DEF 14A of Idexx Laboratories Inc /De
Filed Mar 27, 2024 · FY20230000874716-24-000075
Election of Directors
Election of Directors Our Board is divided into three classes, and members of each class hold office for three-year terms as set forth below: +Class I Directors – currently four Directors whose terms expire at the 2024 Annual Meeting; +Class II Directors – currently three Directors whose terms expire at the 2026 Annual Meeting; and +Class III Directors – currently four Directors whose terms expire at the 2025 Annual Meeting. Upon the recommendation of the Governance and Corporate Responsibility Committee, the Board has nominated Ms. Irene Chang Britt, Mr. Bruce L. Claflin, Dr. Asha S. Collins and Mr. Sam Samad, our current Class I Directors, for re-election as Class I Directors, and the Board is asking shareholders to elect them for three-year terms expiring at the 2027 Annual Meeting. Each nominee meets Nasdaq independence requirements, and all of our nominees have consented to serve, if elected. If any of the nominees become unable to serve, proxies can be voted for a substitute nominee, or the Board may choose to reduce the size of the Board. Biographical information for all of our Directors, including the Director nominees, is provided below, along with information regarding some of the key experiences, qualifications, attributes and skills that our Directors bring to the Board and that contributed to each Director’s selection as a Board member and each Director nominee’s nomination for re-election at our 2024 Annual Meeting. There are no family relationships among the executive officers or Directors of IDEXX. For a summary of key information regarding the composition, backgrounds and skills of our Board, refer to the information above beginning on page 2 under “Board Composition, Backgrounds and Skills” and on page 30 under “Diversity and Our Board.”
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| | The Board of Directors recommends that you vote “FOR” the election of Ms. Irene Chang Britt, Mr. Bruce L. Claflin, Dr. Asha S. Collins and Mr. Sam Samad. |
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| 18 | IDEXX 2024 PROXY STATEMENT |
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Director Nominees and Board Biographies Class I Director Nominees Whose Terms Would Expire in 2027
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| | | Experience Campbell Soup Company +President/Divisional CEO, Pepperidge Farm Ltd. (2012 – 2015) +Senior Vice President, Global Baking and Snacking (2012 – 2015) +Senior Vice President and Chief Strategy Officer (2010 – 2012) +President, Foodservice, North America (2008 – 2010) +Vice President and General Manager, Sauces and Beverages (2005 – 2008) Kraft Foods, Inc. +Senior Vice President and General Manager, Salted Snacks (2004 – 2005) +Vice President, Snacks (2001 – 2004) +Vice President and Leader, Biscuits and Snacks, Canada (2000 – 2001) Qualifications +Human Capital Management: Deep understanding of human capital management and executive compensation matters gained through her general management roles, including as President/Divisional CEO of Pepperidge Farm, and her extensive public company board experience, including service as chair of human capital and compensation committees. +Operations: Experience managing the business operations at complex organizations, including operational, manufacturing, supply chain and commercial activities, developed through senior executive operational roles at Campbell Soup Company and Kraft Foods, Inc. +Corporate Strategy: Experience developing and implementing corporate strategy in the highly competitive food and snack industry in her numerous leadership roles at Campbell Soup Company and Kraft Foods, Inc. +Ms. Chang Britt also brings significant executive leadership, financial acumen, corporate governance, science, technology and R&D, international business, digital, corporate finance and risk oversight skills and experience to the Board. Education +BA, Anthropology, University of Toronto +MBA, University of Western Ontario | | | Irene Chang Britt Retired President/Divisional CEO, Pepperidge Farm Ltd. and Senior VP, Global Baking and Snacking, Campbell Soup Company Independent Director Age: 61 Director since: July 2023 Committees: Audit Compensation and Talent Other current public company director service: +First Watch Restaurant Group, Inc. (since Jul. 2023) +Victoria Secret & Co. (since Aug. 2021) Former public company director service: +Brighthouse Financial, Inc. (Aug. 2017 - Aug. 2023) +TerraVia Holdings, Inc. (Mar. 2016 - 2018) +Tailored Brands Inc. (Dec. 2015 - Dec. 2020) +Dunkin’ Brand Group, Inc. (May 2014 - Dec. 2020) +Sunoco, Inc. (Nov. 2011 - Oct. 2012) | |
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| IDEXX 2024 PROXY STATEMENT | 19 |
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| | | Experience 3Com Corporation +President, Chief Executive Officer, and member of the board of directors (January 2001 – 2006) +President, Chief Operating Officer (August 1998 – January 2001) Digital Equipment Corporation +Senior Vice President, Sales and Marketing (1997 – 1998) +Vice President and General Manager, PC Business Unit (1995 – 1997) International Business Machines Corporation (IBM) +Various senior management and executive positions (1973 – 1995) Qualifications +Corporate Governance: Substantial knowledge and experience gained through his public and private company board service, including as chairman of the board of Advanced Micro Devices, Inc. for approximately seven years and as Chair of our Governance and Corporate Responsibility Committee. +International Business: Experience engaging in international business transactions during his time as President and Chief Executive Officer of 3Com where he established a joint venture in China in partnership with a leading Chinese global telecom solutions provider and at IBM where he lived and worked in Hong Kong and Tokyo and was responsible for IBM’s Asia/South Pacific Area. +Digital: Deep understanding of advanced technology and how it may be utilized to further our corporate strategies and objectives, gained from his senior executive roles at other high-technology companies. +Mr. Claflin also brings significant executive leadership, corporate strategy, financial acumen, science, technology and R&D, operations, human capital management, corporate finance and risk oversight skills and experience to the Board. Education +BA, Political Science, Pennsylvania State University | | | Bruce L. Claflin Retired President and Chief Executive Officer, 3Com Corporation Independent Director Age: 72 Director since: July 2015 Committees: Audit Governance and Corporate Responsibility (Chair) Other current public company director service: +Ciena Corporation (since Aug. 2006) Former public company director service: +Advanced Micro Devices, Inc. (2003 - 2017) (Chairman, 2009 - 2016) +3Com Corporation (2001 - 2006) +Time Warner Telecom (2000 - 2003) | |
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| 20 | IDEXX 2024 PROXY STATEMENT |
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| | | Experience DNAnexus, Inc. +Senior Vice President, General Manager of Biobanks (since August 2021) Genentech, Inc. (a subsidiary of Roche Holding A.G.) +Head of U.S. Clinical Operations (May 2018 – June 2021) McKesson Corporation +Vice President of Clinical Sourcing and Business Development (November 2015 – March 2018) +Senior Director, Corporate Strategy and Business Development (September 2014 – November 2015) Quintiles +Principal Consultant (2011 – 2014) Deloitte Consulting +Manager (2008 – 2011) Other Experience +Selected as a Health Innovators fellow by The Aspen Institute in July 2019 Qualifications +Science, Technology and R&D: Significant experience overseeing scientific innovation and research development efforts in the healthcare field, developed during her tenure as General Manager of Biobanks at DNAnexus, Inc., a cloud-based genome informatics and data management company that leverages a multiomics and multimodal cloud-based platform to fuel scientific discovery and innovation, and previously as the Head of U.S. Clinical Operations at Genentech, a biotechnology company. +Operations: Valuable experience managing complex business operations, gained as a result of leadership positions held at various life science and healthcare companies, including as Head of U.S. Clinical Operations for Genentech, Inc. and as General Manager of Biobanks at DNAnexus, Inc., where she established and continues to scale the global operations and commercialization of the data analysis business. +Corporate Strategy: Significant experience developing and implementing corporate strategy, including in her role as Senior Director, Corporate Strategy and Business Development at McKesson Corporation and as General Manager of Biobanks at DNAnexus, Inc. +Dr. Collins also brings significant corporate governance, executive leadership, digital, international business and risk oversight skills and experience to the Board. Education +BS, Biology, University of Pittsburgh +PhD, Cancer Biology and Microbiology, University of Wisconsin-Madison | | | Asha S. Collins, PhD Senior Vice President, General Manager of Biobanks, DNAnexus, Inc. Independent Director Age: 48 Director since: November 2020 Committees: Finance Governance and Corporate Responsibility | |
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| IDEXX 2024 PROXY STATEMENT | 21 |
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| | | Experience Quest Diagnostics Incorporated +Executive Vice President and Chief Financial Officer (since July 2022) Illumina, Inc. +Senior Vice President and Chief Financial Officer (January 2017 – July 2022) Cardinal Health, Inc. +Senior Vice President and Corporate Treasurer (February 2012 – January 2017) +Senior Vice President and Chief Financial Officer, Pharmaceutical Segment (2009 – 2012) +Vice President, Healthcare Supply Chain Services (2007 – 2009) Other Experiences +Various finance roles at Eli Lily and Company and PepsiCo, Inc. Qualifications +Financial Acumen: Substantial experience in the review and preparation of financial statements and a strong understanding of complex financial and accounting topics, internal controls over financial reporting and financial planning, gained through his current role as Chief Financial Officer of Quest Diagnostics Incorporated and prior role at Illumina, Inc. +Corporate Finance: Deep experience and knowledge in matters of corporate finance, including capital market transactions and mergers and acquisitions, developed during his long career holding roles of increasing responsibility in the finance field. +International Business: Extensive international operational experience, including during his tenure at Cardinal Health where he had significant leadership responsibility for the China business operations. +Mr. Samad also brings significant executive leadership, corporate governance, corporate strategy, science, technology and R&D, digital, human capital management, operations, sustainability and risk oversight skills and experience to the Board. Education +Bachelor’s Degree in Business Administration (BBA), American University of Beirut +MBA, McMaster University | | | Sam Samad Executive Vice President and Chief Financial Officer, Quest Diagnostics Incorporated Independent Director Age: 54 Director since: July 2019 Committees: Audit Compensation and Talent | |
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| 22 | IDEXX 2024 PROXY STATEMENT |
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Class II Directors Whose Terms Expire in 2026
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| | | Experience ImmunoGen, Inc. +President and Chief Executive Officer (2009 – 2016) +President and Chief Operating Officer and Acting Chief Financial Officer (July 2008 - December 2008) +Executive Vice President and Chief Financial Officer (2006 – 2008) +Senior Vice President and Chief Financial Officer (2005 – 2006) New England Business Service, Inc. +Executive Vice President and Chief Financial Officer (2002 – 2004) +Senior Vice President and Chief Financial Officer (1998 – 2002) Nashua Corporation +Vice President and Chief Financial Officer (1996 – 1998) +Joined in 1984 and held various financial management positions of increasing responsibility Qualifications +Financial Acumen: Substantial knowledge and experience in the review and preparation of financial statements and a strong understanding of complex financial and accounting topics, internal controls over financial reporting, and financial planning developed over the course of his almost 25 years serving in various financial management roles, including more than a decade as the chief financial officer of various companies. +Science, Technology and R&D: Experience gained as the former Chief Executive Officer and Chief Financial Officer of ImmunoGen, Inc., a then public biotechnology company, which was acquired by AbbVie Inc. in February 2024, that developed targeted anticancer therapeutics, where he was credited with expanding the company’s technology portfolio significantly, as well as from his board service overseeing multiple biotechnology companies. +Corporate Strategy: Deep experience as displayed while at ImmunoGen, Inc., where under his leadership the company transformed from being a research-focused company to one with strong clinical development and manufacturing capabilities. +Risk Oversight: Extensive experience identifying, assessing and managing enterprise-level risk through over 10 years of experience as a public company senior executive and service on numerous public company boards. +Mr. Junius also brings significant executive leadership, corporate governance, human capital management, operations and corporate finance skills and experience to the Board. Education +BA, Political Science, Boston College +MA, Management, Northwestern University’s Kellogg School of Management | | | Daniel M. Junius Retired President and Chief Executive Officer, ImmunoGen, Inc. Independent Director Age: 71 Director since: March 2014 Committees: Audit (Chair) Finance Other current public company director service: +GlycoMimetics, Inc. (since Mar. 2016) Former public company director service: +ImmunoGen, Inc. (Nov. 2008 – Jun. 2018) +Vitae Pharmaceuticals, Inc. (Jul. 2016 – Oct. 2016) | |
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| IDEXX 2024 PROXY STATEMENT | 23 |
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| | | Experience Berkshire Partners LLC + Advisory Director (since 2016) Pall Corporation + Chairman (2013 – 2015) + Chief Executive Officer (2011 – 2015) IDEX Corporation + Chief Executive Officer (2005 – 2011) + Chief Operating Officer (2004 – 2005) Danaher Corporation + Corporate Vice President and Group Executive (March 2004 – August 2004) + President of Industrial Controls Group (2002 – 2004) + President of Motion Group, Special Purpose Systems (2001 – 2002) Qualifications +Executive Leadership: Substantial experience leading high-technology, high-growth, multinational public companies as Chief Executive Officer of Pall Corporation, a global supplier of filtration, separations and purification products, and IDEX Corporation, a company specializing in fluid and metering technologies. +Corporate Strategy: Significant experience guiding strategy and transformation in various public company senior executive positions and on numerous public company boards of directors. +Operations: Extensive experience overseeing complex business operations, including operational, manufacturing, supply chain and commercial activities, developed over his extensive career as a senior executive at Pall Corporation, IDEX Corporation and Danaher Corporation. +Mr. Kingsley also brings significant international business, financial acumen, corporate governance, human capital management, corporate finance and risk oversight skills and experience to the Board. Education +BS, Industrial Engineering and Management, Clarkson University +MBA, College of William and Mary | | | Lawrence D. Kingsley Former Board Chair and Chief Executive Officer, Pall Corporation Independent Non-Executive Board Chair Age: 61 Director since: October 2016 +Independent Non-Executive Board Chair (since Nov. 2019) +Lead Director (May 2018 – Nov. 2019) Committees: Compensation and Talent Governance and Corporate Responsibility Other current public company director service: +Polaris Industries Inc. (since Jan. 2016) +Mirion Technologies, Inc. (since Oct. 2021) (Non-Executive Chair) Former public company director service: +Rockwell Automation, Inc. (2013 - 2021) +Cooper Industries plc (formerly Cooper Industries Ltd.) (2007 - 2012) +Pall Corporation (2011 - 2015) +IDEX Corporation (2005 - 2011) | |
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| 24 | IDEXX 2024 PROXY STATEMENT |
