sentence defined in the Employment Agreements and described under the heading “Potential Payments Upon Termination or Change in Control—Employment Agreements” below) in connection with a Change in Control. Thus, the Compensation Committee regards the employment agreements as “double trigger” change in control agreements.
Timing of Stock Option Grants
Timing of Stock Option Grants Generally, grants of stock options to our NEOs are approved at regularly scheduled meetings of the Board and the Compensation Committee, except for special situations such as in connection with hiring or promotion. The Company did not grant any awards of stock options or similar option-like instruments during 2024. Furthermore, the Company does not schedule the grants of stock options in anticipation of the release of material, non-public information (MNPI), nor does the Company time the release of MNPI based on stock option grant dates or for the purpose of affecting the value of executive compensation.
Tax Deductibility and Executive Compensation
Tax Deductibility and Executive Compensation Section 162(m) (Section 162(m)) of the Code imposes a $1.0 million annual limit on the amount that a public company may deduct for compensation paid to a company’s chief executive officer, chief financial officer, or any of the company’s three other most highly compensated executive officers for a tax year (Covered Officers), as well as any person who has been a Covered Officer in a previous tax year beginning after December 31, 2016. For tax years beginning before 2018, the limit did not apply to compensation that met the requirements of Section 162(m) for “qualified performance-based” compensation (i.e., compensation paid only if the executive meets pre-established, objective goals based upon performance criteria approved by our shareholders). Qualified performance-based awards, such as stock options, issued prior to 2018 remain under certain conditions exempt from Section 162(m) even if exercised after 2017. Because of limited guidance regarding this transition rule, we cannot provide any assurance that it will apply to stock options issued prior to 2018 and exercised after 2017. The Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) and, to the extent practical, attempts to implement compensation policies and practices that maximize the potential income tax deductions available to the Company. In certain situations, the Compensation Committee may approve compensation that will exceed the deduction limitations of Section 162(m) in order to ensure competitive levels of total compensation for its executive officers. In such situations, the portion of the compensation payable to the executive officer that exceeds the $1.0 million limit will not be deductible for tax purposes. Although deductibility of executive compensation for tax purposes is generally preferred, tax deductibility is not the primary objective of our executive compensation programs. The Board and the Compensation Committee believe that meeting the compensation objectives described above is more important than the benefit of being able to deduct the compensation for tax purposes. The compensation paid to the NEOs during 2024 exceeded the deduction limits of Section 162(m); the Compensation Committee (and Board with respect to the CEO) approved those compensation amounts in order to provide the NEOs with compensation packages that the Compensation Committee and Board consider competitive and in the best interests of the Company and its shareholders. Additionally, under Sections 280G and 4999 of the Code, our NEOs and other Company executives may be subject to additional taxes if they receive payments or benefits in connection with a change of control of the Company that exceed certain prescribed limits (so-called Excess Parachute Payments), and the Company or its successor may not deduct such Excess Parachute Payments. The Company is not obligated to provide any NEO or other executive with a “gross-up” or other reimbursement payment for any tax liability that the executive might owe as a result of the application of Sections 280G or 4999 of the Code. Certain potential future payments described in the table captioned “Termination Without Cause or For Good Reason in Connection with a Change in Control” on page 64 may, however, constitute Excess Parachute Payments that the Company or its successor could not fully deduct.
Compensation Policies and Practices Relating to Risk Management
| ● | our compensation policies and practices are designed to include a significant level of long-term compensation, which discourages short-term risk taking; |
Compensation Policies and Practices Relating to Risk Management
| ● | we use different performance metrics in our Executive Bonus Plan and for our PSUs, providing balance and mitigating against taking undue risk to meet a single goal; |
Compensation Policies and Practices Relating to Risk Management
| ● | Executive Bonus Plan payments and PSU awards are subject to clawback in the event of a material restatement of our financial results and in certain other cases; |
Compensation Policies and Practices Relating to Risk Management
| ● | our stock-based long-term incentives either vest or are earned over a multi-year period, providing upside potential while at the same time requiring our NEOs to bear the economic risk of the award over the vesting period; |
Summary Compensation Table
Summary Compensation Table The following Summary Compensation Table summarizes the total compensation earned by each of the NEOs for the years indicated.
