DEF 14A of Resmed Inc
Filed Oct 3, 2024 · FY20240000943819-24-000019
About ResMed
| Period | ResMed's Annualized Total Stockholder Return (NYSE) | S&P 500 Annualized Total Stockholder Return | US Peer Group Median Annualized Total Stockholder Return | | One year ended June 30, 2024 | -11% | 23% | -8% | | Three years ended June 30, 2024 | -7% | 8% | -6% | | Five years ended June 30, 2024 | 10% | 13% | 8% |
About ResMed
| Period | ResMed's Annualized Total Stockholder Return (ASX) | ASX 100 Annualized Total Stockholder Return | ASX Peer Group Median Annualized Total Stockholder Return | | One year ended June 30, 2024 | -10% | 8% | 8% | | Three years ended June 30, 2024 | -6% | 3% | -2% | | Five years ended June 30, 2024 | 11% | 4% | 7% |
About ResMed
Strong capital management and return to our stockholders. During fiscal year 2024, we maintained the quarterly dividend of $0.48 per share paid to our stockholders, paying approximately $282 million to our stockholders in dividends, representing a dividend payout ratio of 24% of net income, or 23% of adjusted (non-GAAP) net income. In August 2024, we increased our quarterly dividend by approximately 10%, to $0.53 per share for fiscal year 2025. We also resumed our share repurchase program in the second quarter of fiscal year 2024, and during the balance of fiscal year 2024 we repurchased approximately $150 million of stock, more than offsetting the dilution experienced by our stockholders from grants to our employees.
About ResMed
| • • • • • • • • | | Proxy Voting Roadmap |
About ResMed
This summary highlights select information contained elsewhere in this proxy statement. This summary does not contain all the information that you should consider, and you should read the entire proxy statement carefully before submitting your proxy and voting instructions.
About ResMed
| Proposal 1 Election of Directors Age, gender, tenure, and diversity of our Board | | | | | | Your board of directors recommends a vote “FOR” election of the eleven nominees to the board of directors. Page 10 |
About ResMed
Director Nominee Overview
About ResMed
| Carol Burt | | Jan De Witte | | | | Principal of Burt-Hilliard Investments Age: 66 Tenure: 11 years Committees: , , N Extensive executive management and board leadership, extensive experience in the health insurance, healthcare services, medical technology, and financial services industries. | | President and Chief Executive Officer of Integra Life Sciences Age: 60 Tenure: 5 years Committees: A, O 30 years in executive management, corporate strategy and operations for technology and software businesses; extensive experience in international business; and experience as an operating CEO and director in medical technology. | | Christopher DelOrefice | | Karen Drexler | | | | Executive Vice President and Chief Financial Officer of Becton, Dickinson and Company Age: 53 Tenure: <1 year Committees: A Experienced finance executive in medical technology, including commercial, long-term strategy, investor relations, supply chain, mergers and acquisitions, and global R&D. | | Former Chief Executive Officer of Sandstone Diagnostics, Inc. Age: 64 Tenure: 7 years Committees: , N Founder, executive and board experience in the medical diagnostics and device industries, particularly in digital health, technology, and out-of-hospital care models. |
About ResMed
| A | Audit Committee | C | Compensation Committee | O | Compliance Oversight Committee | N | Nominating and Governance Committee | | Chair | | Independent |
Proxy Voting Roadmap
| Michael “Mick” Farrell | | Richard “Rich” Sulpizio | | | | Chairman of the Board and Chief Executive Officer of ResMed Inc. Age: 52 Tenure: 11 years Committees: None 24+ years of experience with ResMed and 28+ years of experience in healthcare and technology industries with a deep understanding of products, operations, technology, sales and marketing. | | Retired President, Chief Operating Officer and Director of Qualcomm, Inc. Age: 74 Tenure: 19 years Committees: C, A, Executive and board positions with major software companies, experience with high growth technology, and executive leadership of international business operations. | | Peter Farrell | | Desney Tan | | | | Founder and Chairman Emeritus of ResMed Inc. Age: 82 Tenure: 35 years Committees: None ResMed founder and chief executive officer for 20+ years with a deep understanding of operations, technology, and sleep industry; significant board experience with other publicly-held medical technology companies. | | Corporate Vice President and Managing Director of Microsoft Research Age: 48 Tenure: 3 years Committees: C Experience in digital health technologies, use of machine learning and artificial intelligence, global R&D in hardware, devices, hardware and consumer products. | | Harjit Gill | | Ronald “Ron” Taylor | | | | Chief Executive Officer of the Asia Pacific Medical Technology Association Age: 59 Tenure: 6 years Committees: A, C Executive and operational background in consumer healthcare, sales, marketing, and international operations. | | Founder and CEO of Pyxis Corporation Lead Director Age: 76 Tenure: 19 years Committees: N, A,O Public medical technology company founder and CEO, served on over twenty public company and private boards. Venture capital experience evaluating healthcare companies. | | John Hernandez | | | | | | Head of Health Impact at Google Age: 57 Tenure: 3 years Committees: O Experience at the intersection of big tech and healthcare, including use of artificial intelligence. Widely published and frequent lecturer on digital health strategy, and use of real-world evidence. | | |
Proxy Voting Roadmap
| Proposal 3 Advisory Vote to Approve Named Executive Officer Compensation Our executive compensation program encourages long-term value creation for our stockholders. The below graphics show the mix of 2024 fixed pay (base salary) and at-risk short-term incentives (STI) and long term incentives (LTI) based on actual cash incentives paid and target equity awards granted, as reflected in the Summary Compensation Table. For fiscal year 2024, our Chief Executive Officer’s direct compensation was based 90% on incentive compensation that was at risk, while the other named executive officers have an average of 80% of their direct compensation in the form of incentive compensation that is at risk. The following table excludes all other compensation from the Summary Compensation Table. | | | | | | Your board of directors recommends that you vote “FOR” Proposal 3. Page 45 |