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| | | Experience Strategic Vision Ventures LLC +Founder and owner (since February 2021) Massachusetts Institute of Technology School of Engineering +Inaugural Visiting Scholar (2019 – 2020 academic year) International Business Machines Corporation +Vice President, Emerging Technology Partnerships (August 2018 – August 2019) +Chief Operating Officer, IBM Research (January 2017 – August 2018) Xerox Corporation +Chief Technology Officer and Corporate Vice President, Xerox Corporation (2006 – 2016) +President, Xerox Innovation Group (2006 – 2016) +Chief Engineer, Xerox Corporation (2002 – 2005) +Oversaw Xerox’s global research centers, including the Palo Alto Research Center Other Experience +Dr. Vandebroek is the Chair of the Advisory Committee of the Flanders AI Research Program, a member of the AI Innovation Board of the Norwegian Research Center for AI, a Fellow of the Institute of Electrical & Electronics Engineers and was appointed an honorary Professor at KU Leuven, Belgium in 2021. Qualifications +Science, Technology and R&D: Long track record of innovation and experience managing balanced research and development portfolios at IBM and Xerox Corporation. +Digital: Deep experience and knowledge in information technology and cybersecurity, including overseeing significant information technology projects to facilitate business objectives, developed over the course of over 20 years serving in various senior executive roles at IBM and Xerox Corporation. +Sustainability: Substantial knowledge of and experience overseeing sustainability issues gained from her outside private and public company board service. +Dr. Vandebroek also brings executive leadership, financial acumen, corporate governance, corporate strategy, operations, international business, human capital management and risk oversight skills and experience to the Board. Education +BS, Engineering, KU Leuven +MS, Electro-mechanical Engineering, KU Leuven +PhD, Electrical Engineering, Cornell University | | | Sophie V. Vandebroek, PhD Former Vice President, Emerging Technology Partnerships, International Business Machines Corporation Independent Director Age: 62 Director since: July 2013 Committees: Finance Governance and Corporate Responsibility Other current public company director service: +Wolters Kluwer N.V. (since Apr. 2020) +Revvity, Inc. (since Feb. 2024) Former public company director service: +Analogic Corporation (Aug. 2008 - Jan. 2016) | |
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| IDEXX 2024 PROXY STATEMENT | 25 |
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Class III Directors Whose Terms Expire in 2025
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| | | Experience IDEXX +Senior Advisor (November 2019 – July 2021) +Board Chair (January 2002 – November 2019) +President and CEO (January 2002 – June 2019) United Technologies Corporation +President, Carrier Corporation (2000 – 2001) +President of Carrier Asia Pacific Operations (Singapore), Carrier Corporation (1997 – 1999) +Vice President, Strategic Planning (1995 – 1997) Morgan Stanley & Co. +Various investment banking positions (1986 – 1995) Bain & Company +Strategy consulting (1982 – 1986) International Business Machines Corporation +Systems Engineer (1978 – 1981) Qualifications +Executive Leadership: Substantial experience developed over his seventeen-year tenure as President and CEO of IDEXX where he drove innovation and grew annual revenue from less than $400 million to $2.4 billion and achieved a compound annual stock price growth rate of 23%. +Corporate Strategy: Deep, IDEXX-specific experience gained while guiding the strategy of IDEXX as our President and CEO from 2002 to 2019, during which time he transformed our go-to market strategy, prioritized research and development and developed comprehensive knowledge of our evolving market landscape and the global pet healthcare sector. +Corporate Finance: Extensive experience honed throughout his time in various investment banking roles at Morgan Stanley & Co. and applied throughout his career at United Technologies and IDEXX. +Mr. Ayers also brings risk oversight, international business, science, technology and R&D, operations, financial acumen, human capital management, digital and corporate governance skills and experience gained through his more than seventeen years of service as our Board Chair, CEO and President (and from prior roles), as well as sustainability experience gained through his service, since September 2021, as Board Chair of Panthera, a non-profit organization devoted to global wild cat conservation. Education +BA, Molecular Biophysics and Biochemistry, Yale University +MBA, Harvard Business School (with high distinction) | | | Jonathan W. Ayers Former President and Chief Executive Officer, IDEXX Laboratories, Inc. Independent Director Age: 68 Director since: January 2002 +Board Chair (Jan. 2002 – Nov. 2019) Committees: Finance | |
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| 26 | IDEXX 2024 PROXY STATEMENT |
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| | | Experience Integra LifeSciences Holdings Corporation +Executive Chair of Board of Directors (since February 2024) +Non-Executive Chair of Board of Directors (June 2012 – February 2024) +Executive Chair of Board of Directors (January 2012 – June 2012) +Member of Board of Directors (since 1997) +Chief Executive Officer (1997 – 2012) Prettybrook Partners LLC +Managing Director (since 2012) Wellington Partners Advisory AG +Venture Partner (since 2013) TowerBrook Capital Partners +Senior Advisor (since 2010) Goldman, Sachs and Co. +Managing Director, M&A, specializing in the medical device, pharmaceutical and biotechnology sectors (1987 – 1997) Qualifications +Executive Leadership: Extensive executive management experience and deep strategic expertise in the global healthcare industry gained from over 25 years of experience in developing, executing and overseeing the corporate strategy of Integra LifeSciences Holdings Corporation, a manufacturer of medical devices used in neurosurgery and orthopedic surgery, as its Chief Executive Officer for 15 years, board chair from 2012 to 2024 and executive chair since 2024, during which time revenues increased over 100-fold. +Financial Acumen: Substantial knowledge and experience in the review and preparation of financial statements and a strong understanding of complex financial and accounting topics, internal controls over financial reporting, and financial planning developed over the course of his career in various financial management and banking roles, including through his investment banking, chief executive officer and significant outside board experiences. +Corporate Finance: Deep knowledge of capital markets, investment banking, and mergers and acquisitions acquired throughout the course of his career in investment banking, during which he specialized in the medical device, pharmaceutical and biotechnology sectors, and applied throughout his career at Integra LifeSciences Corporation and his outside board service. +Mr. Essig also brings significant corporate strategy, corporate governance, science, technology and R&D, human capital management, international business, operations and risk oversight skills and experience to the Board. Education +BA, School of Public and International Affairs at Princeton University +MBA, University of Chicago +PhD, Financial Economics, University of Chicago | | | Stuart M. Essig, PhD Executive Chair, Integra LifeSciences Holdings Corporation Independent Director Age: 62 Director since: July 2017 Committees: Finance (Chair) Governance and Corporate Responsibility Other current public company director service: +Integra LifeSciences Holdings Corporation (since 1997) (Executive Chair since Feb. 2024) (Chair, 2012 - 2024) +Orthofix Medical Inc. (since Jan. 2023) Former public company director service: +Owens & Minor, Inc. (Oct. 2013 - Aug. 2019) +SeaSpine Holdings Corporation (Jun. 2015 - Jan. 2023) (Lead Director, Jul. 2015 - Jan. 2023) +St. Jude Medical, Inc. (Mar. 1999 - Jan. 2017) +Vital Signs, Inc. (1998 - 2002) +Zimmer Biomet Holdings, Inc. (2005 - 2008) | |
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| IDEXX 2024 PROXY STATEMENT | 27 |
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| | | Experience IDEXX +President and CEO (since October 2019) +Interim President and CEO (June 2019 – October 2019) +Executive Vice President (August 2012 – June 2019) Philips Healthcare, a subsidiary of Royal Philips Electronics (now named Royal Philips) +Senior Vice President and General Manager, Computed Tomography, Nuclear Medicine and Radiation Therapy Planning (2010 – 2012) +Various roles of increasing responsibility (2001 – 2010) Agilent Technologies (acquired by Royal Philips Electronics in 2001) +Executive in Charge (2000 – 2002) +General Manager, Medical Consumables Business Unit (1997 – 2000) Hewlett Packard +Various roles in finance, marketing and business planning (1988 – 1996) Qualifications +Executive Leadership: Extensive leadership and management experience gained during his time in various roles at IDEXX, including as President and CEO during which time he has prioritized innovation and built expanded commercial capabilities, and as Executive Vice President in which role he was responsible for the North American Companion Animal Group Commercial Organization and key elements of the innovation portfolio, including IDEXX VetLab in-house diagnostics, Diagnostic Imaging, Veterinary Software and Services, Rapid Assay and Telemedicine lines of business. +Corporate Strategy: Deep experience developing and implementing strategies for continued long-term sustainable growth at IDEXX, including transforming our go-to-market strategy in North America in 2014, significant international commercial expansions, investments in innovation and an emphasis on delivering a differentiated customer experience. +Operations: Substantial experience developed while overseeing the operations of global enterprises at IDEXX, including maintaining product availability and on-time delivery levels amidst supply chain challenges, acquiring and integrating our ezyVet software product line and scaling our warehouse, distribution and manufacturing capabilities to support continued growth. +Mr. Mazelsky also brings significant corporate governance, financial acumen, science, technology and R&D, human capital management, international business, digital, corporate finance, sustainability and risk oversight skills and experience to the Board. Education +BA, Mathematics, University of Rochester +MBA, University of Chicago | | | Jonathan J. Mazelsky President and Chief Executive Officer, IDEXX Laboratories, Inc. Director Age: 63 Director since: October 2019 Committees: None Other current public company director service: +Dentsply Sirona Inc. (since May 2023) | |
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| 28 | IDEXX 2024 PROXY STATEMENT |
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| | | Experience Szostak Partners +Founder, President (since 2004) Fleet/Boston Financial Group (now Bank of America) +Board Chair and Chief Executive Officer, Fleet Bank-Rhode Island (2001 – 2003) +Corporate Executive Vice President and Chief Human Resources Officer, FleetBoston Financial Group (1998 – 2004) +Board Chair, President and Chief Executive Officer, Fleet-Maine (1991 – 1994) Qualifications +Executive Leadership: Substantial executive leadership experience gained from her roles at Fleet/Boston Financial Group, including serving as the Chief Executive Officer of two major bank subsidiaries, as well as through completion of several executive education programs at Harvard Business School. +Human Capital Management: Deep experience of human capital management matters and executive compensation gained from her long history of human resources leadership, including during her tenure as Chief Human Resources Officer at Fleet/Boston Financial Group, as well as her service as compensation committee chair on various public company boards. +Corporate Governance: Extensive experience with corporate governance gained from substantial public company board experience and service as board chair and chief executive officer of two major bank subsidiaries. +Ms. Szostak also brings significant financial acumen, corporate strategy, international business, operations, corporate finance and risk oversight skills and experience to the Board. Education +BA, Sociology, Colby College | | | M. Anne Szostak Retired Executive, Fleet/Boston Financial Group (now Bank of America) Independent Director Age: 73 Director since: July 2012 Committees: Audit Compensation and Talent (Chair) Other current public company director service: +Tupperware Brands Corporation (since 2000) Former public company director service: +Belo Corporation (2004 - 2013) +ChoicePoint Corporation (2005 - 2008) +Dr. Pepper Snapple Group, Inc. (2008 - 2018) +SFN Group, Inc. (2005 - 2011) | |
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| IDEXX 2024 PROXY STATEMENT | 29 |
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Diversity and our Board We believe that diversity on our Board, including but not limited to gender, racial and ethnic diversity, helps drive innovation and a better understanding of our stakeholders and contributes to Board effectiveness. Accordingly, our Governance and Corporate Responsibility Committee and Board focus on ensuring representation of a wide range of backgrounds and experiences on our Board and consider the value of diversity of all types in the Board member nomination process. In particular, the Governance and Corporate Responsibility Committee actively seeks out and includes highly-qualified, diverse candidates (including women and persons with racially and/or ethnically diverse backgrounds) in the pool of potential Board nominees. As a result of our Board’s sustained focus on refreshment and diversity, we have added eight new independent Directors since 2013, and we are proud of the diversity of our Board. The following chart shows certain self-identified personal characteristics of our Directors, in accordance with Nasdaq Listing Rule 5605(f). Our Board Diversity Matrix as of March 1, 2023 can be found in the proxy statement for the 2023 Annual Meeting filed with the Securities and Exchange Commission on March 31, 2023. Board Diversity Matrix (As of March 1, 2024)
Election of Directors
| Total Number of Directors | 11 | | | | | Part I: Gender Identity | Female | Male | Non-Binary | Did Not Disclose Gender | | Directors | 4 | 7 | 0 | 0 | | Part II: Demographic Background | | | | | | African American or Black | 1 | 0 | 0 | 0 | | Alaskan Native or Native American | 0 | 0 | 0 | 0 | | Asian | 1 | 0 | 0 | 0 | | Hispanic or Latinx | 0 | 0 | 0 | 0 | | Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | | White | 2 | 7 | 0 | 0 | | Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | | LGBTQ+ | 1 | | | | | Did Not Disclose Demographic Background | 0 | | | |
Corporate Governance
Corporate Governance Our Corporate Governance Framework We are proud of our commitment to sound corporate governance and high ethical standards, and we believe that this commitment has contributed to our success in building long-term value for our shareholders and other stakeholders by: +Strengthening Board and management accountability and effectiveness; +Promoting alignment with the long-term interests of our shareholders and other stakeholders; and +Helping to maintain our shareholders’ and other stakeholders’ trust in IDEXX. Our corporate governance framework includes our corporate governance policies and practices and provides the structure that enables our Board to provide effective oversight and counsel for IDEXX.
Corporate Governance
| Visit the Corporate Governance section of our website (www.idexx.com) to learn more about, and access copies of, our corporate documents and corporate governance policies, including our: +Corporate Governance Guidelines +Code of Ethics +Certificate of Incorporation +Amended and Restated By-Laws +Board Committee Charters Hard copies of these documents are available on request by contacting our Executive Vice President, General Counsel and Corporate Secretary at IDEXX Laboratories, Inc., One IDEXX Drive, Westbrook, Maine 04092. Information on our website does not constitute part of this Proxy Statement. |
Corporate Governance
Notable Corporate Governance Highlights Our engaged and diverse Board has implemented and maintains strong corporate governance policies and practices, and it regularly reviews these policies and practices in light of the evolving landscape to identify and implement best practices for our Company that will enable us to fulfill our Purpose and support the creation of exceptional long-term value. We believe that our strong governance policies and practices summarized below and the Board’s effective stewardship have enabled us to achieve strong long-term financial performance relative to our peers and the S&P 500 Index.