Summary Compensation Table
| | | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | Name and Position | Year | ($) | ($)(1) | ($)(2)(3)(4) | ($)(4)(5) | ($)(6) | ($)(7)(8) | ($) | | Fred P. Lampropoulos | 2024 | 1,890,000 | — | 7,132,948 | — | 1,348,326 | 10,350 | 10,381,624 | | Chair of the Board, CEO and President | 2023 | 1,888,269 | — | 5,216,227 | 1,599,987 | 1,339,481 | 8,700 | 10,052,664 | | | 2022 | 1,800,000 | — | 4,130,104 | 1,199,993 | 990,036 | 8,700 | 8,128,833 | | Raul Parra | 2024 | 630,000 | — | 2,124,680 | — | 374,535 | 39,796 | 3,169,011 | | Chief Financial Officer and Treasurer | 2023 | 629,423 | — | 1,304,054 | 400,011 | 372,078 | 68,634 | 2,774,200 | | | 2022 | 600,000 | — | 1,239,123 | 360,003 | 275,010 | 53,339 | 2,527,475 | | Neil W. Peterson | 2024 | 630,000 | — | 2,124,680 | — | 299,628 | 83,062 | 3,137,370 | | Chief Operating Officer | 2023 | 629,423 | — | 1,304,054 | 400,011 | 297,662 | 81,391 | 2,712,541 | | | 2022 | 526,308 | — | 636,225 | — | 220,008 | 50,309 | 1,432,850 | | Brian G. Lloyd | 2024 | 630,000 | — | 2,124,680 | — | 299,628 | 48,396 | 3,102,704 | | Chief Legal Officer, Corporate Secretary | 2023 | 629,423 | — | 1,304,054 | 400,011 | 297,662 | 31,506 | 2,662,656 | | | 2022 | 600,000 | — | 688,352 | 199,991 | 220,008 | 28,653 | 1,737,004 | | Joseph C. Wright | 2024 | 728,846 | — | 2,124,680 | — | 445,875 | 84,042 | 3,383,443 | | Former President | 2023 | 700,000 | — | 1,304,054 | 400,011 | 330,736 | 79,710 | 2,814,511 | | | 2022 | 700,000 | — | 688,352 | 199,991 | 201,674 | 68,920 | 1,858,937 |
Summary Compensation Table
| (1) Bonus amounts represent discretionary bonuses not based solely upon pre-determined performance criteria. |
Summary Compensation Table
| (2) Stock Awards include the aggregate grant date fair value of PSUs granted to the NEOs in the year shown under our 2018 Incentive Plan computed in accordance with ASC Topic 718, including the portion of Mr. Lampropoulos’ PSU payable in cash (i.e., his PSU Cash Incentive). Such amounts have been calculated in accordance with current financial statement reporting guidance, using the same assumptions the Company used on the grant date for financial statement reporting purposes with respect to our long-term incentive plans, which may not be indicative of the realized value of the awards when they vest. The grant-date fair value of PSUs granted to Mr. Lampropoulos (i) in 2024 includes $2,337,578 of shares of Common Stock and $2,915,366 of potential PSU Cash Incentive, (ii) in 2023 includes $2,318,334 of shares of Common Stock and $2,897,893 of potential PSU Cash Incentive, and (iii) in 2022 includes $1,835,704 of shares of Common Stock and $2,294,400 of potential PSU Cash Incentive. See footnote 1 to the “Grants of Plan-Based Awards” table for additional details. The table below shows the Free Cash Flow multiplier that was assessed as probable as of each grant date and the grant date fair value of stock awards based on maximum potential attainment. |
Summary Compensation Table
| Description | 2024 | 2023 | 2022 | | Probable Grant-Date Free Cash Flow Multiplier | 164% | 200% | 200% | | Maximum Grant-date fair value of shares-Mr. Lampropoulos | $2,847,059 | $2,318,334 | $1,835,704 | | Maximum Grant-date fair value of PSU cash incentive -Mr. Lampropoulos | $3,550,778 | $2,897,893 | $2,294,400 | | Maximum Grant-date fair value of shares-Mr. Parra | $1,905,735 | $1,304,054 | $1,239,123 | | Maximum Grant-date fair value of shares-Mr. Peterson | $1,905,735 | $1,304,054 | $636,225 | | Maximum Grant-date fair value of shares-Messrs. Lloyd and Wright | $1,905,735 | $1,304,054 | $688,352 |
Summary Compensation Table
| (3) Stock Awards include the aggregate grant date fair value of RSUs granted to the NEOs in the year shown under our 2018 Incentive Plan computed in accordance with ASC Topic 718. Such amounts have been calculated in accordance with current financial statement reporting guidance, using the same assumptions the Company used on the grant date for financial statement reporting purposes with respect to our long-term incentive plans, which may not be indicative of the realized value of the awards when they vest. |