Other NEOs FY24 Compensation Summary
Other NEOs FY24 Compensation Summary
Other NEOs FY24 Compensation Summary
| • • • • • • • • | | Board and Governance Matters |
Other NEOs FY24 Compensation Summary
| Proposal 1 Election of Directors Our bylaws authorize a board of directors with between one and thirteen members, with the exact number to be specified by the board from time to time. On August 15, 2024, based on the recommendation of our nominating and governance committee, our board voted to expand our board to eleven, elected Christopher DelOrefice as a director to serve a term ending at the 2024 annual stockholders meeting, and appointed him to the audit committee. As set forth more fully in his biography, Mr. DelOrefice is a career finance leader in the medical technology industry, with expertise in finance, strategy, operations, and investor relations. Consistent with governance best practices, all of our current directors’ terms expire at this annual meeting. Our board has nominated each of our current directors for re-election at this annual meeting. The directors to be elected at this annual meeting will hold office until the 2025 annual meeting (and until their successors are elected and qualified) or until the director’s earlier death, disability, resignation, or removal. We are soliciting proxies in favor of these eleven nominees and proxies will be voted for them unless the proxy otherwise specifies. If any nominee becomes unable or unwilling to serve as a director, the proxies will be voted for the election of another person, if any, that the board designates. | | | | Your board of directors recommends a vote “FOR” Election of the eleven nominees to the board of directors. |
Other NEOs FY24 Compensation Summary
Our Board of Directors Our 2025 Board Nominees The nominees have diverse backgrounds and perspectives that enable them to provide valuable guidance on strategy and operations. They have extensive leadership experience, as well as corporate governance expertise arising from service in executive management positions as well as other public company board experience. Many have global business experience, including through service as chief executive officer or in other senior corporate leadership positions involving management of complex operations, business challenges, risks, and growth. One director currently resides and works in Singapore, and several others have served outside the United States in the past, providing valuable perspectives on our global business environment. All have experience with medical device, technology or product innovation and development, entrepreneurship, and the dynamics of our industry. Mr. DelOrefice, our most recently elected director, has substantial experience in medical technology companies, having served in various roles in accounting, finance, strategy, operations, and investor relations and is currently chief financial officer of a publicly traded medical technology company. All of our directors have demonstrated involvement in their communities, having contributed to social causes through nonprofit organizations or philanthropy. ͏Our board of directors benefits from these qualifications, as well as the perspectives of directors with in-depth knowledge of ResMed through their service as directors or executive officers. Skills and Experience The nominating and governance committee reviews and regularly updates a matrix of directors’ skill sets, based on factors the board deems important to oversee management and our strategic goals. It most recently updated the matrix during fiscal year 2024. Evaluation of our directors’ collective experience against the fiscal year 2024 skills matrix, with the addition of Mr. DelOrefice, is reflected in the following broad categories of expertise:
Other NEOs FY24 Compensation Summary
| Board Experience | Public company board (other than ResMed), Private company board, Chair of the board of directors of a publicly-traded company, Chair of the board of directors of a for-profit organization, Chair of the board of directors of a non-profit organization or private company, governance, compensation, audit, or compliance committees | 10/11 | | Leadership Experience | Chief executive officer, Non-Chief Executive Officer P&L leader, Non-CEO functional leader | 11/11 | | Functional Expertise | Medical device industry, Software-as-a-service industry, Sales and marketing, Direct-to-consumer business, Non-US business experience, Health policy and government affairs, Healthcare reimbursement - government or private, Finance and accounting, Business/corporate development, mergers and acquisitions, Legal, regulatory compliance and risk management, People and talent management, Communications and investor relations, Environmental sustainability and corporate social responsibility | 11/11 | | Technical Expertise | Research and development, Clinical research, Clinical expertise in sleep and related comorbidities, Manufacturing and supply chain, Digital health technology, Machine learning, artificial intelligence & advanced analytics, cybersecurity, privacy and information technology | 11/11 |
Other NEOs FY24 Compensation Summary
Biographies Included below is certain information as of September 24, 2024, regarding our director nominees, including key business experience, director positions with other public companies, and the experience, qualifications, attributes and skills that led the nominating and governance committee and the board to determine that such person should be nominated for election at our 2024 annual meeting to serve as a director of the company. Information about the eleven nominees for director is set forth below:
Other NEOs FY24 Compensation Summary
| Director | Age as of September 24, 2024 | Position | | Carol Burt | 66 | Director | | Christopher DelOrefice | 53 | Director | | Jan De Witte | 60 | Director | | Karen Drexler | 64 | Director | | Michael Farrell | 52 | Chairman of the board and chief executive officer | | Peter Farrell | 82 | Founder, chairman emeritus and non-executive employee | | Harjit Gill | 59 | Director | | John Hernandez | 57 | Director | | Richard Sulpizio | 74 | Director | | Desney Tan | 48 | Director | | Ronald Taylor | 76 | Lead director |