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 35 |
Corporate Governance
| Board Independence | | +Independent Non-Executive Board Chair +Independent Board except for our CEO +Fully independent Audit, Compensation and Talent and Governance and Corporate Responsibility Committees +Executive sessions of independent Directors generally held at each regularly scheduled Board meeting |
Corporate Governance
| Board Effectiveness | | +Commitment to Board refreshment with 8 new independent Directors joining the Board since 2013 +Robust Director nominee selection process aligned with our long-term, strategic needs +Dedicated to actively seeking and including highly qualified, diverse Director candidates (including women and persons with racially or ethnically diverse backgrounds) in the pool of potential Director nominees +Rigorous annual self-assessments of the Board, its Committees, the independent Board Chair and each Director +Continuing education opportunities available for Directors on an ongoing basis +Director retirement at the next Annual Meeting after 75th birthday (increased from 73rd birthday consistent with current trends for S&P 500 companies and to support institutional knowledge and continuity), except as may be approved by the Board |
Corporate Governance
| Strategy, Risk Management and Succession Planning | | +Annual corporate strategy review by the Board +Risk management oversight by the Board and its Committees +Board and Audit Committee oversight of cybersecurity risk management +Board oversight of overall strategy and management of material environmental, social and governance risks and opportunities +Active Board participation in and oversight over CEO and executive officer succession planning |
Corporate Governance
| Further Best Practices | | +Majority vote standard in uncontested Director elections +Proxy access rights +No shareholder rights plan (poison pill) +Robust stock ownership and retention guidelines for Directors and senior executives +Prohibition of pledging, hedging and short sales of stock +Clawback policy that complies with and exceeds applicable Nasdaq and SEC requirements |
Corporate Governance
| 36 | IDEXX 2024 PROXY STATEMENT |
Corporate Governance
Board of Directors and Its Oversight of IDEXX Our Board currently has 11 members. The Board meets throughout the year on a set schedule, and it also holds special meetings and acts by written consent from time to time as appropriate. The Board has delegated various responsibilities and authority to its four standing Committees: the Audit Committee; the Compensation and Talent Committee; the Governance and Corporate Responsibility Committee; and the Finance Committee. For more information regarding the Board Committees, refer to the discussion under “Board Committees” beginning on page 48. The Board is responsible for monitoring the overall performance of IDEXX. Among other things, the Board, directly and through its Committees: +Oversees our long-term strategy for creating enduring growth and value creation; +Reviews and approves our key financial and other objectives, the annual budget and other significant actions and transactions; +Oversees our processes for maintaining the integrity of our financial statements and other public disclosures and our compliance with the law and high ethical standards; +Oversees the prudent management of risk, including cybersecurity risk management; +Reviews plans for CEO succession and management’s succession planning for other key executive officers; +Monitors shareholder engagement and communications; +Oversees our overall corporate responsibility strategy and management of material environmental, social and governance risks and opportunities; +Oversees our executive compensation program, policies and practices; and +Reviews the performance of the CEO, determines the CEO’s compensation and reviews and approves the CEO’s compensation recommendations for our other executive officers, making changes when deemed appropriate. In accordance with general corporate legal principles applicable to corporations organized under the laws of Delaware, the Board does not manage the day-to-day operations of IDEXX. Board Meetings and Attendance Directors are responsible for attending Board and Committee meetings and for devoting the time needed to discharge their responsibilities properly. The Board held seven meetings in 2023, and the Committees held a total of 24 meetings in 2023. Each of our Directors attended at least 75% of the meetings of the Board and each Committee on which they served in 2023. We schedule Board and Committee meetings to coincide with the Annual Meeting, and Directors are expected to attend the 2024 Annual Meeting. Last year, all of our Directors attended our 2023 Annual Meeting. Director Overboarding Policy To help ensure that Directors have sufficient time to fulfill their duties as a director, the Board has adopted an overboarding policy contained in our Corporate Governance Guidelines. The overboarding policy provides that, unless an exception has been granted by the Board upon recommendation of the Governance and Corporate Responsibility Committee: +Directors cannot serve on more than three other public company boards;
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 37 |
Corporate Governance
+Audit Committee members cannot serve on more than two other public company audit committees or, if an Audit Committee member is a retired certified public accountant, chief financial officer or controller, or is a retired executive with similar experience, then they cannot serve on more than three other public company audit committees; and +Directors who are CEOs of public companies cannot serve on more than two other public company boards (including the board of their employer). Directors are expected to inform the Board Chair, General Counsel and Chair of the Governance and Corporate Responsibility Committee of any public company directorship that they have been offered prior to accepting that directorship to ensure, among other things, that acceptance of the directorship would not result in a violation of the overboarding policy. The Governance and Corporate Responsibility Committee monitors compliance with the overboarding policy at least annually and as appropriate from time to time throughout the year. Each of our Directors is in compliance with the overboarding policy. New Director Orientation and Onboarding We have a robust new Director orientation and onboarding program, including committee orientation and onboarding as applicable, that enables new members of the Board to quickly become active and effective Board members and make contributions to the Board at the start of their service. Our orientation and onboarding includes individual meetings with members of the Board, senior management and external advisors, as well as facility tours and optional attendance at certain industry trade shows. The orientation and onboarding process is designed to provide new Directors with comprehensive information about, among other things, our business, strategy, capital structure, financial performance, industry landscape and risk oversight, as well as the policies, procedures and responsibilities of the Board and its committees. The orientation and onboarding program is based on the skills, experience and background of each new Director. The Governance and Corporate Responsibility Committee is responsible for overseeing the orientation program and our General Counsel and Corporate Secretary is responsible for administering the program and reporting to the Governance and Corporate Responsibility Committee regarding the status of the orientation process as to each new Director. Director Education To maintain and enhance the effectiveness of the Board, the Board supports the continuing education by each Director on an ongoing basis regarding director duties and responsibilities, including with respect to corporate governance; legal, regulatory and accounting developments; shareholder engagement; and other topics relevant to the oversight of our business. We reimburse Directors for reasonable expenses incurred in connection with continuing education, provide memberships and subscriptions to various relevant organizations and periodicals and regularly make information available to all Directors regarding external director education programs. The Board and Committees also regularly review developments in corporate governance to continue enhancing Board effectiveness. In addition, third-party experts and advisors, including financial, accounting and legal advisors, provide presentations to the Board and Committees from time to time on salient topics relevant to the oversight of our business. Director Independence Under our Corporate Governance Guidelines, at least a majority of our Directors must be “independent” as defined by Nasdaq rules. The Finance Committee’s charter requires that at least a majority of its members be independent, and each other Committee’s charter requires all of its members to be independent. Audit Committee and Compensation and Talent Committee members must satisfy additional independence criteria, as follows: +Under the Audit Committee charter, each Audit Committee member must also satisfy the independence criteria set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (Exchange Act); and
Corporate Governance
| 38 | IDEXX 2024 PROXY STATEMENT |
Corporate Governance
+Under the Compensation and Talent Committee charter, each Compensation and Talent Committee member must also satisfy the heightened independence standard described in Nasdaq Rule 5605(d)(2)(A) and qualify as a “non-employee director” pursuant to Rule 16b-3 under the Exchange Act. The Board, in consultation with the Governance and Corporate Responsibility Committee, determines the independence of each Director. In February 2024, the Board determined that: +Each of the Directors other than Mr. Mazelsky, our President and CEO, is independent under Nasdaq rules; +Each Audit Committee member also satisfies the independence criteria of Rule 10A-3(b)(1) under the Exchange Act; and +Each Compensation and Talent Committee member also satisfies the heightened independence criteria under Nasdaq rules and qualifies as a “non-employee director” pursuant to Rule 16b-3 under the Exchange Act. In determining Mr. Samad’s independence, the Board and Governance and Corporate Responsibility Committee each considered Mr. Samad’s position, since July 2022, as Executive Vice President and Chief Financial Officer of Quest Diagnostics Incorporated, which provides certain remote route freight services to IDEXX, which we refer to as the Quest Transactions. The Board and Governance and Corporate Responsibility Committee each considered several factors, including the following: +IDEXX’s relationship with Quest predates Mr. Samad joining the Board; +Mr. Samad did not participate in the negotiation of the terms of the transactions between IDEXX and Quest; +Quest’s services were provided on arm’s length terms and conditions and in the ordinary course of business; and +The services provided by Quest to IDEXX are routine and limited in scope (IDEXX paid Quest approximately $0.6 million in 2021, $1.0 million in 2022 and $1.0 million in 2023). Considering these and other factors, the Board and Governance and Corporate Responsibility Committee each concluded that the Quest Transactions would not affect Mr. Samad’s independence. In determining Mr. Ayers’s independence, the Board and Governance and Corporate Responsibility Committee each considered Mr. Ayers’s prior service as our Chief Executive Officer until June 28, 2019, our Executive Board Chair and employee until November 1, 2019 and his acceptance of compensation from the Company for services provided from November 2019 to July 2021 pursuant to a Senior Advisory Agreement. The Board and Governance and Corporate Responsibility Committee each considered several factors, including the following: +Mr. Ayers, as of the date of the independence determination, had not been employed by IDEXX at any time during the past three years; and +Other than compensation for service on the Board, Mr. Ayers had not accepted compensation from IDEXX in excess of $120,000 during any period of 12 consecutive months within the three years preceding the date of the independence determination. Considering these and other factors, the Board and Governance and Corporate Responsibility Committee each concluded that these transactions would not affect Mr. Ayers’s independence. Board Leadership Structure Mr. Kingsley currently leads our Board as our independent Non-Executive Board Chair. The Board believes one of its most important responsibilities is to determine the appropriate leadership structure for the Board at a given time that best enables it to provide effective, independent oversight of management and support long-term value creation for the Company and our stakeholders, considering the current, specific characteristics and circumstances of IDEXX at that time.
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 39 |
Corporate Governance
Accordingly, the Board does not have a predetermined policy as to whether or not the roles of the Board Chair and CEO should be combined or separate. Instead, the Board takes a flexible approach, enabling it to adapt its leadership structure to best meet the needs of the Board, IDEXX and our shareholders and other stakeholders as characteristics and circumstances of IDEXX change. Each year, the Board, through the Governance and Corporate Responsibility Committee, assesses the Board’s leadership structure, including whether the roles of Board Chair and CEO should be combined or separate and what leadership structure is appropriate given the specific characteristics and circumstances of IDEXX at that time. The Board will also, from time to time, assess Board Chair and CEO succession and transition planning considerations in determining the appropriate leadership structure of the Board. In February 2024, the Governance and Corporate Responsibility Committee, conducting its annual assessment, determined that separating the roles of Board Chair and CEO continues to best serve the current needs of the Board, IDEXX, our shareholders and other stakeholders and effectively allocates responsibility and oversight between management and the Board based on the current characteristics and circumstances of IDEXX. Independent Non-Executive Board Chair Our independent Non-Executive Board Chair has significant authority and responsibilities, including:
Corporate Governance
| Board Leadership and Board Committee Service | Presides over all Board meetings, executive sessions of independent and/or non-employee Directors and shareholder meetings. Provides leadership to the Board by maintaining regular communication with, and facilitating communications among, the Directors. Serves as a member of the Governance and Corporate Responsibility Committee and such other Committees as may be assigned. | | Advisor to CEO | Provides mentorship, support and advice to the CEO. Briefs the CEO on issues and concerns raised during executive sessions of independent and/or non-employee Directors. Serves as the principal liaison between the Board and the CEO. | | Agendas | Works with the CEO in preparing the agenda for each Board meeting and liaises with Directors concerning Board agendas and materials. | | Corporate Governance | Consults with and advises the CEO on matters relating to corporate governance and Board functions. | | Board Oversight of Strategy and CEO and Officer Succession Planning | Coordinates Board review of and input regarding the strategic plan and other significant corporate strategy decisions. Supports the Governance and Corporate Responsibility Committee’s oversight over succession planning for the CEO and other executive officers. | | Stakeholder Communication | Works with the General Counsel to monitor communications from shareholders and other stakeholders. |
Corporate Governance
| 40 | IDEXX 2024 PROXY STATEMENT |
Corporate Governance
Annual Board Self-Assessment Our Board believes that a rigorous annual review of its performance is essential to ensuring its effectiveness. To that end, each year, the Governance and Corporate Responsibility Committee determines the format and approach for, and conducts, an annual Board self-assessment. This self-assessment involves evaluating the performance of the Board, its Committees, the independent Board Chair and each Director and helps identify ways to enhance their effectiveness. The annual self-assessment process is conducted during the second half of each calendar year, and the following summarizes the overall process:
Corporate Governance
| 01 | Collection of Input | +Questionnaires distributed and individual interviews conducted with Directors and selected executive officers. | | 02 | Review of Input | +Results reviewed and shared with Non-Executive Board Chair and Committee-specific results reviewed and shared with each Committee Chair. | | 03 | Committee-Level Evaluation | +Governance and Corporate Responsibility Committee evaluates process, discusses results and determines proposed Board-level follow-up actions. +Committees discuss Committee-specific results and determine Committee-specific follow-up actions. | | 04 | Board-Level Evaluation | +Results and Committee-specific follow-up actions reported to Board. +Board discusses results and proposed Board-level follow-up actions and determines Board-level follow-up actions. | | 05 | Monitoring and Implementation | +Board and Committees monitor progress of any agreed upon actions. |
Corporate Governance
The information gathered through this process has informed Board and Committee meeting agenda topics, revisions to Committee charters and Corporate Governance Guidelines, enhancements to our continuing education program for our Directors and the Governance and Corporate Responsibility Committee’s active planning for Board succession and refreshment throughout the year.
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 41 |
Corporate Governance
Board’s Oversight of Our Strategy Management annually presents the Company’s long-term business and financial strategic plan to the Board for review, discussion and approval. The plan identifies and assesses the strengths, weaknesses, opportunities and threats to the continuing creation of enduring growth and long-term stakeholder value, and management’s presentation to the Board includes overviews of business and market trends, historical financial performance, assessments of opportunities for long-term growth and margin expansion and projected long-term financial performance. This annual corporate strategy review is accompanied by a presentation on the results of management’s annual enterprise risk assessment (including an analysis of strategic risks), as described below under “Board’s Role in Risk Management Oversight” beginning on page 43. The Board acts as a strategic partner in this process, offering insight and additional perspectives and challenging management’s plan as it deems appropriate. In addition to this annual corporate strategy review, the Board is involved in strategic planning and review throughout the year: +Management regularly presents information to the Board regarding IDEXX’s various business segments, their commercial markets and strategic priorities, as well as trends expected to pose significant risks or strategic opportunities for IDEXX. +The Board annually reviews and approves our key financial and other objectives and budget. +Management regularly presents its capital allocation and deployment plans to the Finance Committee and the Board for review and discussion, and the Board (or the appropriate Committee) approves specific significant actions and transactions to ensure that we deploy our capital to create long-term value for our shareholders and other stakeholders, including through capital and operating expenditures or strategic acquisitions that support future innovation or growth, as well as share repurchases that return cash to our shareholders.