Summary Compensation Table
| um | | | | Named Executive Officer | Number of RSUs Granted (#) | Grant Date Fair Value of RSUs ($) | | Fred P. Lampropoulos | 24,572 | 1,880,004 | | Raul Parra | 7,319 | 559,977 | | Neil W. Peterson | 7,319 | 559,977 | | Brian G. Lloyd | 7,319 | 559,977 | | Joseph C. Wright | 7,319 | 559,977 |
Summary Compensation Table
| (4) Assumptions used in the calculation of these amounts for 2024, 2023 and 2022 are included in footnotes to our audited consolidated financial statements for the years ended December 31, 2024, 2023 and 2022 (which are included in our Annual Reports on Form 10-K filed with the SEC on February 25, 2025, February 28, 2024 and February 24, 2023, respectively). |
Summary Compensation Table
| (5) Option awards reflect the aggregate grant date fair value of the options granted to the NEOs in the year shown under our 2018 Incentive Plan, computed in accordance with ASC Topic 718. Such amounts have been calculated in accordance with current financial statement reporting guidance, using the same assumptions the Company has used for financial statement reporting purposes with respect to our long-term incentive plans. |
Summary Compensation Table
| (6) Annual Incentive bonuses under our Executive Bonus Plan based on pre-established performance criteria appear in the Non-Equity Incentive Plan Compensation column. Based upon the Company’s achievement of goals established by the Compensation Committee, the Compensation Committee determined to award and pay the annual cash bonus at 118.90%, 118.12% and 91.67% of the target payment amount for each of the NEOs for 2024, 2023 and 2022, respectively. Payment was made in 2025, 2024, and 2023, respectively. |
Summary Compensation Table
| (7) Amounts include vacation benefits paid to the NEOs in cash in lieu of vacation benefits, as follows: |
Summary Compensation Table
| ● | for the year ended December 31, 2024: $29,446 for Mr. Parra; $72,712 for Mr. Peterson; $73,692 for Mr. Wright; and $39,426 for Mr. Lloyd. |
Summary Compensation Table
| ● | for the year ended December 31, 2023: $59,934 for Mr. Parra; $72,691 for Mr. Peterson; $71,010 for Mr. Wright; and $23,634 for Mr. Lloyd. |
Summary Compensation Table
| ● | for the year ended December 31, 2022: $44,639 for Mr. Parra; $41,609 for Mr. Peterson; $60,220 for Mr. Wright; and $20,781 for Mr. Lloyd. |
Summary Compensation Table
| (8) Amounts shown also include matching contributions made by the Company for the benefit of the NEOs to the Company’s 401(k) Plan in the following amounts: |
Summary Compensation Table
| ● | for the year ended December 31, 2024: $10,350 for each of Messrs. Lampropoulos, Parra, Wright, and Peterson, and $8,970 for Mr. Lloyd. |
Summary Compensation Table
| ● | for the year ended December 31, 2023: $8,700 for each of Messrs. Lampropoulos, Parra, Wright, and Peterson, and $7,872 for Mr. Lloyd. |
Summary Compensation Table
| ● | for the year ended December 31, 2022: $8,700 for each of Messrs. Lampropoulos, Parra, Wright, and Peterson, and $7,872 for Mr. Lloyd. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information concerning plan-based awards to the NEOs during the year ended December 31, 2024.
Grants of Plan-Based Awards
| Named Executive Officer | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards ($) | | | Estimated Possible Payouts Under Equity Incentive Plan Awards (#) (3) | | | RSU Awards: Number of Securities Granted (#) (4) | Grant Date Fair Value of Stock Awards ($) (4)(5) | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Fred P. Lampropoulos | 3/4/2024 (1) | 586,913 | 1,565,100 | 3,912,750 | 6,151 | 16,402 | 41,005 | 24,572 | 7,132,948 | | | N/A (2) | 510,300 | 1,134,000 | 1,871,100 | — | — | — | — | — | | Raul Parra | 3/4/2024 | — | — | — | 4,117 | 10,979 | 27,448 | 7,319 | 2,124,680 | | | N/A (2) | 141,750 | 315,000 | 519,750 | — | — | — | — | — | | Neil W. Peterson | 3/4/2024 | — | — | — | 4,117 | 10,979 | 27,448 | 7,319 | 2,124,680 | | | N/A (2) | 113,400 | 252,000 | 415,800 | — | — | — | — | — | | Brian G. Lloyd | 3/4/2024 | — | — | — | 4,117 | 10,979 | 27,448 | 7,319 | 2,124,680 | | | N/A (2) | 113,400 | 252,000 | 415,800 | — | — | — | — | — | | Joseph C. Wright | 3/4/2024 | — | — | — | 4,117 | 10,979 | 27,448 | 7,319 | 2,124,680 | | | N/A (2) | 168,750 | 375,000 | 618,750 | — | — | — | — | — |