Other NEOs FY24 Compensation Summary
The following biographical information is furnished with regard to our directors as of September 24, 2024. Nominees for election at our 2024 annual meeting to serve for a one-year term expiring at the 2025 annual meeting:
Other NEOs FY24 Compensation Summary
| | Carol Burt | 66 Independent Principal of Burt-Hilliard Investments and Senior Advisor and Member of the Operating Council for Consonance Capital Partners | | | | | Director since: 2013 Committees: •Audit (Chair) •Compliance Oversight (Chair) •Nominating and Governance | Current Public Company Directorships: •IQVIA Holdings Inc. (NYSE: IQV), a leading global provider of advanced analytics, technology solutions, and clinical research services to the life sciences industry (2019-present) •Chairs the Leadership Development and Compensation Committees •Member of the Audit Committee | Prior Public Company Directorships: •Envision Healthcare •Transitional Hospitals •Vanguard Health Systems •WellCare Health Plans |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •Private investor with extensive experience in corporate governance, finance, accounting and capital markets, strategy, mergers and acquisitions, operations, and risk oversight and compliance •Serves on private-equity backed WellDyne and previously served on the public boards of four NYSE companies: Envision Healthcare, Transitional Hospitals, Vanguard Health Systems, WellCare Health Plans, and private equity-backed KEPRO and Global Medical Response •Part of the executive team that built WellPoint from a single state health plan to one of the leading health benefits companies in the U.S., at the time ranking in the top 35 Fortune 500 companies Education and Professional Credentials •Graduated magna cum laude from the University of Houston, earning a Bachelor of Business Administration | Business Experience Burt-Hilliard Investments, a private investment firm •2008 to present – Principal Consonance Capital Partners, a New York-based private equity firm focused on investments in the healthcare industry •2013 to present – Senior Advisor and a member of the Operating Council WellPoint, Inc. (now Elevance Health, NYSE: ELV) •Senior Vice President Corporate Finance and Development - Areas of responsibility included corporate strategy, mergers and acquisitions, strategic ventures, the Treasurer and Chief Investment Office, finance, business information systems, corporate real estate operations, and the financial services and international insurance business units. American Medical Response •Senior Vice President and Treasurer Chase Securities, Inc. (now JP Morgan Chase & Co, NYSE: JPM) •16 years service including as founder, Managing Director and Head of the Health Care Banking Group Other Experience •Ms. Burt is Co-Chair of the Emeritus Trustee program for the Colorado Chapter of The Nature Conservancy. Ms. Burt is a member of Women Corporate Directors, and the International Women’s Forum. Her philanthropic activities focus on mentoring women for leadership positions and environmental causes. |
Other NEOs FY24 Compensation Summary
| | Christopher DelOrefice | 53 Independent Executive Vice President and Chief Financial Officer of Becton, Dickinson and Company | | | | | Director since: 2024 Committees: •Audit | Current Public Company Directorships: •none | Prior Public Company Directorships: •none |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •Proven financial executive currently serving as chief financial officer and leadership of strategy and corporate development for Becton, Dickinson and Company, a long history of service in various roles at Johnson & Johnson, and experience at Astra Zeneca Pharmaceuticals, AET Films, Inc. and Ametek, Inc. Education and Professional Credentials •Bachelor of Science degree from Villanova University •MBA from Villanova University •Certified Public Accountant (inactive) | Business Experience Becton, Dickinson and Company (BD) (NYSE: BDX), a leading, global medical technology company •2021 to present – Executive Vice President and Chief Financial Officer Johnson & Johnson (NYSE: JNJ), a multinational pharmaceutical, biotechnology, and medical technologies company •August 2018 to September 2021 – Vice President of Investor Relations •2012 to 2018 – Variety of senior finance leadership roles, including CFO of both the Consumer and Medical Devices segments for North America •1999 to 2012 – Finance leadership roles for J&J Supply Chain, corporate mergers and acquisitions, Consumer Global R&D and the Pharmaceutical North America Business Development and Commercial Contracting Finance groups |
Other NEOs FY24 Compensation Summary
| | Jan De Witte | 60 Independent President and Chief Executive Officer of Integra Life Sciences | | | | | Director since: 2019 Committees: •Audit •Compliance Oversight | Current Public Company Directorships: •Integra Life Sciences (NASDAQ: IART) (2021-present) | Prior Public Company Directorships: •BARCO (EBR:BAR) (2016-2021) |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •Served in a variety of global operational and business leadership and CEO roles over the past 35 years •During his 17-year tenure with GE Healthcare, he worked in management and CEO roles covering business responsibilities across Europe, Middle East, China, Asia-Pacific, and the Americas, living both in the U.S. and Europe •Served as CEO for Barco headquartered in Belgium, held operational management positions at Procter & Gamble in Europe and served as senior consultant with McKinsey & Company serving clients across Europe bringing a uniquely European point of view to the board Education and Professional Credentials •Master of Science degree in electromechanical engineering with Greatest Distinction from the KU Leuven in Belgium •M.B.A. from Harvard Business School | Business Experience Integra Life Sciences (NASDQ: IART), a global leader in regenerative tissue technologies and neurological solutions •October 2021 to present – President, Chief Executive Officer and director •Mr. De Witte recently announced his intention to retire from his position as CEO of Integra Life Sciences upon the appointment of his successor. Barco (EBR: BAR), a global leader in advanced visualization solutions for healthcare, entertainment, and enterprise, with headquarters in Belgium •2016 to 2021 – CEO and director General Electric Company (NYSE: GE) •2011 to 2016 - Officer and CEO of GE Healthcare’s Global software and solutions business •2004 to 2010 CEO of GE Healthcare’s Services business for EMEA and Asia •1999 to 2003 leadership roles in manufacturing, supply chain and Lean Six Sigma Procter & Gamble (NYSE: PG) •Operational management positions in supply chain and manufacturing McKinsey & Company •Senior consultant serving clients in the airline, process, and high-tech industries Other Experience •Chair of the board of Hangar K, a non-profit innovation and co-creation hub in digital technologies for EdTech and GameTech in Flanders (Belgium) •Director at Advanced Medical Technology Association (AdvaMed), an American medical device trade association |