Corporate Governance
| 42 | IDEXX 2024 PROXY STATEMENT |
Corporate Governance
Board’s Role in Risk Management Oversight Management is responsible for our enterprise risk assessment and risk management on a day-to-day basis. The Board oversees our risk management activities directly and through its Committees, including by discussing with management the policies and practices used in assessing and managing risks and providing input on those policies and practices. In general, the Board oversees risk management activities relating to business strategy, acquisitions, capital allocation and structure, cybersecurity, legal, compliance and regulatory risk and operational risks that are most relevant to our business. The Board also oversees our overall strategy and management of material environmental, social and governance risks and opportunities as described below under “Board’s Oversight of Corporate Responsibility and Environmental, Social and Governance Matters” on page 45.
Corporate Governance
| The Audit Committee oversees risk management activities relating to accounting, auditing, internal controls, information system controls, Code of Ethics compliance monitoring, cybersecurity and insurance and tax matters. | The Compensation and Talent Committee oversees risk management activities relating to the Company’s compensation policies and practices, organizational risk and human capital and talent matters. | The Governance and Corporate Responsibility Committee oversees risk management activities relating to Board composition, function and succession, other corporate governance matters, executive officer succession and corporate responsibility, environmental/sustainability and social matters. | The Finance Committee oversees risk management activities relating to capital allocation and structure, investment policy, hedging activities and financial instruments. | | Each Committee reports to the full Board on a regular basis, including with respect to its risk management oversight activities as appropriate. | | | |
Corporate Governance
We conduct an annual enterprise risk assessment as part of our annual strategic planning process. The risk assessment process involves identification and assessment by senior line-of-business and functional leaders of the particular risks relevant to their lines of business and functional areas (including legal, compliance and regulatory risks; cybersecurity risks; and environmental, social and governance-related risks and opportunities), the materiality of those risks, our risk tolerances and our plans to mitigate the risks to the extent prudent and feasible. The identified risks are ranked based on probability of occurrence and severity of impact and maturity of related controls. Management shares the result of this annual risk assessment with the full Board in conjunction with the Board’s annual review and discussion of the Company’s long-term business and financial strategic plan described earlier under “Board’s Oversight of Our Strategy” on page 42. As part of our 2023 enterprise risk assessment, management reviewed with the Board relevant risks related to generative AI and established a policy, governance framework and management steering committee to monitor, oversee and mitigate enterprise-level risk related to generative AI, including current and future operational, compliance and regulatory risks.
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 43 |
Corporate Governance
Management also reviews specific risk areas, such as cybersecurity risk, on a regular basis with the Audit Committee and Board. In addition, certain other risks and related mitigation plans are reviewed throughout the year either by the Board or its Committees as part of normal business discussions. The Audit Committee reviews links between the critical risk findings, management preparedness or plans to address those risks and the internal audit department’s tests of those plans. The Audit Committee seeks to ensure that our internal audit department can perform its function by reviewing the charter, plans, activities, staffing and organizational structure of the internal audit department, and approving the appointment, replacement, reassignment or dismissal of the Chief Audit Executive. The Chief Audit Executive reports directly to the Audit Committee (and administratively to the Chief Financial Officer), and the Audit Committee provides an open channel of communication between internal audit and the Board. The Audit Committee also meets independently with the Company’s internal auditors, independent auditors and management. Board’s Oversight of Cybersecurity Risk Management Like other companies, we currently inhabit an environment of increasing global cybersecurity vulnerabilities and threats. We aim to effectively assess, identify, and manage material risks from these cybersecurity threats through our cybersecurity risk management program. Our cybersecurity risk management program includes processes that incorporate and utilize certain principles from the National Institute of Standards and Technology Cybersecurity Framework, the COBIT 2019 Framework and the IT Infrastructure Library Framework. The program aims to protect and preserve the security, availability, integrity, confidentiality, and privacy of our information systems and information residing on those systems and includes controls and procedures for the prevention, identification, containment, and remediation of cybersecurity threats through the use of various technologies, tools, policies, standards and practices. For more information about the features of this program and management’s role, refer to the discussion under “Item 1C. Cybersecurity” in our Annual Report on Form 10-K filed with the SEC on February 22, 2024. In December 2023, our Board delegated responsibility for overseeing our cybersecurity risk management program to the Audit Committee. In accordance with the Audit Committee’s charter, the Audit Committee will throughout the year regularly review and discuss with management, including the Chief Information Officer (CIO) and Chief Information Security Officer (CISO), cybersecurity program assessments and audits, planned improvements and the status of any information security initiatives, as well as risks from cybersecurity threats pertinent to us and any previous cybersecurity incidents experienced by us, including any material impact or reasonably likely material impact on the Company, our business strategy, results of operations or financial condition. The Audit Committee will provide reports to the Board at each regularly scheduled Board meeting of the matters it has recently addressed, including relating to the oversight of our cybersecurity risk management, and the full Board may participate from time to time, as warranted, in the Audit Committee’s sessions on cybersecurity risk management. In addition, in accordance with the Audit Committee’s charter, the Audit Committee will at least annually review and discuss with management, including our CIO and CISO, our processes, policies, procedures, and protocols related to cybersecurity and information security, and it is anticipated that the full Board will participate in this annual review. Outside advisors also may meet from time to time with the Audit Committee or Board, as warranted, to review and discuss cybersecurity matters. Prior to December 2023, our entire Board oversaw cybersecurity risk management, and our CIO and CISO reviewed our cybersecurity risks and risk management program and activities with the Board at least annually. The Board also received additional updates on changes in our cybersecurity risks and related risk management program and activities from time to time throughout the year, as warranted. Management also shared, and will continue to share, the results of our annual enterprise risk assessment, which includes a review of cybersecurity risk, with our full Board.
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| 44 | IDEXX 2024 PROXY STATEMENT |
Corporate Governance
Board’s Oversight of Legal and Ethical Conduct The Audit Committee oversees our Code of Ethics compliance monitoring, and the full Board exercises oversight over our compliance program for legal and ethical conduct. The General Counsel regularly updates the Audit Committee of any ethical concerns raised through the IDEXX Ethics Hotline, which is hosted by an independent third party. The Hotline allows for both confidential and anonymous reporting, subject to local legal restrictions. The General Counsel also evaluates the treatment of potential or actual violations of our Code of Ethics in accordance with our applicable policies and procedures, and generates an annual benchmarking report, which the Audit Committee receives. The Audit Committee briefs the full Board on these matters. In addition, the General Counsel and Chief Compliance Officer annually provide the full Board with an update on our corporate compliance program, including our Code of Ethics and data privacy, anti-bribery and corruption, and trade sanctions compliance programs. Board’s Oversight of Corporate Responsibility and Environmental, Social and Governance Matters Our Head of Global Corporate Social Responsibility and Diversity is responsible for advancing our Corporate Responsibility strategy and works in collaboration with a cross-functional team, including Legal, Investor Relations, Finance, Operations, Supply Chain, Human Resources and business leaders. Members of this cross-functional team periodically engage with external stakeholders, including some of our shareholders, on IDEXX’s corporate responsibility and environmental, social and governance initiatives and disclosures. In addition, environmental, social and governance-related risks and opportunities are identified and assessed as part of management’s annual enterprise risk assessment process described earlier under “Board’s Role in Risk Management Oversight.” A senior management-level corporate responsibility steering committee composed of business and functional leaders provides strategic guidance to the cross-functional team and regularly reviews progress.
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 45 |
Corporate Governance
Our full Board oversees our overall strategy and management of material environmental, social and governance risk and opportunities, and our Board committees provide support as follows:
Corporate Governance
| Audit Committee Reviews controls and procedures for disclosures relating to environmental, social and governance matters. Reviews disclosures in Annual Reports on Form 10-K and other periodic reports. | Compensation and Talent Committee Oversees human capital and talent, such as: +Diversity, equity and inclusion; +Pay equity; +Employee engagement; +Talent recruitment, development and retention; and +Health and wellness. Reviews executive compensation and human capital disclosures in proxy statements and Annual Reports on Form 10-K. | Governance and Corporate Responsibility Committee Oversees environmental/ sustainability and social matters (other than human capital and talent), such as: +Climate change and environmental sustainability; +Supply chain and human rights; +Community and government relations; and +Charitable and political contributions. Reviews significant environmental, social and governance disclosures not addressed by other Committees. |
Corporate Governance
Our senior management regularly reviews our material environmental, social and governance activities and practices (including related disclosures) with the Board and the Committees, including as part of the Board’s review of the results of our annual enterprise risk assessment. Talent Management and Executive Succession Planning Executive succession planning and talent development are an integral part of our long-term strategy for sustained shareholder value creation. The Governance and Corporate Responsibility Committee is responsible for annually reviewing succession plans for the CEO and our other executive officers, and the Board is responsible for ensuring the existence of appropriate succession plans for these executive officers. The CEO is responsible for preparing an annual report to the Board regarding succession planning for himself, and as part of that annual report, our CEO provides his evaluations and recommendation of potential future candidates for the position of CEO, including possible timing. In addition, the Board, both directly and through the Governance and Corporate Responsibility Committee, reviews plans for identifying and developing potential future candidates for other senior leadership roles, and Board members interact with many of these candidates in formal and informal settings during the year.
Corporate Governance
| 46 | IDEXX 2024 PROXY STATEMENT |
Corporate Governance
Diversity, Equity and Inclusion We believe that diversity among our employees and senior management, including but not limited to gender, racial and ethnic and disability diversity, helps drive both innovation and a better understanding of our increasingly global and diverse customer base. We also believe that senior management with a variety of backgrounds, experiences, education, skills and business knowledge will contribute to our effectiveness and drive a strong culture of innovation. Throughout IDEXX, we are focused on ensuring representation of a wide range of backgrounds and experiences, including broad representation of diverse backgrounds in all levels of management. We actively seek out highly qualified, diverse candidates (including but not limited to women and persons from racially and/or ethnically diverse backgrounds) to include in each pool of potential senior management candidates, and we consider the value of diversity of all types when evaluating candidates and assessing senior-level management. We have a global diversity, equity and inclusion (DEI) strategy and roadmap, and the Compensation and Talent Committee periodically reviews our DEI strategy and progress. We have made good progress against our DEI priorities in 2023, and highlights include: +Increased the percentage of women in senior leadership — employees in compensation grades considered to be director or above — to 37% as of December 31, 2023; +Continued to maintain gender-balanced people leadership with women holding 49% of people leadership roles; +Increased the proportion of employees in U.S. management who voluntarily self-identify as belonging to underrepresented groups by approximately two percentage points; and +Met our goal of matching each Employee Resource Group with an executive sponsor. We also aim to advance DEI at IDEXX through our strengthened DEI learning practices by offering training for leaders and all employees to learn about DEI and supporting programs focused on building a strong culture of inclusion.
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 47 |
Corporate Governance
Board Committees The Board has established four standing committees — an Audit Committee, a Compensation and Talent Committee, a Governance and Corporate Responsibility Committee and a Finance Committee — each of which is described briefly below. The Audit, Compensation and Talent and Governance and Corporate Responsibility Committees are composed entirely of independent Directors as determined under Nasdaq rules. Each Committee acts pursuant to a written charter that is approved by the Board and reviewed annually by the applicable Committee, the Governance and Corporate Responsibility Committee and the Board. Current copies of each Committee’s charter can be accessed on the Corporate Governance section of our website (www.idexx.com) or by contacting our Corporate Secretary at the Company’s principal executive offices. Members of the Committees, as of March 27, 2024, are named below:
Corporate Governance
| Board Member | Audit | Compensation & Talent | Governance & Corporate Responsibility | Finance | | Jonathan W. Ayers | | | | l | | Irene Chang Britt(1) | l | l | | | | Bruce L. Claflin(1) | l | | + | | | Asha S. Collins, PhD | | | l | l | | Stuart M. Essig, PhD | | | l | + | | Daniel M. Junius(1) | + | | | l | | Lawrence D. Kingsley(2) | | l | l | | | Jonathan J. Mazelsky | | | | | | Sam Samad(1) | l | l | | | | M. Anne Szostak(1) | l | + | | | | Sophie V. Vandebroek, PhD | | | l | l |
Corporate Governance
| + | Chair | l | Member |
Corporate Governance
1.Audit Committee Financial Expert as defined under SEC rules 2.Independent Non-Executive Board Chair
Corporate Governance
| 48 | IDEXX 2024 PROXY STATEMENT |
Corporate Governance
| Audit Committee Members +Mr. Junius (Chair) +Ms. Chang Britt +Mr. Claflin +Mr. Samad +Ms. Szostak Meetings held in 2023: 9 | Key Committee Responsibilities The Audit Committee oversees: accounting; internal control over financial reporting; information system controls relating to our financial reporting process; our compliance and audit processes, including the selection, retention and oversight of our independent auditors; and our cybersecurity program. The Audit Committee also reviews and approves all related person transactions, receives and reviews management reports relating to the treatment of potential or actual violations of our Code of Ethics in accordance with our applicable policies and procedures and prepares the Audit Committee Report required to be included in our annual proxy statement. The Audit Committee also periodically reviews our environmental, social and governance disclosure controls and procedures. The Audit Committee meets from time to time with our financial personnel, other members of management, internal audit staff and independent auditors regarding these matters. The Audit Committee has established policies and procedures for the pre-approval of all services provided by the independent auditors, which are described beginning on page 68. The Audit Committee has also adopted procedures for the receipt, retention and treatment of complaints received by IDEXX regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of any concerns regarding questionable accounting or auditing matters. The Audit Committee Report is included beginning on page 66. |
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 49 |
Corporate Governance
| Compensation and Talent Committee Members +Ms. Szostak (Chair) +Ms. Chang Britt +Mr. Kingsley +Mr. Samad Meetings held in 2023: 5 | Key Committee Responsibilities The Compensation and Talent Committee: oversees our executive compensation philosophy and practices; evaluates the performance of our CEO; and determines the compensation of our CEO and approves the compensation of other executive officers. The Compensation and Talent Committee also: has primary responsibility to oversee the administration of our incentive compensation plans for executive officers and equity compensation plans; reviews and approves stock ownership and retention guidelines applicable to our Directors and senior executives and reviews compliance with those guidelines; reviews and makes recommendations to the Board regarding adoption of and changes to compensation-related policies applicable to executive officers, including our amended and restated clawback policy; and reviews and makes recommendations to the Board regarding the compensation of non-employee Directors. In addition, the Compensation and Talent Committee: oversees our key human capital and talent strategies and policies and management of material human capital and talent risks and opportunities, including those relating to diversity, equity and inclusion, employee engagement, talent recruitment, development and retention, and health and wellness; monitors and analyzes risks associated with our compensation policies and practices; reviews the Compensation Discussion and Analysis and prepares the Compensation and Talent Committee Report required to be included in our annual proxy statement; and may make or recommend changes to our executive compensation program and practices that it deems appropriate based on the results of the shareholder vote on the “say-on-pay” proposal set forth in our annual proxy statement. The Compensation and Talent Committee charter does not provide for any delegation of these duties except to a sub-committee or individual members of the Committee as the Compensation and Talent Committee may determine. The Compensation and Talent Committee Report is included on page 96. |
Corporate Governance
| 50 | IDEXX 2024 PROXY STATEMENT |
Corporate Governance
| Governance and Corporate Responsibility Committee Members +Mr. Claflin (Chair) +Dr. Collins +Dr. Essig +Mr. Kingsley +Dr. Vandebroek Meetings held in 2023: 6 | Key Committee Responsibilities The Governance and Corporate Responsibility Committee advises and makes recommendations to the Board with respect to corporate governance matters, including: Board composition, organization, function, membership and performance; Board committee structure and membership; our Corporate Governance Guidelines; succession planning for the Board Chair; succession planning for the Chief Executive Officer and other executive officers; matters of significance to shareholders and other stakeholders relating to corporate governance, corporate responsibility and environmental/sustainability and social matters; and shareholder proposals. The Governance and Corporate Responsibility Committee also: advises and makes recommendations to the Board on matters relating to Board oversight of the management of corporate responsibility, environmental/sustainability and social risks and opportunities; periodically reviews key strategies and policies relating to environmental/sustainability and social matters (other than human capital and talent matters); and periodically reviews our significant environmental, social and governance disclosures not addressed by another Committee. The Governance and Corporate Responsibility Committee also identifies, evaluates, recruits and makes recommendations to the Board regarding candidates to fill vacancies on the Board as described beginning on page 32. The Governance and Corporate Responsibility Committee annually reviews the performance of the Board, its Committees, the independent Board Chair and each of the Directors, as described under “Annual Board Self-Assessment” on page 41. The Governance and Corporate Responsibility Committee is also responsible for annually reviewing with the Board the requisite skills and criteria for new Board members, as well as the composition of the Board as a whole, and annually assessing, for each Director or person nominated to become a Director, the specific experience, qualifications, attributes and skills, including those described on page 33, that lead the Governance and Corporate Responsibility Committee to conclude that such Director or nominee should serve as a Director in light of our business and structure. The Governance and Corporate Responsibility Committee also annually reviews, evaluates and makes reports and recommendations to the Board regarding, as appropriate, succession plans for our CEO and other executive officers. |
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 51 |
Corporate Governance
| Finance Committee Members +Dr. Essig (Chair) +Mr. Ayers +Dr. Collins +Mr. Junius +Dr. Vandebroek Meetings held in 2023: 4 | Key Committee Responsibilities The Finance Committee advises the Board with respect to financial matters and capital allocation, including capital structure and strategies, financing strategies, investment policies and practices, major financial commitments, financial risk management, acquisitions and divestitures, stock repurchase strategies and activities and dividend policy. The Finance Committee also, among other things: monitors our liquidity and financial condition; oversees our financial risk management activities (including hedging activities and transactions involving derivatives); reviews and approves any proposed acquisition or divestiture having an aggregate value greater than $50 million but less than or equal to $100 million (or in its discretion refer to the Board); makes recommendations to the Board regarding any other proposed acquisition or divestiture having an aggregate value greater than $100 million; and reviews and approves a variance in capital expenditures that in the aggregate exceeds 10% of the total budgeted amount in the applicable annual budget approved by the Board or the Finance Committee. |
Corporate Governance
Compensation and Talent Committee Interlocks and Insider Participation Ms. Szostak (Chair), Ms. Chang Britt, Mr. Kingsley and Mr. Samad served on the Compensation and Talent Committee during 2023. There were no Compensation and Talent Committee interlocks or insider (employee) participation during 2023. Related Person Transactions Our Board has adopted a written Related Person Transaction Policy under which the Audit Committee must review and approve any transaction involving more than $120,000 in which the Company is a participant and in which any related person has or will have a direct or indirect material interest. The Audit Committee may approve any such transaction only if it determines that, under all of the applicable circumstances, the transaction is not inconsistent with the best interests of the Company. A related person under this policy is: +Any executive officer; +A Director, or nominee for Director; +A holder of 5% or more of our common stock; or +An immediate family member of any of those persons.