Grants of Plan-Based Awards
| (1) The PSU agreements with Mr. Lampropoulos include Target PSU Shares and a Target Cash Incentive. Both the Target PSU Shares and Target Cash Incentive are considered part of an equity incentive plan and are accounted for under ASC Topic 718 because they are based, at least in part, on the price of our shares of Common Stock. However, because there is not a stated number of shares of Common Stock underlying the PSU Cash Incentive, the threshold, target, and maximum payments of the PSU Cash Incentive under Mr. Lampropoulos PSUs have been included in this table under the non-equity incentive plan awards column. These amounts are based upon achievement of the performance measures with respect to the PSU awards granted in 2024. The threshold amount assumes threshold FCF performance and application of the 4th (bottom) quartile rTSR multiplier, and the maximum amount assumes maximum FCF performance and application of the 1st (top) quartile rTSR multiplier. See the section “Performance Stock Units (PSUs)” on page 42 for additional details regarding the PSUs, and footnote 2 to the Summary Compensation Table. |
Grants of Plan-Based Awards
| (2) Listed amounts reflect threshold, target and maximum incentive performance bonuses for 2024 under our Executive Bonus Plan. For the year ended December 31, 2024, each of Messrs. Lampropoulos, Parra, Wright, Lloyd and Peterson received 118.90% of the targeted level of their incentive annual performance bonus, as discussed above and as shown in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table. |
Grants of Plan-Based Awards
| (3) Listed amounts reflect threshold, target, and maximum number of shares of Common Stock the NEO is eligible to receive based upon achievement of the performance measures with respect to performance stock units granted in 2024. See the section “Performance Stock Units (PSUs)” on page 42 for additional details regarding the PSUs. The threshold amount assumes threshold FCF performance and application of the 4th (bottom) quartile rTSR multiplier, and the maximum amount assumes maximum FCF performance and application of the 1st (top) quartile rTSR multiplier. |
Grants of Plan-Based Awards
| (4) RSUs vest at the rate of 25% per year over four years on the first through the fourth anniversaries of the date of the grant. |
Grants of Plan-Based Awards
| (5) The grant-date fair value of PSUs granted to Mr. Lampropoulos includes $2,337,578 of shares of Common Stock and $2,915,366 potential PSU Cash Incentive. See footnote 1 for additional details regarding the PSU cash incentive. |
Outstanding Equity Awards at Year End
Outstanding Equity Awards at Year End The following table provides information on the holdings of stock options and other stock awards by the NEOs as of December 31, 2024.
Outstanding Equity Awards at Year End
| | | Option Awards | | | | Stock Awards | | | | | Named Executive Officer | Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable (1) | Option Exercise Price ($) | 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 (2)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (4) | Equity Incentive Plan Awards: Market Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (3)(4) | | Fred P. Lampropoulos | 3/2/2018 | 38,002 | — | 44.80 | 3/2/2025 | — | — | — | — | | | 3/1/2019 | 159,151 | — | 55.73 | 3/1/2026 | — | — | — | — | | | 2/26/2020 | 100,334 | — | 37.71 | 2/26/2027 | — | — | — | — | | | 3/19/2021 | 43,563 | 14,520 | 56.25 | 3/19/2028 | — | — | — | — | | | 2/28/2022 | 24,284 | 24,282 | 65.03 | 2/28/2029 | 30,755 | 5,474,624 | — | — | | | 2/28/2023 | 13,576 | 40,726 | 70.58 | 2/28/2030 | — | — | 30,226 | 5,590,125 | | | 3/4/2024 | — | — | — | — | 24,572 | 2,376,604 | 32,804 | 6,303,003 | | Raul Parra | 2/26/2020 | 5,361 | — | 37.71 | 2/26/2027 | — | — | — | — | | | 3/19/2021 | 7,261 | 2,420 | 56.25 | 3/19/2028 | — | — | — | — | | | 2/28/2022 | 7,286 | 7,284 | 65.03 | 2/28/2029 | 20,760 | 2,007,907 | — | — | | | 2/28/2023 | 3,394 | 10,182 | 70.58 | 