Other NEOs FY24 Compensation Summary
| | Karen Drexler | 64 Independent Former Board Member and Chief Executive Officer of Sandstone Diagnostics, Inc. | | | | | Director since: 2017 Committees: •Compensation (Chair) •Nominating and Governance | Current Public Company Directorships: •Outset Medical (NASDAQ: OM), a medical technology company innovating dialysis treatment (2021-present) •Chair of nomination and governance committee and member of the compensation committee •EBR Systems, Inc. (ASX: EBR), maker of a wireless cardiac pacing system for people with heart failure (2022-present) •Chairs the remuneration and governance committee, member of the audit committee | Prior Public Company Directorships: •Tivic Health, (NASDAQ:TIVC) (2019-2024) |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •A serial entrepreneur with expertise in the fields of digital health, medical devices, and diagnostics •Serves on the board of two private companies: VIDA Diagnostics, a leading company in AI-powered lung intelligence solutions; and Huma.ai, a company using natural language queries to extract unique insights from complex medical data •Acts as senior strategic advisor for other early-stage companies Education and Professional Credentials •Graduated magna cum laude with a B.S.E in chemical engineering from Princeton University •Earned an M.B.A. with honors from Stanford University Graduate School of Business | Business Experience Tivic Health (NASDAQ: TIVC), a bioelectric medicine company focused on relief of congestion and sinus pain •2019 to 2024 – Board member, chaired the compensation and nomination and governance committees and served on the audit committee Sandstone Diagnostics, Inc., a private company developing instruments and consumables for point-of-care medical testing •2014 to 2020 board member •2016 to 2020 CEO Hygieia, Inc., a digital insulin therapy company •Served as board chair and remains an advisor to the CEO Amira Medical Inc., a private company focused on minimally invasive glucose monitoring technology •Founder, President, and CEO until it was sold to Roche Holding AG Lifescan •Held management roles and played a key role in its sale to Johnson & Johnson (NYSE: JNJ) Other Experience •Spent 11 years on the board of the Keller Center for Innovation in Engineering Education at Princeton University •Active mentor and advisor with Astia, a global nonprofit that supports high-potential female founders •A lead mentor with StartX, the Stanford University incubator •Serves on the Life Science and Women’s Health Councils for Springboard, an accelerator for women-led technology companies •Interacts with many promising young medical technology companies through her work with Astia, Springboard, and StartX |
Other NEOs FY24 Compensation Summary
| | Michael Farrell | 52 Chairman of the Board and Chief Executive Officer of ResMed Inc. | | | | | Director since: 2013 Committees: none | Current Public Company Directorships: •Zimmer Biomet (NYSE: ZBH), a global provider of implantable musculoskeletal medical devices, and associated robotics and digital health technology (2014-present) •Chairman of the compensation and management development committee •Member of the quality, technology and regulatory committee | Prior Public Company Directorships: •none |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •Leadership roles of increasing responsibility at ResMed in business development, marketing, product development, leading our global sleep apnea business and president of our largest commercial organization; previously worked in management consulting, biotechnology, chemicals and metal manufacturing companies including Arthur D. Little, Sanofi Genzyme, Dow and BHP. Education and Professional Credentials •Bachelor of Engineering with first-class honors from the University of New South Wales •Master of Science in chemical engineering from the Massachusetts Institute of Technology (MIT) •M.B.A. from the MIT Sloan School of Management | Business Experience ResMed Inc. (NYSE: RMD) •2023 – Appointed as Chairman of the Board •March 2013 to present – Chief Executive Officer and director •2011 to 2013 – President of the Americas region •2007 to 2011 – Senior Vice President of the global sleep apnea diagnostic and therapeutic business •Various other senior roles in marketing and business development Other Experience •Advanced Medical Technology Association (AdvaMed), an American medical device trade association •Chair of the International Business Committee •Volunteers as a trustee for non-profit organizations: University of California San Diego Foundation, Rady Children’s Hospital, and Father Joe’s Villages’ project for the homeless in San Diego, California •Member of the University of California San Diego - Rady School of Management Advisory Board •Member of the Boston College Engineering Advisory Board |
Other NEOs FY24 Compensation Summary