Corporate Governance
| 52 | IDEXX 2024 PROXY STATEMENT |
Corporate Governance
The policy provides that a “direct or indirect material interest” does not arise solely from the related person’s position as a director of another entity that is a party to the transaction, the direct or indirect ownership by the related person and all other related persons in the aggregate of less than a 10% equity interest (other than a general partnership interest) in another entity which is a party to the transaction, both the position and ownership level described above or the related person’s position as an executive officer of another entity involved in a transaction with the Company, where, in the case the related person is an executive officer as described above: +The related person and all other related persons own in the aggregate less than a 10% equity interest in such entity; +The related person and their immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction; +The amount involved in the transaction equals less than the greater of $200,000 or 5% of the annual gross revenue of the other entity involved in the transaction; and +The amount involved in the transaction equals less than 2% of the consolidated gross revenues of the Company for its most recent fiscal year. Since January 1, 2023, there has been one related person transaction requiring review and approval by the Audit Committee under the Related Person Transaction Policy: the employment of an adult son of Mr. James F. Polewaczyk, our Executive Vice President and Chief Commercial Officer. Since the beginning of 2023, Mr. Polewaczyk’s adult son received salary, cash bonus payments and 401(k) employer matching contributions of approximately $130,000 and participated in employee benefit plans and programs generally made available to employees of similar responsibility levels. His compensation is commensurate with peers’ compensation and established in accordance with the Company’s compensation practices applicable to employees with equivalent qualifications, experience and responsibilities. His past and current positions sit within functions outside of the direct or indirect purview of Mr. Polewaczyk and Mr. Polewaczyk has not exerted and does not exert any influence or control over the hiring, retention, career or compensation decisions regarding his adult son. Corporate Governance Guidelines and Code of Ethics The Board has adopted Corporate Governance Guidelines and a Code of Ethics, both of which are accessible on the Corporate Governance section of our website (www.idexx.com). Hard copies are available on request by contacting our Executive Vice President, General Counsel and Corporate Secretary at IDEXX Laboratories, Inc., One IDEXX Drive, Westbrook, Maine 04092. Our Code of Ethics applies to all our employees, officers and Directors. In addition, we intend to post on our website all disclosures required by law or Nasdaq listing standards concerning any amendments to, or waivers from, any provision of the Code of Ethics. Anti-Hedging and Short Sale and Anti-Pledging Policies Our Policy on Short Sales, Derivative Transactions and Hedging generally prohibits any Director, officer or employee, or any of their family members or affiliates, from engaging in (i) any short sales of IDEXX securities, (ii) purchases or sales of puts, calls or other derivative securities based upon IDEXX securities, or (iii) purchases of financial instruments that are designed to hedge or offset any decrease in the market value of IDEXX securities. Our Policy on Pledging of Company Stock prohibits our Directors and executive officers from pledging, hypothecating or otherwise encumbering the equity securities they own in IDEXX as collateral for indebtedness, including holding shares in a margin or similar account that would subject our equity securities to margin calls or otherwise making them available as collateral for a margin loan.
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 53 |
Corporate Governance
Shareholder Communication and Engagement We believe transparent communication and engagement with our shareholders is critical for our continued success. It enables us to convey our strategy for long-term value creation and sustainable financial performance and to understand and actively listen to our shareholders’ perspectives and concerns. We contact, meet and engage with our shareholders on a year-round basis in connection with our quarterly reporting of financial results, industry and investment conferences, our Annual Meeting, our Investor Day and the release of our Corporate Responsibility Report, as well as from time to time on discrete topics of interest to shareholders. In 2023, we engaged and interacted with a meaningful portion of our institutional investor base. As part of our engagement efforts, our senior management met with representatives of many of our top institutional shareholders at industry and investment community conferences and analyst meetings, as well as at engagement meetings arranged by us outside of such forums. We also held our annual 2023 Investor Day at our corporate headquarters in Westbrook, Maine in August 2023, with a live webcast available. To further advance our engagement with shareholders on corporate responsibility matters, we also contacted and met with many of our top institutional shareholders specifically in connection with the July 2023 release of our 2022 Corporate Responsibility Report to communicate and reinforce the key themes of the report while also seeking feedback regarding our corporate responsibility goals, progress toward those goals and our overall approach to corporate responsibility. Topics discussed during our 2023 engagement meetings included, among other things: +Our business strategy, long-term financial potential model and financial performance; +Customer and industry trends; +Investment in R&D, commercial resources and innovation; +Capital allocation and deployment; +Executive compensation, human capital and social matters; +Corporate governance; and +Environmental and sustainability issues. Management shares with the Board the feedback provided by our shareholders. We provide several additional ways for our shareholders and other interested parties to communicate with us. Written communications to any individual Director, the Board Chair or the full Board may be submitted by electronic mail to contactdirectors@idexx.com, by completing the online “Contact the Board” submission form available on our website at www.idexx.com/corporate/corporate-governance.html or by writing to the Office of the Corporate Secretary at One IDEXX Drive, Westbrook, Maine 04092. Written communications addressed to any individual Director are forwarded to that Director. In addition, our Executive Vice President, General Counsel and Corporate Secretary or her delegate reviews all written communications addressed to any individual Director, the Board Chair or the Board. The Corporate Secretary will forward all such written communications to the Board Chair (if the Board Chair is an independent Director) or the Chair of the Governance and Corporate Responsibility Committee, as applicable, for review, except for items that could not reasonably be interpreted to implicate or otherwise relate to the duties and responsibilities of the Board.
Corporate Governance
| 54 | IDEXX 2024 PROXY STATEMENT |
Corporate Governance
Virtual Shareholder Meeting We will conduct our 2024 Annual Meeting virtually through a live audio webcast, with related online shareholder tools available. We are implementing the virtual meeting format for our 2024 Annual Meeting to enable full and equal participation by all our shareholders from any location in the world at little to no cost. We believe this is the right choice for IDEXX because: +We are a global company with shareholders all around the world; +The virtual meeting format is cost-effective and convenient for our shareholders, as well as the Company, and enables IDEXX to reduce the environmental impact of our 2024 Annual Meeting; and +Given the latest technology for holding virtual meetings and related online tools, we believe that the virtual meeting format will enhance shareholder access and participation in our 2024 Annual Meeting. We designed the format of our 2024 Annual Meeting to ensure shareholders who attend our 2024 Annual Meeting have the same rights and opportunities to participate as they would at an in-person meeting and to enhance shareholder access, participation and communication through online tools. For example, the format of our 2024 Annual Meeting will include the following: +An online pre-meeting forum will be available to our shareholders at www.proxyvote.com. By accessing this online pre-meeting forum, our shareholders will be able to submit questions in writing in advance of our 2024 Annual Meeting, vote, view the 2024 Annual Meeting’s Rules of Conduct and Procedures and obtain copies of proxy materials and our annual report. +By following instructions on the online pre-meeting forum or at www.virtualshareholdermeeting.com/IDXX2024, shareholders will have the ability to use their telephones to dial into a live audio webcast of the meeting and verbally ask questions during the meeting. In addition, shareholders accessing the audio webcast online will be able to submit questions in writing during the meeting. As part of the 2024 Annual Meeting, we will hold a live Q&A session, during which we will answer questions as they come in and address those asked in advance, as time permits. Please note, however, that the purpose of the meeting will be observed, and we will not address questions determined to be irrelevant or inappropriate. +We will publish the answer to each question received following the 2024 Annual Meeting, including those not addressed during the meeting due to insufficient time, except for those questions determined to be irrelevant or inappropriate. +Although the live audio webcast will be available only to shareholders at the time of the meeting, a replay of the meeting will be made publicly available at www.virtualshareholdermeeting.com/IDXX2024 after the meeting.
Corporate Governance
| IDEXX 2024 PROXY STATEMENT | 55 |
Corporate Governance
Non-Employee Director Compensation Our non-employee Director compensation program is designed to attract and retain qualified Directors, fairly compensate them and align their interests with our shareholders’ interests. The Compensation and Talent Committee reviews and makes recommendations regarding the form and amount of non-employee Director compensation, for discussion and approval by the Board. In 2023, Farient Advisors LLC (Farient), the Compensation and Talent Committee’s independent compensation consultant, provided director compensation program analysis, market data and advice to the Compensation and Talent Committee. Annual Non-Employee Director Compensation Our non-employee Directors receive annual compensation for their Board service as described in the chart below:
Corporate Governance
| Compensation Element | Non-Employee Director Compensation Program | | Cash compensation(1) | | | Annual retainer | $90,000(2) | | Committee Chair retainer | $30,000 for the Audit Committee(2) | | | $25,000 for the Compensation and Talent Committee | | | $25,000 for the Governance & Corporate Responsibility Committee | | | $15,000 for the Finance Committee | | Other Audit Committee member retainer(3) | $7,500 | | Lead Director retainer (as applicable) | $25,000 | | Non-Executive Board Chair retainer (as applicable) | $80,000 | | Meeting fees | Not applicable; no fees are paid for meeting attendance | | Equity compensation(4) | | | Full-value awards(5) | $125,000 in target value(6) | | Non-qualified stock options | $125,000 in value(7) | | Total | $250,000(2) | | Additional equity compensation for Non-Executive Board Chair(8) | | | Full-value awards(5) | $40,000 in target value(6) | | Non-qualified stock options | $40,000 in value(7) | | Total | $80,000 | | Director stock ownership guidelines(9) | Target ownership of our common stock (including vested deferred stock units credited to a Director’s investment account) equal to six times the Annual Retainer |
Corporate Governance
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Option Awards(2) ($) | All other Compensation ($) | Total Compensation ($) | | Jonathan W. Ayers | 85,000 | 125,190 | 124,971 | — | 335,161 | | Irene Chang Britt | 46,101(3) | 106,348(4) | 106,444(4) | — | 258,893 | | Bruce L. Claflin | 117,500 | 125,190 | 124,971 | — | 367,661 | | Asha S. Collins, PhD | 85,000 | 125,190 | 124,971 | — | 335,161 | | Stuart M. Essig, PhD | 100,000 | 125,190 | 124,971 | — | 350,161 | | Daniel M. Junius | 112,500(5) | 125,190 | 124,971 | — | 362,661 | | Lawrence D. Kingsley | 165,000 | 165,134 | 164,885 | — | 495,019 | | Sam Samad | 92,500 | 125,190 | 124,971 | — | 342,661 | | M. Anne Szostak | 117,500 | 125,190 | 124,971 | — | 367,661 | | Sophie V. Vandebroek, PhD | 85,000 | 125,190 | 124,971 | — | 335,161 |
Executive Compensation
| | Page | | Executive Summary | 75 | | Key Compensation Practices and Policies | 80 | | How We Determine Compensation | 82 | | Compensation Benchmarking and Peer Group | 84 | | How We Paid Our NEOs in 2023 | 86 | | How We Manage Risk and Governance | 94 |
Executive Compensation
| Base Salary | Annual Performance-Based Cash Bonus | Equity-Based Long-Term Incentive Compensation | | | At Risk | |
Executive Compensation
+Base Salary To provide a fixed amount of compensation that is positioned in a competitive range for similar positions, and takes into account the individual skills, abilities and performance of each of our executives, which supports our compensation philosophy of attracting and retaining talented individuals. +Annual Performance-Based Cash Bonus To motivate senior executives to achieve our annual goals for financial performance, as well as achieve key annual goals that strengthen the business and position us for longer-term performance. Target bonus percentages are positioned in a competitive range for similar positions and capped at 200% of target. +Equity-Based Long-Term Incentive Compensation To motivate long-term performance and align the interests of management and shareholders, which supports our compensation philosophy of rewarding long-term performance and sustained shareholder value creation in a way that attracts and retains talented senior executives. In general, long-term incentive opportunities are structured so that, when combined with salary and target bonus opportunity, total target direct compensation is positioned in a competitive range. 2024 Changes to the Equity-Based Long-Term Incentive Compensation Element In connection with the Compensation and Talent Committee’s review of the executive compensation program for 2024, it decided to modify the equity-based long-term incentive compensation component by introducing PSUs. In 2024, senior executives, other than our CEO, will receive 50% of their annual equity award value in the form of stock options, 25% in the form of PSUs and 25% in the form of time-based RSUs, which compares to our historical practice of an equity-based long-term incentive mix for our NEOs generally consisting of 75% stock options and 25% RSUs. The value of our CEO’s annual equity award package in 2024 will be divided equally between PSUs and stock options. The 2024 PSU awards are subject to a three-year performance period and the target payout is based on two equally weighted financial metrics: (i) our average annual organic revenue growth for 2024-2026 and (ii) our average annual comparable operating profit growth for 2024-2026, with a payout maximum of 200% of target. Following the end of the three-year performance period, the Compensation and Talent Committee will determine the payout ratio, and the earned shares underlying the PSU awards will vest on the later of the third anniversary of the grant date or the date of such determination, generally subject to the senior executive’s continued employment through the vesting date. The Compensation and Talent Committee decided to introduce PSU awards to further reinforce our senior executives’ focus on long-term performance goals tied to our growth strategy, additionally strengthen the direct alignment between the interests of our senior executives and shareholders and further support our long-held compensation philosophy of pay for performance.