2/28/2030 | — | — | 17,002 | 1,644,433 | | | 3/4/2024 | — | — | — | — | 7,319 | 707,894 | 21,958 | 2,123,778 | | Neil W. Peterson | 4/25/2019 | 15,000 | — | 54.40 | 4/25/2026 | — | — | — | — | | | 8/19/2021 | 18,750 | 6,250 | 68.33 | 8/19/2028 | — | — | — | — | | | 2/28/2022 | — | — | — | — | 11,533 | 1,115,423 | — | — | | | 2/28/2023 | 3,394 | 10,182 | 70.58 | 2/28/2030 | — | — | 17,002 | 1,644,433 | | | 3/4/2024 | — | — | — | — | 7,319 | 707,894 | 21,958 | 2,123,778 | | Brian G. Lloyd | 3/2/2018 | 25,000 | — | 44.80 | 3/2/2025 | — | — | — | — | | | 3/1/2019 | 30,000 | — | 55.73 | 3/1/2026 | — | — | — | — | | | 2/26/2020 | 16,722 | — | 37.71 | 2/26/2027 | — | — | — | — | | | 3/19/2021 | 7,261 | 2,420 | 56.25 | 3/19/2028 | — | — | — | — | | | 2/28/2022 | 4,048 | 4,046 | 65.03 | 2/28/2029 | 11,533 | 1,115,423 | — | — | | | 2/28/2023 | 3,394 | 10,182 | 70.58 | 2/28/2030 | — | — | 17,002 | 1,644,433 | | | 3/4/2024 | — | — | — | — | 7,319 | 707,894 | 21,958 | 2,123,778 | | Joseph C. Wright | 3/2/2018 | 25,000 | — | 44.80 | 3/2/2025 | — | — | — | — | | | 3/1/2019 | 30,000 | — | 55.73 | 3/1/2026 | — | — | — | — | | | 2/26/2020 | 16,722 | — | 37.71 | 2/26/2027 | — | — | — | — | | | 3/19/2021 | 7,261 | 2,420 | 56.25 | 3/19/2028 | — | — | — | — | | | 2/28/2022 | 4,048 | 4,046 | 65.03 | 2/28/2029 | 11,533 | 1,115,423 | — | — | | | 2/28/2023 | 3,394 | 10,182 | 70.58 | 2/28/2030 | — | — | 17,002 | 1,644,433 | | | 3/4/2024 | — | — | — | — | 7,319 | 707,894 | 21,958 | 2,123,778 |
Outstanding Equity Awards at Year End
| (1) Unvested stock option awards granted in 2023, 2022, 2021 and 2020 vest 25% each year for four years commencing one year from the grant date. All other outstanding stock option awards held by NEOs vest 20% each year for five years commencing one year from the grant date. |
Outstanding Equity Awards at Year End
| (2) Amounts in this column represent unvested RSUs and PSUs with completed performance periods as of December 31, 2024, and for Mr. Lampropoulos include the cash incentive of $2,500,000 for 2022 awards. The figures shown are based upon actual achievement of the performance measures with respect to the PSU awards granted in 2022 with a three year performance period, including attainment of the maximum FCF and application of the 1st quartile rTSR multiplier. These PSUs and the underlying shares of Common Stock and cash incentive vested and were issued or paid, as applicable, on February 27, 2025. |
Outstanding Equity Awards at Year End
| (3) The market value of unvested RSUs and PSUs is calculated based on a market price of $96.72 per share, which was the closing price of our Common Stock on December 31, 2024, as reported by Nasdaq. |
Outstanding Equity Awards at Year End
| (4) Amounts in this column represent unvested PSUs granted with incomplete performance periods as of December 31, 2024. The figures shown assume that maximum performance is achieved with respect to PSUs issued with ongoing performance periods extending beyond 2024 (including the maximum cash incentives of $2,666,666 and $3,130,200 for awards with ongoing performance periods granted to for Mr. Lampropoulos in 2023 and 2024, respectively) without application of the rTSR multiplier. The assumption of maximum performance is based on prior year performance. If maximum performance is achieved (including the maximum rTSR multiplier) the number and market value of shares and the cash incentive to be issued or paid, as applicable, following vesting of these PSUs (i) would be as follows for 2023: Mr. Lampropoulos: 37,783 Shares ($3,654,323) and $3,333,333 of PSU Cash Incentive (total of $6,987,656) and Messrs. Parra, Wright, Lloyd and Peterson: 21,253 shares ($2,055,542) and (ii) would be as follows for 2024: Mr. Lampropoulos: 41,005 Shares ($3,966,004) and $3,912,750 of PSU Cash Incentive (total of $7,878,754) and Messrs. Parra, Wright, Lloyd and Peterson: 27,448 shares ($2,654,722). |
Option Exercises and Stock Awards Vested
Option Exercises and Stock Awards Vested The following table provides information regarding stock options exercised by each of the NEOs and restricted stock awards (PSUs) that vested during the year ended December 31, 2024.