| | Peter Farrell | 82 Founder and Chairman Emeritus of ResMed Inc. | | | | | Director since: 1989 Committees: none | Current Public Company Directorships: •Arcturus Therapeutics Holdings Inc. (NASDAQ: ARCT) (2018-present) •Board Chair, member of the compensation and nominating and corporate governance committees | Prior Public Company Directorships: •NuVasive, Inc. (NASDAQ: NUVA) •Evolus, Inc. (NASDAQ:EOLS) (2019-2023) |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •Founder, former Chairman of the Board, and former Chief Executive Officer of ResMed, globally recognized innovator and leader Education and Professional Credentials •B.E. in chemical engineering with honors from the University of Sydney •S.M. in chemical engineering from MIT •Ph.D. in chemical engineering and bioengineering from the University of Washington, Seattle •D.Sc. from the University of New South Wales | Business Experience ResMed Inc. •January 2023 to present – Chairman Emeritus •May 1989 to January 2023--Board Chairman •July 1990 to December 2007; February 2011 to March 2013 – Chief Executive Officer •January 2014 to present – Non-officer employee •1989 to present – Founder and director Baxter International, Inc. (NYSE: BAX) •July 1984 to June 1989 – Vice President of research and development at various subsidiaries •August 1985 to June 1989 – Managing Director of the Baxter Center for Medical Research Pty Ltd. University of New South Wales •1989 to Present - Visiting professor and chair of the UNSW Centre for Innovation and Entrepreneurship •January 1978 to December 1989 – Foundation Director of the Graduate School for Biomedical Engineering Harvard/MIT •2018 to present - Serves on the MIT Dean of Engineering Advisory Council •1998 to 2018 – Served on the Visiting Committee of the Health Sciences & Technology Program Other Experience •Currently sits on two faculty advisory boards at UC, San Diego: the Rady Business School and the Jacobs Engineering School. •Chair of WaveGuide, a private startup leveraging nuclear magnetic resonance technology •Serves on the Board of Trustees of Scripps Research Institute •Active board member of private companies ProtoStar and Mikroscan |
Other NEOs FY24 Compensation Summary
| | Harjit Gill | 59 Independent Chief Executive Officer of the Asia Pacific Medical Technology Association | | | | | Director since: 2018 Committees: •Audit •Compensation | Current Public Company Directorships: •none | Prior Public Company Directorships: •none |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •Extensive experience in consumer healthcare and international sales and marketing including in Europe, Asia and the Middle East; Board member for privately held consumer companies, serving in multiple roles on multiple committees Education and Professional Credentials •Bachelor of Arts (honors) in combined studies from the University of Manchester | Business Experience Asia Pacific Medical Technology Association (APACMed), the first and only regional association to provide a unified voice for the medical device, equipment, and in-vitro diagnostics industry in Asia Pacific •February 2019 to present – Chief Executive Officer Alticor Inc., a private holding company for Amway, a global leader in home, health, and beauty products •January 2022 to present – Director MAS Holdings, one of the largest apparel tech companies in South Asia with over 115,000 people and a presence in 17 countries •2019 to present – Member of the Innovation Board of Directors HTC, Taiwan (OTCMKTS: HTCKF) •2015 to 2016 – Chief Operations and Marketing Officer Royal Philips (NYSE: PHG) •2012 to 2015 – Executive Vice President and Chief Executive Officer for Philips ASEAN & Pacific, based in Singapore, responsible for Healthcare/Lighting and Consumer Lifestyle •2009 to 2012 – Senior Vice President of International Sales •2006 to 2009 – Vice President of Asia for Philips Consumer Lifestyle Products •1990 to 2006 – Held progressive roles in the Netherlands, Hong Kong, Dubai, and Singapore for Consumer Electronics Other Experience •Served as a board member of the National University of Singapore, Entrepreneurship Committee, Singapore International Chamber of Commerce, Apollo Education and Training. |
Other NEOs FY24 Compensation Summary
| | John Hernandez | 57 Independent Head of Health Impact at Google | | | | | Director since: 2021 Committees: •Compliance Oversight | Current Public Company Directorships: •Carmat, SA (ALCAR.PA), a French artificial heart company, publicly traded on the Euronext Paris exchange •Member of the audit and research and development committees | Prior Public Company Directorships: •none |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •Serves as head of health impact at Google where he oversees clinical research, health economics and outcomes research •Joined Alphabet in 2016 where he has built and led teams at Verily and Google leveraging artificial intelligence to assist in promoting healthy lifestyles, diagnosing cancer, and preventing blindness, among other things Education and Professional Credentials •Bachelor of Arts from the University of North Carolina at Chapel Hill •Master’s degree in health policy •Doctorate of Philosophy at the RAND Graduate School in Santa Monica, CA | Business Experience Google (NASDAQ: GOOGL), a technology company •2018 to present – Head of Health Impact Abbott Laboratories, a medical devices and healthcare company •2010 to 2016 – Vice President of global health economics and outcomes research Boston Scientific Corporation •2001 to 2010 – Vice President of clinical research and health economics Other Experience •Previously served in research and consulting roles at the RAND Corporation, Quintiles (now IQVIA), PwC and the American Society of Internal Medicine (now ACP) •Widely published in scientific journals and lectures frequently on diverse topics including digital health strategy, health policy, health economics, healthcare technology assessment, value-based payments and real-world evidence strategies. Held teaching and advisory positions with Stanford University from 2015 to 2019, University of Southern California from 2017 to 2019, and University of Washington from 2015 to 2018 |
Other NEOs FY24 Compensation Summary
| | Richard Sulpizio | 74 Independent Former Board Member, President and Chief Operating Officer of Qualcomm, Inc. | | | | | Director since: 2005 Committees: •Audit •Compensation •Nominating and Governance (Chair) | Current Public Company Directorships: •none | Prior Public Company Directorships: •Qualcomm, Inc. (NASDAQ: QCOM) •CA, Inc. (NASDAQ: CA), an information technology management software company |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •Experienced executive of a major wireless software innovator, including experience as president and chief operating officer, overseas assignments in China and Europe, leading startups and established operations; oversaw development and deployment of multimedia services to the wireless industry Education and Professional Credentials •Bachelor of Arts from California State University, Los Angeles •Master of Science in systems management from the University of Southern California | Business Experience Qualcomm, Inc. (NASDAQ: QCOM) •December 2009 to November 2013 – president and CEO of Qualcomm Enterprise Services (QES) •1994 to 2009 – Various executive roles including President of Qualcomm Wireless Business Solutions, Interim President of Qualcomm Europe and Qualcomm China, President of MediaFLO (a wholly owned Qualcomm subsidiary), and President and Chief Operating Officer Other Experience •Worked at Unisys Corporation (NYSE: UIS) and Fluor Corporation (NYSE: FLR) before joining Qualcomm •Currently serves as an honorary board member of the advisory board of the University of California San Diego’s Sulpizio Family Cardiovascular Center |