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
1-, 3- and 5-Year Compound Annual Total Shareholder Return %* * Based on total return to shareholders, assuming dividend reinvestment for those companies issuing dividends. All periods ended December 31, 2023. ** Average of the compensation peer group identified under “Compensation Benchmarking and Peer Group” beginning on page 84 and excludes IDEXX.
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
| | | Annual Performance-Based Cash Bonus | | | Equity-Based Long-Term Incentives | | | | Base Pay(1) ($) | Target Bonus (% of Base Pay) | Target Bonus ($) | Actual Bonus ($) | Grant Value(2) ($) | Total Direct Compensation ($) | | Jonathan J. Mazelsky | 1,000,000 | 125% | 1,250,000 | 1,737,500 | 8,750,000 | 11,487,500 | | Brian P. McKeon | 673,000 | 75% | 504,750 | 701,603 | 2,450,000 | 3,824,603 | | Tina Hunt, PhD(3) | 562,500 | 75% | 421,875 | 586,406 | 2,400,000 | 3,548,906 | | Michael J. Lane | 562,500 | 75% | 421,875 | 586,406 | 1,750,000 | 2,898,906 | | James F. Polewaczyk(4) | 562,500 | 75% | 421,875 | 586,406 | 1,750,000 | 2,898,906 |
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
1. Reflects annual base pay approved by the Compensation and Talent Committee in February 2023 and effective in March 2023. 2. Reflects the aggregate grant value (expressed in dollars) approved by the Compensation and Talent Committee, which differs slightly from the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 that results from the conversion of the approved grant value into shares and rounding the resulting number of shares underlying an award to the nearest whole number to avoid the issuance of fractional shares. Refer to Note 5 to our consolidated financial statements included in our 2023 Annual Report on Form 10-K for the relevant assumptions used to determine the grant date fair value of our stock awards and stock options. 3. Dr. Hunt’s $2.4 million grant value includes a one-time equity award granted to Dr. Hunt in 2023 in the form of RSUs which vest on February 14, 2026 and had a grant date value of $750,000. This special, one-time award was made to Dr. Hunt in recognition of her expanded job responsibilities encompassing corporate strategy, marketing and sector development. 4. Mr. Polewaczyk will be retiring effective April 1, 2024. For greater detail regarding the compensation determinations made by the Compensation and Talent Committee with respect to our NEOs, refer to the discussion under “How We Paid Our NEOs in 2023” beginning on page 86.
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
| What We Don’t Do | | | X | No uncapped payouts under our Executive Incentive Plan |
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
| What We Do | | | ü | Require a one-year minimum vesting period for equity awards granted to employees | | ü | Set minimum fair market value exercise price for options | | ü | Align executive officers’ interests with shareholder interests and support executive officer retention by providing a significant percentage of total target direct compensation in the form of long-term equity incentive awards |
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
| What We Don’t Do | | | X | No dividends or the equivalents on equity awards until the award vests | | X | No backdating, “spring-loading” or “bullet-dodging” of options, and no repricing or buyout of underwater stock options without shareholder approval |
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
| What We Do | | | ü | Review our peer group annually and engage in rigorous, annual benchmarking to align our executive compensation program with the market | | ü | Assess annually the independence of the Compensation and Talent Committee’s compensation consultant and the absence of any conflicts of interest | | ü | Conduct an annual compensation program risk assessment | | ü | Provide limited benefits and perquisites to our executive officers that are not otherwise made available to our other salaried employees | | ü | Require our senior executives to satisfy robust stock ownership guidelines to strengthen the alignment with our shareholders’ interests | | ü | Maintain a clawback policy that complies with and exceeds Nasdaq listing standards and generally requires us (or, in certain instances, provides discretion to the Board) to recover erroneously awarded incentive-based compensation from our executive officers if we are required to restate our financial results due to material noncompliance with any financial reporting requirement under federal securities laws | | ü | Hold an advisory vote on executive compensation on an annual basis to provide our shareholders with an opportunity to give feedback on our executive compensation program | | ü | Cap annual performance-based cash bonuses at 200% of target |
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
| What We Don’t Do | | | X | No employment contracts with our NEOs, other than with our CEO | | X | No tax gross-ups (except standard tax equalization measures for expatriates, relocation costs and de minimis amounts for spousal and partner travel expenses to our annual President’s Club events) | | X | No supplemental executive retirement plan | | X | No single-trigger change-in-control bonus payments or vesting of equity awards (except for 25% vesting of equity awards upon a change-in-control) | | X | No stock options granted below fair market value | | X | No hedging, pledging or selling short our common stock by executive officers or Directors |
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
| Base Salary | Annual Performance-Based Cash Bonus | Equity-Based Long-Term Incentive Compensation (LTI) | | | | 9% | 11% | 80% | | | | | | Stock Options | RSUs | Premium-Priced Stock Options | | | | 50% of LTI | 25% of LTI | 25% of LTI | | | 91% at Risk | | | |
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
| Base Salary | Annual Performance-Based Cash Bonus | Equity-Based Long-Term Incentive Compensation (LTI) | | | 19% | 14% | 67% | | | | | Stock Options | RSUs | | | | 68% of LTI* | 32% of LTI* | | | 81% at Risk | | | | *Excluding the one-time special RSU award to Dr. Hunt, stock option awards would have represented 75% of LTI and RSU awards would have represented 25% of LTI for our other NEOs. | | | |
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
| Responsible Party | Primary Role and Responsibilities Relating to Compensation Decisions | | Compensation and Talent Committee (Composed solely of independent, non-employee Directors and reports to the Board) | +Oversees our executive compensation program, policies and practices, taking into account business goals and strategies, legal and regulatory developments and evolving best practices; +Establishes performance goals for purposes of compensation decisions for our NEOs; +Conducts an annual evaluation of the CEO’s performance in consultation with the full Board and determines his compensation; +Reviews and approves the CEO’s recommendations for compensation for the other NEOs and executive officers, making changes when deemed appropriate; +Approves all changes to the composition of the peer group; and +Reviews and makes recommendations to the full Board with respect to Director compensation. | | Independent Consultant to the Compensation and Talent Committee* | +Provides the Compensation and Talent Committee with analysis and advice pertaining to CEO, executive officer and Director compensation program design, including industry survey analysis, explanation of current and developing best practices and regulatory changes; +Recommends a relevant group of peer companies against which to benchmark the competitiveness and appropriateness of our CEO, executive officer and Director compensation; +Analyzes peer companies’ CEO and executive compensation annually, and Director compensation no less frequently than every two years, to assist the Compensation and Talent Committee in determining the appropriateness and competitiveness of our CEO, executive officer and Director compensation; +Reviews any proposed changes to CEO, executive officer and Director compensation program design; +Reviews compensation disclosure materials; +Analyzes our compensation practices to assist the Compensation and Talent Committee in determining whether risks arising from such practices are reasonably likely to have a material adverse effect on IDEXX; and +Provides specific analysis and advice periodically as requested by the Compensation and Talent Committee. | | Senior Management | +Our CEO recommends to the Compensation and Talent Committee annual compensation for the other NEOs and senior executives reporting directly to the CEO based on his assessment of their performance; +Our CEO, Executive Vice President, General Counsel and Corporate Secretary and our Executive Vice President and Chief Human Resources Officer work with the Compensation and Talent Committee Chair and our independent compensation consultant to set agendas, prepare materials for Compensation and Talent Committee meetings, attend meetings as appropriate and prepare meeting minutes; +Our Executive Vice President, General Counsel and Corporate Secretary, with the assistance of internal and external legal counsel, provides the Compensation and Talent Committee with legal advice and support on executive compensation and related matters from time to time; and +Our Chief Financial Officer also works with our Executive Vice President and Chief Human Resources Officer in the preparation of some materials for Compensation and Talent Committee meetings. No member of management is present in Compensation and Talent Committee meetings when matters related to their individual compensation are under discussion or when the Compensation and Talent Committee otherwise meets in executive session. |
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
Results of the 2023 “Say-on-Pay” Advisory Vote At our 2023 Annual Meeting, our shareholders casting votes on the proposal voted approximately 95% (represented by 65,447,348 votes) in favor of approving the compensation of our NEOs. Although the results of this vote are non-binding, the Compensation and Talent Committee considered these results in determining compensation policies and decisions and concluded that the compensation paid to our NEOs and our overall pay practices are strongly supported by our shareholders. We regularly engage shareholders on a year-round basis to convey our strategy and actively listen to their perspectives and concerns, including regarding our executive compensation program. For more information about our shareholder engagement efforts refer to the discussion under “Shareholder Communication and Engagement” on page 54. The chart below illustrates the results of our last three annual shareholder votes regarding the compensation of our NEOs: Compensation Benchmarking and Peer Group The Compensation and Talent Committee believes that market data, including compensation data from a peer group of comparable companies, is essential to determining compensation targets and actual awards that attract and retain highly talented executive officers. The Compensation and Talent Committee uses market data to assess the competitiveness of our compensation packages relative to similar companies and to ensure that our compensation program is consistent with our compensation philosophy. Annually (and more frequently, where appropriate), the Compensation and Talent Committee engages its independent compensation consultant to conduct a market benchmarking study for our executive officers, including our CEO and our other NEOs. The Compensation and Talent Committee’s objective is to provide executive officers with total target direct compensation that is generally within a competitive market range, unless the circumstances warrant a different determination (e.g., prior experience, sustained high performance). Our executive compensation program is benchmarked against a peer group of healthcare equipment and supplies, veterinary medicine and life sciences tools and services companies selected by our Compensation and Talent Committee. The Compensation and Talent Committee, with input from our independent compensation consultant, reassesses our peer group composition annually to identify appropriate changes needed to ensure that the peer group continues to provide an appropriate benchmark for competitive pay analysis. All changes recommended by our independent compensation consultant are subject to the review and approval of the Compensation and Talent Committee.
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
We view the peer group selection process as a critical aspect of our executive compensation program because benchmarking our pay practices against our market peers provides us with key information relevant to the attraction and retention of talent. The composition of our peer group is based upon a number of criteria, including the following:
1-, 3- and 5-Year Compound Annual Total Shareholder Return %*
| Industry and Business Characteristics | Our peer companies are publicly-traded U.S. companies that operate in similar industries and, to the extent possible, have similar cost structures, business models and global reach. Generally speaking, we look to companies that fall within our industry classification, based on the Global Industry Classification Standard (GICS), and specifically companies that qualify as Healthcare Equipment and Supplies, Healthcare Providers and Services, Biotechnology, Healthcare Technology and Life Sciences Tools & Services companies under GICS.(1) | | Size | Based on the strong correlation between compensation opportunity levels and company size, we look for comparably sized companies as measured by metrics such as revenue, net income, market capitalization and number of employees. | | Competition for Executive Talent | In selecting our peer group, we seek to identify companies with which we compete with respect to attracting or retaining executive talent. | | Competition for Investor Capital | Because compensation expense is a factor in financial performance and resulting margins, it is important to consider companies that shareholders may consider as alternative investment opportunities. | | Statistical Reliability | We believe that, to provide a number of data points that will yield statistically meaningful benchmarking opportunities, our peer group should be composed of at least twelve companies, with a target group of between fifteen and twenty. | | Additional Factors | In addition to the foregoing, we consider certain other refining characteristics when selecting peers, including our ISS and Glass Lewis peer companies and companies that identify IDEXX as a peer for compensation purposes. | | Overall Reasonableness | While individual peer companies may satisfy some but not all of the relevant criteria, we view the group as a whole and determine whether, in totality, the group is reasonable and defensible for benchmarking purposes and whether the resulting comparison data is rational. |
IDEXX Compensation Peer Group (16 Companies in Total)
IDEXX Compensation Peer Group (16 Companies in Total)
IDEXX Compensation Peer Group (16 Companies in Total)
| Peer Company | Ticker Symbol | Peer Company | Ticker Symbol | | Agilent Technologies, Inc. | A | Illumina, Inc. | ILMN | | Align Technology, Inc. | ALGN | Intuitive Surgical, Inc. | ISRG | | Bio-Rad Laboratories, Inc. | BIO | Mettler-Toledo International Inc. | MTD | | The Cooper Companies, Inc. | COO | PerkinElmer, Inc.(1) | PKI(1) | | DexCom, Inc. | DXCM | ResMed Inc. | RMD | | Edwards Lifesciences Corporation | EW | STERIS plc | STE | | Elanco Animal Health Incorporated | ELAN | Waters Corporation | WAT | | Hologic, Inc. | HOLX | Zoetis Inc. | ZTS |
IDEXX Compensation Peer Group (16 Companies in Total)
1.In May 2023, PerkinElmer, Inc. changed its name to Revvity, Inc. and now trades under the ticker symbol RVTY. This peer group included the same companies that constituted the peer group referenced by the Compensation and Talent Committee when it determined 2022 compensation, except that we replaced Teleflex Incorporated with Mettler-Toledo International Inc. based on the fact that it more closely aligns with IDEXX with respect to a number of business characteristics. As part of our compensation benchmarking process, we utilize a blend of peer group data and survey data of technology, life science and other companies representing companies similar to IDEXX in size and business model. How We Paid Our NEOs in 2023 In making compensation determinations for our NEOs, the Compensation and Talent Committee gives primary consideration to their impact on our results in the context of our business model and their scope of responsibility, in addition to other relevant factors (such as prior experience and performance) and data on prevailing market compensation levels. The Compensation and Talent Committee also gives considerable weight to the CEO’s evaluation of the other NEOs because of his unique knowledge of their responsibilities, performance and contributions. Before making its final decisions regarding Mr. Mazelsky’s 2023 compensation, the Compensation and Talent Committee consulted with the Board and considered the Board members’ feedback and assessment of Mr. Mazelsky’s overall performance. For each of our NEOs, including our CEO, the Compensation and Talent Committee determines each component of compensation — base salary, annual performance-based cash bonus and equity-based long-term incentive compensation — based on various relevant factors. We describe those components and how they are determined in more detail in the sections that follow.