Option Exercises and Stock Awards Vested
| | Option Awards | | Stock Awards | | | Named Executive Officer | Number of Shares Acquired on Exercise | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting | Value Realized on Vesting ($) (2) | | Fred P. Lampropoulos | — | — | 18,962 | 1,450,783 | | Raul Parra | 39,361 | 1,830,623 | 7,110 | 543,986 | | Neil W. Peterson | 20,000 | 721,231 | 7,110 | 543,986 | | Brian G. Lloyd | — | — | 7,110 | 543,986 | | Joseph C. Wright | 25,000 | 1,186,936 | 7,110 | 543,986 |
Option Exercises and Stock Awards Vested
| (1) The reported value for this column is determined by multiplying the number of shares of Common Stock acquired upon the exercise of the applicable option by the difference between the market price of our Common Stock on the date of exercise and the exercise price of the stock option. The value is stated before payment of applicable taxes. |
Option Exercises and Stock Awards Vested
| (2) The reported value for this column is determined by multiplying the number of shares of Common Stock acquired upon vesting by the closing price of the Company’s shares on the date of issuance. The value is stated before payment of applicable taxes. |
Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation Pursuant to the Merit Medical Systems, Inc. Deferred Compensation Plan (Deferred Compensation Plan), NEOs may elect prior to the beginning of each calendar year to defer the receipt of base salary and bonuses earned for the ensuing calendar year. Amounts deferred are credited to an unfunded liability account maintained by the Company on behalf of the applicable NEO, which account is deemed invested in and earns a rate of return based upon certain notational, self-directed investment options offered under the Deferred Compensation Plan. The NEOs’ accounts under the Deferred Compensation Plan may also be credited with a discretionary employer matching contribution, although no such discretionary contribution was made for 2024 or at any other time since the Deferred Compensation Plan’s inception. Participant account balances under the Deferred Compensation Plan are fully-vested and will be paid by the Company to each NEO upon retirement or separation from employment, or on other specified dates, in a lump sum form or in installments according to a schedule elected in advance by the participant. The following table sets forth certain information regarding the account balance and amounts with respect to the NEOs who participated in the Deferred Compensation Plan during 2024.
Non-Qualified Deferred Compensation
| | Executive Contributions in Last Fiscal Year ($) (1) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) (2) | Aggregate Withdrawals / Distributions ($) | | Aggregate Balance at Last Fiscal Years End ($) | | | Named Executive Officer | | | | | | | | | Raul Parra | 49,170 | — | 13,620 | | — | | 96,500 | | Neil Peterson | 86,158 | — | 51,224 | | — | | 673,783 | | Brian G. Lloyd | 4,578 | — | 143 | | — | | 4,720 | | Joseph C. Wright | 70,805 | — | 536,109 | | — | | 3,335,811 |
Non-Qualified Deferred Compensation
| (1) These amounts are also reflected in the Summary Compensation Table above for the year ended December 31, 2024 as “Salary.” |
Non-Qualified Deferred Compensation
| (2) Earnings have not been reflected in the Summary Compensation Table above for the year ended December 31, 2024 because they do not reflect compensation for services provided. |
Non-Qualified Deferred Compensation
The table below shows the funds available for notational investment under the Deferred Compensation Plan and their annual rate of return for the calendar year ended December 31, 2024. These notational investments were generally the same as the mutual fund investment options offered in 2024 under our 401(k) Plan:
Non-Qualified Deferred Compensation
| Name of Fund | Rate of Return | | T. Rowe Price Blue Chip Growth Fund | 35.79% | | T. Rowe Price Equity Income Fund | 12.00% | | Vanguard 500 Index Fund Admiral Shares | 24.97% | | Vanguard Total Stock Market Index Fund Admiral Shares | 23.74% | | MFS Mid Cap Value Fund Class R6 | 14.11% | | T. Rowe Price Mid-Cap Growth Fund | 9.54% | | DFA U.S. Targeted Value | 9.33% | | Vanguard Explorer Fund Admiral Shares | 10.37% | | American Funds EuroPacific Growth Fund Class R-6 | 5.04% | | Fidelity International Index Fund | 3.71% | | Lazard Emerging Markets Equity Advantage Portfolio R6 Shares | 7.59% | | MFS International Intrinsic Value Fund Class R6 | 7.53% | | Vanguard Real Estate Index Fund Admiral Shares | 4.92% | | Vanguard LifeStrategy Conservative Growth Fund | 7.54% | | Vanguard LifeStrategy Moderate Growth Fund | 10.31% | | Vanguard LifeStrategy Growth Fund Investor Shares | 13.18% | | Vanguard LifeStrategy Income Fund Investor Shares | 4.66% | | PIMCO Real Return Fund Institutional Class | 2.59% | | PIMCO Total Return Fund Institutional Class | 2.61% | | Vanguard Federal Money Market Fund | 5.23% |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control