Other NEOs FY24 Compensation Summary
| | Desney Tan | 48 Independent Corporate Vice President and Managing Director of Microsoft Research | | | | | Director since: 2021 Committees: •Compensation | Current Public Company Directorships: •none | Prior Public Company Directorships: •none |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •Technology executive who has built and run multidisciplinary global innovation teams – leveraging expertise in hardware and devices, software development, applied machine learning and artificial intelligence, human-computer interaction, and applied science to make impact in areas such as autonomous navigation, entertainment and consumer products, as well as health and life sciences •Named inventor on more than 100 granted patents, and author of numerous academic publications, on topics relevant to ResMed's long-term strategy, such as artificial intelligence, machine learning, and human-computer interaction Education and Professional Credentials •Bachelor of Science (summa cum laude) in computer engineering from the University of Notre Dame •Doctorate of Philosophy in computer science from Carnegie Mellon University | Business Experience Microsoft (NASDAQ: MSFT), a technology company •2023 to present – Corporate Vice President and Managing Director of Microsoft Research •2021 to 2023 – Vice President and Managing Director of Microsoft Health Futures •2015 to 2021 – Managing Director of Microsoft Healthcare •2004 to 2015 – Various leading research and development roles University of Washington Seattle •2007 to present – Affiliate Professor of computer science and engineering Other Experience •Served on the board of two private companies: 1910 Genetics, a biotechnology company integrating artificial intelligence, computation, and biological automation to improve drug development; and Artificial, a lab automation company focused on accelerating the pace of life science discoveries •Serves on the Washington Research Foundation's board of directors: as senior advisor and chief technologist to IntuitiveX, a medical device and life sciences innovation partner and catalyst; and as advisor to Proprio, which is developing an advanced surgical navigation platform •Cofounded the National Science Foundation Center for Sensorimotor Neural Engineering and chaired its industry advisory board |
Other NEOs FY24 Compensation Summary
| | Ronald Taylor | 76 Lead Independent Director Founder, Chairman, and chief executive officer of Pyxis Corporation | | | | | Director since: 2005 Lead Director since: 2013 Committees: •Audit •Compliance Oversight •Nominating and Governance | Current Public Company Directorships: •none | Prior Public Company Directorships: •Allergan (NYSE: AGN) •Cardiodynamics (NASDAQ: CDIC) •Medicalogic (NASDAQ: MDLI) •Red Lion Hotels (NYSE: RLH) |
Other NEOs FY24 Compensation Summary
| Skills and Qualifications •Has a background that reflects significant executive and operational experience with publicly-held medical technology and pharmaceutical companies, including experience in evaluating and investing in healthcare companies as a partner in a venture capital firm, and public company governance experience •Has been a director of approximately 20 publicly and privately held companies over the past 27 years •More than 15 years of experience as a board member of Red Lion Hotel including its governance, compensation, and audit committees, and more than 20 years of experience as a board member of Allergan (formerly Watson and Actavis) including the audit, compensation, and governance committees Education and Professional Credentials •Bachelor of Arts from the University of Saskatchewan •Master of Arts from the University of California, Irvine | Business Experience Pyxis Corporation, a manufacturer of automated drug dispensers for hospitals •1987 to 1996 – Founder, Chairman, and chief executive officer until its purchase by Cardinal Health, Inc. Hybritech, Inc., a biotechnology company •Responsible for operations and international sales Allergan plc (NYSE: AGN), a pharmaceutical company •Served in operational and management roles Enterprise Partners Venture Capital •1998 to 2001 – General partner Other Experience ResMed Foundation •Served as Chair of the board |
Other NEOs FY24 Compensation Summary
Director Nomination Process Board Skills, Experience and Qualifications The nominating and governance committee regularly reviews with the board the appropriate characteristics, skills, and experience required for the board as a whole and its individual members. The board values diversity and a heterogeneous board, and views diversity expansively, to include differences of viewpoint, professional experience, education, skill and other individual qualities. To assist in promoting a diversity of backgrounds and experience on the board, the nominating and governance committee identifies and considers board candidates who are drawn from a wide talent pool, representing diversity of thought, culture, gender, ethnicity, race, background, and other qualities, consistent with the company's corporate governance guidelines. For example, the nominating and governance committee and the board chairman shared these values with the third-party executive search firm that identified Mr. DelOrefice as a new board member. ResMed currently complies with California Senate Bill 826, which requires publicly held corporations with principal executive offices in California to have a board of directors that satisfies certain gender diversity requirements. We also comply with California Assembly Bill 979, which requires publicly held corporations with principal executive offices