IDEXX Compensation Peer Group (16 Companies in Total)
| 86 | IDEXX 2024 PROXY STATEMENT |
IDEXX Compensation Peer Group (16 Companies in Total)
Base Salary The Compensation and Talent Committee reviews and approves base salary levels annually, typically in the first fiscal quarter, as part of our compensation planning process. The Compensation and Talent Committee targets base salary for the executive officers within a competitive market range. Individual executive officer base salary levels may vary at the high or low end of the competitive range when factoring in contributions to our overall financial performance, and an individual’s strengths, level and scope of responsibilities, skills, experience, past performance and potential. The 2023 base salaries of our NEOs are included in the table under “Total Direct Compensation Summary” on page 79. In February 2023, the Compensation and Talent Committee approved 2023 base salary increases for each of our NEOs other than our CEO based on individual performances, certain changes in roles and responsibilities, to maintain alignment of each individual’s compensation within a competitive market range for these positions and to ensure they are internally equitable. Mr. Mazelsky’s base salary was kept the same as it was in 2022 after determination that it was in a competitive range. Annual Performance-Based Cash Bonus Pursuant to the Executive Incentive Plan that the Compensation and Talent Committee adopted in February 2023, each of our NEOs and other participating senior executives received an annual performance-based cash bonus for 2023 calculated by multiplying the senior executive’s target bonus amount by an overall performance factor consisting of two weighted components:
IDEXX Compensation Peer Group (16 Companies in Total)
| | Overall Performance Factor | | | | | | Target Annual Performance- Based Cash Bonus Amountx | Financial Performance Factor | + | Non-Financial Performance Factor | = | Actual Annual Performance- Based Cash Bonus Amount | | | 60% Weighting | | 40% Weighting | | |
IDEXX Compensation Peer Group (16 Companies in Total)
Each participating senior executive’s target bonus amount is equal to a certain percentage of their annual base salary, and their actual bonus is capped at 200% of this target bonus amount, mitigating the risk associated with this type of incentive compensation design. The Compensation and Talent Committee sets the target percentages to provide a suitable mix of fixed and variable compensation and to maintain an appropriate weighting of annual versus longer-term incentives, consistent with our compensation philosophy.
IDEXX Compensation Peer Group (16 Companies in Total)
| Base Salaryx | Target Incentive % | = | Target Annual Performance-Based Cash Bonus Amount |
IDEXX Compensation Peer Group (16 Companies in Total)
The overall performance factor used to calculate these bonuses consists of: +a financial performance factor, determined by measuring against four specific financial metrics selected by the Compensation and Talent Committee (for more detail, refer to the discussion under “Financial Performance Factor” beginning on page 88); and +a non-financial performance factor, determined by measuring our achievement of non-financial performance goals, typically approved by the Board in February, that are focused on strengthening and positioning IDEXX for sustained future growth and profitability (for more detail, refer to the discussion under “Non-Financial Performance Factor” beginning on page 90).
IDEXX Compensation Peer Group (16 Companies in Total)
| IDEXX 2024 PROXY STATEMENT | 87 |
IDEXX Compensation Peer Group (16 Companies in Total)
The Compensation and Talent Committee annually establishes the respective weightings of the financial and non-financial performance factors. For 2023, the Compensation and Talent Committee established weightings of 60% for the financial performance factor and 40% for the non-financial performance factor. These were the same as the weightings used for 2022.
Financial Performance Factor
The Compensation and Talent Committee established 2023 threshold, budget (i.e., target) and maximum performance goals for each of these metrics, which are aligned with the goals included in the Company’s 2023 annual business plan approved by the Board: +The threshold goal for each metric is the minimum level of performance required to achieve a payout rating for that metric. The payout rating for threshold performance is 25%, and below threshold performance will result in a 0% payout rating for that metric. +The budget goals are aligned with the 2023 annual business plan approved by the Board and are intended to encourage stretch performance, while at the same, time being achievable. Establishing these budget goals as performance targets incentivizes our participating senior executives to deliver on those financial goals, and achieving the budget goal will result in a 100% payout rating for the applicable metric. +The maximum goal for each metric is set at a level that requires superior performance, and performance at or above the maximum goal will result in a maximum payout rating of 200% for that metric. In the event performance of any metric is between the threshold and target goals or target and maximum goals, the payout rating for that metric is calculated on a sliding scale, ranging from 25% to 200%, under the Executive Incentive Plan. The Compensation and Talent Committee decided to use a wider range under the Executive Incentive Plan (compared to the 50% to 180% used under our annual performance-based cash bonus program in 2022) to more closely align with the practices of our peer group and create consistency between the maximum payout percentage for individual financial performance metrics and the overall maximum payout percentage. The following table illustrates our performance versus the budget goal with respect to each financial metric selected by the Compensation and Talent Committee for the Executive Incentive Plan, and the resulting calculation of the financial performance factor.
Non-Financial Performance Factor
| 2023 Strategic Goal Priorities | 2023 Assessment Highlights | | Innovate for Continued Long-term Growth | +Successfully advanced development of our IDEXX inVue DX cellular analyzer to enable a January 2024 announcement. +Delivered six new product, service and software solution enhancements. +Achieved readiness to launch an ezyVet enterprise software solution, purpose-built for corporate groups. +Successfully advanced development of a new point-of-care platform and achieved key development milestones. | | Enhance our Global Commercial Presence and Capability | +Finalized the launch plan for our IDEXX inVue DX cellular analyzer announcement in January 2024. +Completed expansion of U.S. commercial field-based team, which better sizes territories to enable more frequent interactions with customers. +Exceeded goal of a 30% growth rate for key cloud practice management systems and related applications. | | Deliver a Differentiated Customer Experience | +Delivered productivity savings of more than $15 million across our global operations without compromising the customer experience. +Exceeded goals for 99% CAG product availability and 98% reference laboratory on-time results delivery. +Launched a “beta” release of a pet owner engagement application across key practice management systems. | | Strengthen and Engage Our Talent While Building a More Diverse and Inclusive Organization | +Reduced the voluntary attrition rate of all employees, maintained high engagement levels of staff across the globe and achieved best-in-class employee net promoter scores. +Achieved goal of 37% of employees in compensation grades considered director or above self-identifying as women as of December 31, 2023. +Increased the proportion of employees in U.S. management who voluntarily self-identify as belonging to underrepresented groups by approximately two percentage points. |
Non-Financial Performance Factor
Under our Executive Incentive Plan, applying the financial performance factor and the non-financial performance factor, as described above, resulted in each of our NEOs receiving an annual performance-based cash bonus that equaled 139% of their target bonus amount. The Compensation and Talent Committee believes that this bonus amount is appropriate and reflects a direct linkage between executive pay and performance. This alignment is demonstrated by our strong financial performance well in excess of the target goals for each of the four metrics and our achievement of substantial progress in support of future growth and long-term value creation, despite continued veterinary clinic capacity management challenges and macroeconomic headwinds. Equity-Based Long-Term Incentive Compensation We believe that granting equity-based awards is an effective tool in recruiting and retaining the key talent necessary to ensure our continued success and further aligns the interests of our senior executives with those of our shareholders by rewarding long-term total shareholder return while providing a retention incentive through multi-year vesting periods. We also believe that in order to attract and retain key talent and support long-term value creation, our annual equity awards should be designed to be easy to understand and communicate.
Types and Mix of Equity Awards
Types and Mix of Equity Awards The annual equity awards made to our NEOs in 2023 consisted of stock options and RSUs, with the following key terms:
Types and Mix of Equity Awards
| | Stock Options | RSUs | | Vesting | Vest in four equal annual installments | Vests in four equal annual installments | | Term | Term expires on the day immediately prior to the tenth anniversary of grant date | Not applicable | | Exercise Price | Closing sale price of our common stock on the Nasdaq Global Select Market on the grant date* | Not applicable |
Types and Mix of Equity Awards
*In February 2023, the Compensation and Talent Committee granted premium-priced stock options to Mr. Mazelsky with an exercise price equal to 115% of the closing sale price of our common stock on the grant date.
Types and Mix of Equity Awards
| IDEXX 2024 PROXY STATEMENT | 91 |
Types and Mix of Equity Awards
Generally, unvested RSUs and stock options are subject to forfeiture when a senior executive’s employment at IDEXX ends, and vested stock options are exercisable only while the senior executive remains employed by IDEXX or within three months after their employment at IDEXX ends. However, our equity awards include certain death and disability provisions, as well as retirement provisions aimed to enhance our ability to retain talent and facilitate succession and transition planning for key positions. For more information regarding these provisions, refer to the discussion under “Stock Incentive Plans” beginning on page 110. Historically, and in 2023, executive officers generally received 75% of their annual equity award value in the form of stock options and the remaining 25% in the form of RSUs, with Mr. Mazelsky receiving one-third of his annual stock option award value in the form of premium-priced stock options. Previously, Mr. Mazelsky’s premium-priced stock option awards had an exercise price equal to 110% of the closing sale price of our common stock on the grant date, but in approving Mr. Mazelsky’s 2023 annual equity awards, the Compensation and Talent Committee approved a premium-priced stock option award with an exercise price equal to 115% of the closing sale price of our common stock on the grant date to further align Mr. Mazelsky’s interests with those of our shareholders and require a greater increase in stock price for his premium-priced option awards to be “in-the-money.” Given the different risk and reward characteristics of stock options and RSUs, the Compensation and Talent Committee believes that this mix of annual equity awards, together with a multi-year vesting schedule, has served as an effective means of implementing our compensation philosophy, which seeks to align the interests of our executive officers and shareholders and retain key talent. Our executive officers have the most direct impact on our performance, and we therefore believe they should bear the highest risk and realize the highest potential reward associated with that performance. Stock options, which only have value to the extent our stock price exceeds the per-share exercise price and vest ratably over time, create alignment with shareholder interests and serve as effective incentives for our executive officers to create long-term shareholder value. Stock options are also retentive even after vesting because the opportunity to exercise is generally contingent on continued employment. RSUs, which also vest ratably over time, vary in value depending on the stock price of our common stock prior to vesting, but will have some value in the long term, which encourages retention and rewards the creation of shareholder value over time. In connection with the Compensation and Talent Committee’s review of the executive compensation program for 2024, it decided to modify the equity-based long-term compensation component by introducing PSUs. For more information about the terms of the PSUs and the Compensation and Talent Committee’s rationale for this modification, refer to the discussion under “2024 Changes to the Equity-Based Long-Term Incentive Compensation Element” on page 76.
2023 NEO Annual Equity Awards
2023 NEO Annual Equity Awards In determining the value of annual equity awards granted to each NEO, the Compensation and Talent Committee evaluates a number of factors, including a competitive assessment of the market and each senior executive’s responsibilities, performance, long-term leadership potential and equity holdings. The Compensation and Talent Committee also considers the impact of equity award values in total on shareholder dilution and shareholder value transfer in relation to the average of such totals for our peers. The Compensation and Talent Committee may also grant one-time, special equity awards in recognition of strong annual performance or in light of expanded or differing job responsibilities from time to time. The Compensation and Talent Committee targets being in a specific competitive range when determining equity awards. The Compensation and Talent Committee also reviews compensation summaries for each NEO that set forth the value of outstanding vested and unvested stock options and RSUs and the cumulative value realized by the senior executives upon exercise of stock options and vesting of RSUs since commencement of employment.