Pay Versus Performance
Pay Versus Performance The following table sets forth additional compensation information for our NEOs, calculated in accordance with SEC regulations, for fiscal years 2024, 2023, 2022, 2021 and 2020. The table below contains information about the relationship between compensation actually paid, as computed in accordance with SEC rules, to our CEO and non-PEO NEOs as a group, and our financial performance for the five years 2020 – 2024. The cumulative Total Stockholder Return depicts a hypothetical $100 investment in our Common Stock on December 31, 2019, and shows the value of that investment over time for each calendar year. A hypothetical $100 investment in NASDAQ Stocks (SIC 3840-3849 US Companies Surgical, Medical, and Dental Instruments and Supplies) using the same methodology is shown for comparison. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the fiscal years shown.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Total for the Principal Executive Officer (“PEO”) | Compensation Actually Paid to the PEO | Average Summary Compensation Table Total for Non-PEO Named Executive Officers (“NEO”s) | Average Compensation Actually Paid to Non-PEO NEOs | Total Shareholder Return | Peer Group Total Shareholder Return | Net Income (loss) ($ in thousands) | Non-GAAP Operating Margin (%) | | (a) | (b)(1) | (c)(1)(2) | (d)(3) | (e)(2)(3) | (f) | (g)(4) | (h)(5) | (i)(6)(7) | | 2024 | 10,381,624 | 16,384,953 | 3,198,132 | 5,427,843 | 309.61 | 145.08 | 120,357 | 19.0% | | 2023 | 10,052,664 | 9,799,372 | 2,740,977 | 2,715,268 | 243.19 | 126.48 | 94,411 | 17.2% | | 2022 | 8,128,833 | 12,087,645 | 2,091,141 | 2,009,224 | 226.12 | 119.56 | 74,516 | 15.5% | | 2021 | 7,537,100 | 10,691,399 | 1,678,125 | 2,266,274 | 199.50 | 170.06 | 48,454 | 14.4% | | 2020 | 7,703,508 | 12,603,991 | 1,722,505 | 2,903,044 | 177.78 | 147.10 | (9,843) | 13.2% |
Pay Versus Performance
| (1) Fred P. Lampropoulos was the PEO for all five years in the table. |
Pay Versus Performance
| (2) SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine “compensation actually paid” as reported in the Pay versus Performance Table. “Compensation actually paid” does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under the applicable SEC rules. The following table details these adjustments: |
Pay Versus Performance
| | | Summary Compensation Table Total | Subtract Stock Awards | Add Year-End Equity Value | Change in Value of Prior Equity Awards | Add Change in Value of Vested Equity Awards | Subtract Value of Equity Awards that Failed to Meet Vesting Conditions | Compensation Actually Paid | | Year | Executives | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | 2024 | PEO | 10,381,624 | (7,132,948) | 9,763,994 | 3,355,811 | 16,472 | — | 16,384,953 | | | Non-PEO NEOs | 3,198,132 | (2,124,680) | 3,197,053 | 1,103,844 | 53,494 | — | 5,427,843 | | 2023 | PEO | 10,052,664 | (6,816,214) | 7,053,611 | (62,418) | (428,271) | — | 9,799,372 | | | Non-PEO NEOs | 2,740,977 | (1,704,065) | 1,763,413 | 9,312 | (94,369) | — | 2,715,268 | | 2022 | PEO | 8,128,833 | (5,330,097) | 5,376,613 | 1,434,847 | 2,477,449 | — | 12,087,645 | | | Non-PEO NEOs | 2,091,141 | (980,076) | 819,171 | 211,296 | 253,211 | (385,519) | 2,009,224 | | 2021 | PEO | 7,537,100 | (4,146,759) | 5,567,123 | 756,685 | 977,250 | — | 10,691,399 | | | Non-PEO NEOs | 1,678,125 | (691,110) | 927,825 | 170,049 | 181,385 | — | 2,266,274 | | 2020 | PEO | 7,703,508 | (4,976,970) | 5,425,560 | 2,390,685 | 2,061,208 | — | 12,603,991 | | | Non-PEO NEOs | 1,722,505 | (893,427) | 834,434 | 557,540 | 681,992 | — | 2,903,044 |
Pay Versus Performance
| (3) For 2024 and 2023, Raul Parra, Neil W. Peterson, Brian G. Lloyd and Joseph C. Wright were the Non-PEO NEOs. For 2022, Raul Parra, Neil W. Peterson, Brian G. Lloyd, Joseph C. Wright and Ronald A. Frost were the Non-PEO NEOs. For 2021 and 2020, Raul Parra, Ronald A. Frost, Brian G. Lloyd and Joseph C. Wright were the Non-PEO NEOs. |
Pay Versus Performance
| (4) Peer Group Total Shareholder return is based on NASDAQ Stocks (SIC 3840-3849 US Companies Surgical, Medical, and Dental Instruments and Supplies) (the NASDAQ Peer Group). The NASDAQ Peer Group is the peer group used by the |
Pay Versus Performance
Company for the purposes of item 201(e) of Regulation S-K under the Exchange Act in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The companies included in the NASDAQ Peer Group are set forth on Appendix A attached hereto. The NASDAQ Peer Group was prepared by Zacks Investment Research, Inc. and is used with permission. All rights reserved. Copyright 1980-2025. Index Data: Copyright NASDAQ OMX, Inc.