in California to meet certain requirements to include directors from underrepresented communities on their board of directors. The nominating and governance committee believes board composition and an appropriate balance of board refreshment and experience is important to effective governance, and follows a process of regularly reviewing board composition and board refreshment, with a long-term perspective. The suitability of individual director candidates depends on many factors. Those factors include: •fundamental qualities of intelligence, honesty, good judgment, high ethics, and standards of integrity, fairness, and responsibility; •practical wisdom and mature business judgment; •ability to make independent analytical inquiries, general understanding of marketing, finance, and other elements relevant to the success of a publicly-traded company in today’s business environment; •experience in corporate management, or as a board member of a publicly-held company; •academic experience and technical understanding in the area of our operations; •professional experience in our industry; •characteristics that add diversity to our board; and •a commitment to representing the long-term interests of our stockholders. The nominating and governance committee also reviews and regularly updates a matrix of directors’ skill sets, based on factors the board deems important to oversee management and our strategic goals. It most recently updated the matrix during fiscal year 2024. We believe the annual consideration of new skills that benefit the company, and examination of our directors’ collective experience across those identified attributes, keeps our board across the evolving profile of our global business. ͏The board evaluates each individual director in the context of the board as a whole, to assemble a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas. In determining whether to recommend a director for re-election, the nominating and governance committee also considers the director’s past attendance at meetings and participation in and contributions to the board’s activities. In fiscal year 2024 our board members achieved 100% attendance at our board and committee meetings. After review and deliberation of all feedback and data, the nominating and governance committee makes its recommendation to our board. Recommendations we receive from stockholders are subject to the same criteria as are candidates nominated by the nominating and governance committee. The committee will consider stockholder suggestions for nominees for directorship and has a policy to consider any candidate recommended by stockholders who have held a minimum of 1% of our outstanding voting securities for at least one year. Our bylaws also permit a stockholder, or a group of up to 20 stockholders, owning 3% or more of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials directors constituting up to 20% of the board or two individuals, whichever is greater, provided that each stockholder and nominee satisfy the other requirements specified in our bylaws. A recommending stockholder must submit a detailed resume of the candidate and an explanation of the reasons why the stockholder believes the candidate is qualified for service on our board. The stockholder must also provide any other information about the candidate that would be required by SEC rules to be included in a proxy statement. In addition, the stockholder must include the consent of the candidate (including the consent to a background check) and describe any relationships, arrangements or undertakings between the stockholder and the candidate regarding the nomination or otherwise. The stockholder or nominee must submit certain background information and representations regarding disclosure of voting or compensation arrangements, compliance with our policies and guidelines, and intent to serve the entire term. The stockholder must submit proof of ownership of our stock. All communications should be submitted in writing to the chair of the nominating and governance committee, care of Secretary, ResMed Inc., 9001 Spectrum Center Boulevard, San Diego, California 92123 USA. Recommendations received after seventy days before the anniversary of the prior year’s annual meeting will likely not be considered timely for consideration at that year’s annual meeting. The nominating and governance committee will consider stockholder recommendations of candidates on the same basis as it considers all other candidates. For further information, see “Stockholder proposals for 2024 annual meeting.” Tenure and Board Refreshment The nominating and governance committee believes board composition and an appropriate balance of board refreshment and experience is important to effective governance. While refreshment is an important consideration in assessing board composition, the board does not make determinations based solely on tenure; instead choosing to consider an appropriate mix of skill set and institutional knowledge as the key foundations of our board composition. Over the course of the last ten years we have achieved a balanced blend of long-tenured board members and new board members. Our founder, Peter Farrell, is our longest serving board member. Our lead director, Ron Taylor and the chair of our nominating and governance committee, Rich Sulpizio, each have almost twenty years’ experience on our board. Ms. Burt, the chair of our audit and compliance oversight committees, has just over ten years’ experience on our board and leads both the audit and compliance oversight committee. These four board members have served on many public company boards and bring experience in corporate governance that is very valuable to ResMed. We have three additional board members--Ms. Drexler, Ms. Gill, and Mr. De Witte--with more than five but less than ten years of service to our board, bringing entrepreneurial expertise, consumer goods and marketing experience, and additional executive leadership experience to our board. Two recent members, Dr. Hernandez and Dr. Tan, have experience in the use of real world evidence and artificial intelligence in healthcare, key skill sets as ResMed continues to expand its digital health offerings to provide patient and customer benefits from the seven billion nights of sleep we have collected since launching AirSense 10 and AirSense 11 connected devices.