2023 NEO Annual Equity Awards
| 92 | IDEXX 2024 PROXY STATEMENT |
2023 NEO Annual Equity Awards
In February 2023, the Compensation and Talent Committee granted the following equity awards to all our NEOs given these considerations:
2023 NEO Annual Equity Awards
| | Stock Option Award Value ($)(1)(2) | Premium-Priced Stock Option Award Value ($)(1)(3) | Restricted Stock Unit Award Value ($)(1)(4) | Total Equity Award Value ($)(1) | | Jonathan J. Mazelsky(5) | 4,375,000 | 2,187,500 | 2,187,500 | 8,750,000 | | Brian P. McKeon | 1,837,500 | — | 612,500 | 2,450,000 | | Tina Hunt, PhD(6) | 1,237,500 | — | 1,162,500 | 2,400,000 | | Michael J. Lane | 1,312,500 | — | 437,500 | 1,750,000 | | James F. Polewaczyk | 1,312,500 | — | 437,500 | 1,750,000 |
2023 NEO Annual Equity Awards
1.Reflects the aggregate grant value (expressed in dollars) approved by the Compensation and Talent Committee, which differs slightly from the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 that results from the conversion of the approved grant value into shares and rounding the resulting number of shares underlying an award to the nearest whole number to avoid the issuance of fractional shares. Refer to Note 5 to our consolidated financial statements included in our 2023 Annual Report on Form 10-K for the relevant assumptions used to determine the grant date fair market value of our stock awards and stock options. 2.Stock options awards vest ratably over four years and have a term of 10 years. 3.Premium-priced stock option awards vest ratably over four years, have a term of 10 years and have an exercise price equal to 115% of the closing sale price of our common stock on the Nasdaq Global Select Market on the grant date. 4.Restricted stock units vest ratably over four years. 5.The 2023 annual equity awards granted to Mr. Mazelsky will continue to vest so long as he remains an IDEXX employee, Board member or consultant. 6.Includes a one-time equity award granted by the Compensation and Talent Committee to Dr. Hunt in February 2023 in the form of RSUs, which vest in their entirety on February 14, 2026, and have a grant value approved by the Compensation and Talent Committee of $750,000. This special, one-time award was made to Dr. Hunt in recognition of her expanded job responsibilities encompassing corporate strategy, marketing and sector development. Minimal Executive Benefits and Perquisites We provide a wide array of health and welfare benefits that support our employees’ overall well-being. This includes comprehensive health, life and disability insurance, generous time-off and leave programs and financial support. We provide free counseling for employees and their dependents through our mental wellness partner. In addition, all U.S. employees are eligible to participate in our 401(k) plan. Participants in our 401(k) plan receive matching contributions of up to 5% of their eligible compensation. All full-time U.S. employees who have been employed for at least one month also have an opportunity to purchase shares of our common stock through payroll deductions pursuant to our 1997 Employee Stock Purchase Plan, as amended. All employees have access to financial education and our employees in North America can engage with a financial coach. We also provide reimbursement to our employees for reasonable relocation costs when necessary based on business needs. In 2023, the benefits available exclusively to our executive officers and other senior executives directly reporting to our CEO were Company-funded supplemental disability coverage, annual executive physical examinations and wellness coaching and tax return preparation and financial planning services, which had a combined value of under $15,000 per NEO. In addition, we have fractional interests in aircraft available, as needed, to provide efficient business travel for our CEO, other senior executives and Board members, subject to compliance with our policies. Personal use of these aircraft is prohibited, unless a special exception is approved by the Board Chair or Audit Committee Chair in the case of the CEO, and by the CEO in all other cases. There was no personal use of these aircraft in 2023. The supplemental disability coverage is provided for additional financial security in the case of disability. Annual physical examinations and wellness coaching are provided because the health of our executive officers is
2023 NEO Annual Equity Awards
| IDEXX 2024 PROXY STATEMENT | 93 |
2023 NEO Annual Equity Awards
critical to their performance. The tax preparation and financial planning service is provided to maximize the amount of time that our executive officers are able to spend on Company business rather than personal financial matters, support executive officer retention and assist them in navigating complex tax, financial and regulatory issues. In addition, some of our executive officers and their spouses and partners may be invited to participate in our annual President’s Club event recognizing our highest performing sales employees, and we reimburse them for their reasonable travel expenses, including the expenses of their spouses and partners. We do not gross up our executive officers’ perquisites and benefits to compensate for any taxes due on the value of these perquisites and benefits, with the exception of typical tax equalization benefits for executive officers on expatriate assignments and gross-up payments for reasonable relocation costs, as applicable. In addition, de minimis tax gross-up payments on the reimbursed expenses for spousal or partner travel to our President’s Club events are provided to all employees who attend these events — not just our executive officers. How We Manage Risk and Governance Executive Stock Ownership and Retention We maintain stock ownership guidelines intended to further align the financial interests of our senior executives with those of our shareholders. These guidelines set a target level of ownership of a number of shares of our common stock for each of our NEOs and other senior executives (including all of our Senior Vice Presidents) each year as of March 31 (or their hire date or date of promotion during the year they were hired or promoted) based on a target multiple of annual base salary shown in the table below, divided by the closing price of our common stock on the relevant calculation date.
2023 NEO Annual Equity Awards
| | Target Multiple of Annual Base Salary | | CEO | 10X | | Executive Vice Presidents | 4X | | Senior Vice Presidents | 1X |
2023 NEO Annual Equity Awards
These target levels determine whether the senior executive must retain additional stock acquired upon the vesting and settlement of RSUs or the exercise of options. Specifically, unless and until the number of shares of our common stock held by a senior executive equals or exceeds their target level established each year as of March 31 (or their hire date or date of promotion during the year they were hired or promoted), the senior executive must retain: +At least 75% of our common stock received upon the exercise of options or the vesting and settlement of RSUs after payment or withholding of any applicable exercise price and taxes; and +All other shares of our common stock held by the senior executive. We do not apply unexercised stock options (whether or not vested) or unvested RSUs towards satisfying these guidelines, as we believe that these guidelines are meant to encourage outright ownership of our common stock and to further align the financial interests of our senior executives with those of our shareholders. Each senior executive’s compliance with the guidelines is measured annually and reviewed by the Compensation and Talent Committee. All NEOs were in compliance with the guidelines as of December 31, 2023. For more information regarding the stock ownership guidelines applicable to our non-employee Directors, refer to “Director Stock Ownership Guidelines” on page 59.
2023 NEO Annual Equity Awards
| 94 | IDEXX 2024 PROXY STATEMENT |
2023 NEO Annual Equity Awards
Recovery of Incentive Compensation In October 2023, the Board amended and restated our Clawback Policy to comply with, and exceed the requirements of, the finalized and effective SEC and Nasdaq rules (Section 10D of the Exchange Act, Rule 10D-1 of the Dodd Frank Wall Street Reform and Consumer Protection Act promulgated thereunder and Nasdaq Rule 5608). Pursuant to our Clawback Policy, in the event of an “accounting restatement” (as defined in the policy), our “covered executives” (as defined in the policy), including current and former NEOs and other executive officers, must reimburse us for any “erroneously awarded compensation” (as defined in the policy) they received during the three completed fiscal years preceding the date on which we are required to prepare an accounting restatement. Incentive compensation subject to mandatory recoupment under the Clawback Policy includes the amount of incentive compensation received by a covered executive during the three fiscal years preceding the required accounting restatement based on our achievement of “financial reporting measures” (as defined in the policy) in excess of the amount that the covered executive would have received based on the restated financial reporting measures. In addition, in the event we are required to prepare a “‘Big R’ accounting restatement” (as defined in the policy), our Board has discretionary authority to recover covered executives’ “additional compensation” (as defined in the policy), including their time-based equity awards and annual cash bonus amounts tied to the non-financial performance factor, to the extent such forms of compensation are not otherwise subject to mandatory recoupment. The Board has the authority to interpret and make all determinations under the Clawback Policy, in a manner consistent with applicable SEC and Nasdaq rules. Policy on Short-Sales, Derivatives and Hedging Pursuant to our Policy on Short Sales, Derivative Transactions and Hedging, no Director or employee of IDEXX may engage in short sales of our securities; purchases or sales of puts, calls or other derivative securities based on our securities; or purchases of financial instruments that are designed to hedge or offset any decrease in the market value of our securities. Anti-Pledging Policy We maintain a Policy on Pledging of Company Stock that prohibits our Directors and executive officers from pledging, hypothecating or otherwise encumbering our equity securities as collateral for indebtedness, including holding shares in a margin or similar account that would subject our equity securities to margin calls or otherwise making them available as collateral for a margin loan. Executive Agreements In connection with Mr. Mazelsky’s appointment as our President and CEO in October 2019, IDEXX and Mr. Mazelsky entered into the Mazelsky Employment Agreement. Among other things, the Mazelsky Employment Agreement provides Mr. Mazelsky with certain severance benefits if he were to be terminated by IDEXX other than for cause (as defined in the Mazelsky Employment Agreement) or in connection with a change in control (as described below). For more information regarding these severance benefits, refer to the discussion under “Potential Payments Upon Termination or Change in Control” beginning on page 112. In addition, each of the NEOs and certain other senior executives has a change in control agreement with IDEXX. With respect to Mr. Mazelsky, the terms of this change in control agreement are included in the Mazelsky Employment Agreement. The purpose of these agreements is to provide strong incentives for these senior executives to act in the best interest of our stakeholders before, during and after any change in control transaction by providing them with certain payments, benefits and accelerated vesting of equity awards in the event their employment is terminated or materially changed following a change in control. The agreements do not provide for any 280G excise tax gross-ups. The change in control agreements (other than the Mazelsky Employment Agreement) renew annually unless we provide timely notice of our intent not to renew. The Compensation and Talent Committee believes these terms are reasonable and consistent with market practice. The Compensation and Talent Committee periodically reviews the change in control agreements and obtains updated industry benchmarking advice from its independent compensation consultant to assist in determining whether any modifications to the agreements are necessary or whether we should permit
2023 NEO Annual Equity Awards
| IDEXX 2024 PROXY STATEMENT | 95 |
2023 NEO Annual Equity Awards
renewal. For more information regarding these change in control agreements and the payments and benefits provided thereunder, refer to the discussion under “Potential Payments Upon Termination or Change in Control” beginning on page 112. We have also entered into Confidential Information, Work Product and Restrictive Covenant Agreements with our senior executives, including each of our NEOs, pursuant to which senior executives agree to abide by standard non-competition, non-solicitation, confidentiality and invention assignment covenants. Equity Award Grant Policy We have an equity award grant policy that determines when and how we grant equity awards. This policy provides for an award date on the date the Compensation and Talent Committee approves an equity award at its regularly scheduled February meeting, and as to any other equity awards, a fixed award date that occurs outside the quarterly quiet periods during which our executives and Directors are precluded from trading in our securities. In addition, the Compensation and Talent Committee may grant an equity award on other dates if determined to be advisable. However, our equity award grant policy prohibits manipulating either the timing of the release of material nonpublic information or the timing of the grant of an equity-based award with the intent of benefiting any equity award grantee. All annual equity awards to our NEOs require the approval of the Compensation and Talent Committee. Prior to 2023, most equity awards, including all annual awards to the NEOs, were made on February 14 following the meeting of the Compensation and Talent Committee at which annual compensation determinations are made. Annual equity awards granted in 2023 and thereafter are made on the date of the regularly scheduled Compensation and Talent Committee meeting in February, which shortly follows our earnings announcement for the fourth quarter of the prior year. Risk Analysis The Compensation and Talent Committee engaged Farient to conduct an analysis of our compensation practices to assist the Compensation and Talent Committee in determining whether those practices created risks that were reasonably likely to have a material adverse effect on IDEXX. The results of this analysis were presented by Farient to the Compensation and Talent Committee in December 2023. Based on this analysis, the Compensation and Talent Committee determined that our compensation practices were not reasonably likely to have a material adverse effect on IDEXX. This conclusion was based on the use of a reasonably balanced pay mix; multiple performance metrics used for the Executive Incentive Plan, including non-financial goals; capped cash bonus payouts; multi-year equity compensation vesting periods; stock ownership guidelines; a clawback policy; and a prohibition against pledging and hedging activity. Compensation and Talent Committee Report The Compensation and Talent Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Proxy Statement for the year ended December 31, 2023. Based on this review and discussion, the Compensation and Talent Committee recommended to the Board of Directors, and the Board of Directors has approved, the inclusion of the Compensation Discussion and Analysis in this Proxy Statement.
Irene Chang Britt Lawrence D. Kingsley Sam Samad
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards(1) ($) | Non-Equity Incentive Plan Compensation(2) ($) | All Other Compensation ($) | Total ($) | | Jonathan J. Mazelsky | 2023 | 1,000,000 | — | 2,187,697 | 6,562,842 | 1,737,500 | 31,270(3) | 11,519,309 | | President and Chief Executive Officer | 2022 | 1,000,000 | — | 1,937,696 | 5,812,593 | 1,012,500 | 25,599 | 9,788,388 | | | 2021 | 976,923 | — | 1,500,029 | 4,499,229 | 2,062,500 | 26,340 | 9,065,021 | | Brian P. McKeon | 2023 | 669,023 | — | 612,336 | 1,837,574 | 701,603 | 24,529(4) | 3,845,065 | | Executive Vice President, Chief Financial Officer and Treasurer | 2022 | 644,249 | — | 612,702 | 1,837,483 | 393,143 | 23,249 | 3,510,826 | | | 2021 | 625,485 | — | 550,065 | 1,649,731 | 777,521 | 22,233 | 3,625,035 | | Tina Hunt, PhD | 2023 | 559,154 | — | 1,162,494 | 1,237,487 | 586,406 | 25,252(5) | 3,570,793 | | Executive Vice President, Strategy, Sector Development and Global Operations | 2022 | 538,327 | — | 412,512 | 1,237,583 | 328,506 | 20,935 | 2,537,863 | | | 2021 | 513,462 | — | 349,843 | 1,049,814 | 649,688 | 20,298 | 2,583,105 | | Michael J. Lane | 2023 | 559,154 | — | 437,738 | 1,312,524 | 586,406 | 25,539(6) | 2,921,361 | | Executive Vice President and General Manager, Global Reference Laboratories and Information Technology | 2022 | 538,327 | — | 412,512 | 1,237,583 | 328,506 | 24,263 | 2,541,191 | | | 2021 | 521,154 | — | 349,843 | 1,049,814 | 649,688 | 22,159 | 2,592,658 | | James F. Polewaczyk | 2023 | 559,154 | — | 437,738 | 1,312,524 | 586,406 | 21,214(7) | 2,917,036 | | Executive Vice President and Chief Commercial Officer | 2022 | 538,327 | — | 412,512 | 1,237,583 | 328,506 | 23,158 | 2,540,086 | | | 2021 | 521,154 | — | 349,843 | 1,049,814 | 649,688 | 22,476 | 2,592,975 |
Irene Chang Britt Lawrence D. Kingsley Sam Samad
| Year (1) | Summary Compensation Table Total for CEO | Compensation Actually Paid to CEO(2)(4) | Average Summary Compensation Table Total for Other NEOs | Average Compensation Actually Paid to Other NEOs(3)(4) | Value of Initial Fixed $100 Investment Based on: | | IDEXX Net Income (MM) | IDEXX Organic Revenue Growth(7) | | | | | | | IDEXX TSR(5) | Peer Group TSR(6) | | | | 2023 | $11,519,309 | $22,675,198 | $3,313,564 | $6,133,478 | $212.56 | $143.18 | $845.0 | 9% | | 2022 | $9,788,388 | ($13,754,140) | $2,782,492 | ($3,411,052) | $156.23 | $140.29 | $679.1 | 7% | | 2021 | $9,065,021 | $28,210,038 | $2,848,443 | $8,009,991 | $252.16 | $143.09 | $744.8 | 16% | | 2020 | $7,038,175 | $34,873,879 | $2,311,502 | $10,522,557 | $191.43 | $113.45 | $581.8 | 12% |