Pay Versus Performance
| (5) This column represents our net earnings (in millions) as reported in conformance with GAAP. |
Pay Versus Performance
| (6) The Company Selected Measure is Non-GAAP Operating Margin. Non-GAAP operating income is calculated by adjusting GAAP operating income for certain items which are deemed by the Company’s management to be outside of core operations and vary in amount and frequency among periods, such as expenses related to acquisitions or other extraordinary transactions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, performance-based stock compensation expenses, certain employee termination benefits, expenses resulting from non-ordinary course litigation or administrative proceedings and resulting settlements, governmental proceedings, and changes in governmental or industry regulations, as well as other items. Non-GAAP operating margin is calculated by dividing non-GAAP operating income by reported net sales. A reconciliation of non-GAAP financial measures used in this Proxy Statement to their most directly comparable GAAP financial measures is included under the heading “Non-GAAP Financial Measures” below. The Company selected this measure because it is a principal metric upon which our Continued Growth Initiatives Program is based, and a key metric considered by the Compensation Committee in making its determinations regarding compensation of our PEO and Non-PEO NEOs. |
Pay Versus Performance
| (7) Beginning in 2024, consulting expenses associated with initiatives conducted under our FFG Program are not adjusted as part of its non-GAAP financial measures. As a result, Merit’s Non-GAAP Operating Margin for prior periods has been recast for comparability. |
Pay Versus Performance
The charts below further depict the relationship between compensation actually paid to our CEO and other NEOs (as calculated in accordance with the SEC rules) in fiscal year 2020, 2021, 2022, 2023 and 2024 and the metrics set forth in the Pay Versus Performance table above.
Pay Versus Performance
| (1) TSR represents the value of a $100 investment in our Common Stock, assuming reinvestment of dividends, as measured at each fiscal year end. |
Pay Versus Performance
| (2) Peer group used to determine total shareholder return values was NASDAQ Stocks (SIC 3840-3849 US Companies Surgical, Medical, and Dental Instruments and Supplies). |
Pay Versus Performance
| (1) Beginning in 2024, consulting expenses associated with initiatives conducted under our FFG Program are not adjusted as part of its non-GAAP financial measures. As a result, Merit’s Non-GAAP Operating Margin for prior periods has been recast for comparability. |
CEO Pay Ratio
CEO Pay Ratio The following pay ratio and supporting information compares (x) the annual total compensation for the year ended December 31, 2024 of our median employee identified as of December 31, 2024 by taking into account all of our employees other than our CEO, (including full-time and part-time employees and employees on leave) and annualizing permanent employees (full-time and part-time) that did not work a full year, (excluding employees on leave under the Family and Medical Leave Act of 1993, employees called for active military duty, and employees who took an unpaid leave of absence during the period for another reason) (Median Employee) against (y) the annual total compensation of our CEO (as reported in our Summary Compensation Table above), as required by Section 953(b) of the Dodd-Frank Act. As illustrated in the table below, our 2024 CEO pay ratio was 290 to 1.
CEO Pay Ratio
| | 2024 Compensation ($) | | Fred P. Lampropoulos (1) | 10,381,624 | | Median Employee (2) | 35,793 |
CEO Pay Ratio
| (1) For additional information, see our Summary Compensation Table beginning on page 56. |
CEO Pay Ratio
| (2) Amount represents taxable compensation paid, plus the fair value of equity awards granted (if applicable) to the Median Employee during 2022, plus bonus accrued and paid in 2023. |
CEO Pay Ratio
We have reviewed the changes in our employee population and employee compensatory arrangements since 2022 and determined there have been no changes to our employee population or employee compensatory arrangements that would result in a significant change to our pay ratio disclosure. Thus, we referenced the same median employee identified for 2022 for purposes of the computation of the 2024 pay ratio. In calculating the median employee total compensation in 2022, we calculated the annual total compensation (annual taxable compensation, plus the fair value of equity awards granted) for all employees of the Company (other than the CEO) for the year ended December 31, 2022. We believe that annual total compensation is a consistently applied compensation measure and appropriate for determining the median-paid employee. We used actual annual total compensation (converted, where applicable, to U.S. dollars based on an average annual exchange rate for the year ended December 31, 2022) and did not make any assumptions or adjustments to the amounts determined.