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Consistent with its usual practice, in fiscal year 2024 the nominating and governance committee considered whether it would be useful to add an additional board member to reflect the company's evolving mission. On the recommendation of the chairman of the board, as well as the chairs of the nominating and governance committee and the audit committee and the lead director, the company engaged a search firm to identify potential board candidates. The company provided guidance on the expertise and qualities that the board believed were appropriate, particularly considering the company's published corporate governance guidelines. The search firm presented a slate of potential candidates for consideration. Interviews were conducted and the nominating and governance committee recommended the nomination and election of Christopher DelOrefice to the board. On August 15, 2024, the board expanded the size of the board to eleven, appointed Mr. DelOrefice to the board and the audit committee, and nominated him to stand for election at the 2024 annual meeting of stockholders with the rest of our directors. The board specifically considered the tenure of our directors when considering the decision to expand the size of the board to include Mr. DelOrefice. The board believes the independent directors represent an excellent balance of tenure. Six of our nine independent directors have been on the board for ten years or less. Three of our nine independent directors and nominees have served for more than ten years. Our more tenured members of the board serve as mentors for our new board members. The board has determined that the tenure of our longer serving members has not compromised their independence; in fact, in the board’s view, the depth of their knowledge and insight with the company has strengthened their independence and contributions to our board as they have witnessed the evolution of the company through our strategic vision and adoption of various operating models, and can provide valuable historical connections to both our senior leadership and employees. The tenure and experience of our longer serving directors brings balance to the relatively lower tenure and experience of the other independent directors and is important to the education of our newest board members. Of course, the vast experience of our founder, Peter Farrell, with over thirty-five years of history with ResMed, is extremely valuable to our company. Board Independence Our board has determined that nine of our eleven current directors are independent, including: Carol Burt, Christopher DelOrefice, Jan De Witte, Karen Drexler, Harjit Gill, John Hernandez, Richard Sulpizio, Desney Tan, and Ronald Taylor, as defined under the listing standards of the NYSE, and they and their respective family members have no material relationship with us, commercial or otherwise, that would impair the director’s independence. The board determined that every member of the audit, compliance oversight, nominating and governance, and compensation committees is independent under the NYSE’s listing standards, and that each member of the audit committee and compensation committee meets the additional standards for independence for audit committee and compensation committee members, as applicable, imposed by the SEC’s regulations and the NYSE's listing standards. The board determined that based on their employment with the company, Peter Farrell and Michael Farrell are not deemed independent: Michael Farrell is an executive officer; while Peter Farrell, our founder and chairman emeritus, is a current non-executive employee and the father of Michael Farrell. There were no specific relationships or transactions that required consideration by our board in making its independence decisions. Corporate Governance Corporate Governance Highlights
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| Board Independence | •Non-Executive lead director leads separate board sessions •Independent board except founder and chairman and chief executive officer •Fully independent committee chairs and committee members •Executive sessions of the independent directors held at each board meeting | | Board Effectiveness | •Demonstrated commitment to board refreshment with six new board members since 2017 •Robust director nominee selection process based on published guidelines •Actively seek and include highly qualified, diverse candidates including women and ethnically diverse candidates •Annual self-assessments of the board, its committees, and each director •Director education sessions at each board meeting, including annual briefings on cybersecurity | | Strategy, Risk Management and Succession Planning | •Regular corporate strategy review by the board •Risk management oversight by all four committees •Board oversight of overall strategy refresh and material sustainability topics including governance, social and environmental risks •Active board participation and oversight of chief executive officer and executive officer succession including emergency succession plans | | Further Best Practices | •Majority vote standard in director elections •Proxy access rights •Established stock ownership and retention guidelines for directors and executive officers •Prohibition of pledging, hedging, and short sales of stock •Compensation recovery policy that exceeds NYSE and SEC requirements •Insider trading and rule 10b5-1 policy •Formal oversight policy for cybersecurity incidents, including standards for public disclosure in the event of a material cybersecurity incident |
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Board Structure and Operations Board Leadership Structure
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| | Michael Farrell Chairman of the Board and Chief Executive Officer | | Ronald Taylor Lead Director |
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| | Carol Burt Chair of Audit and Compliance Oversight Committees | | Karen Drexler Chair of Compensation Committee | | Richard Sulpizio Chair of Nominating and Governance Committee |
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| Independent Board | Fully independent board, other than two members: chairman of the board and chief executive officer, and founder and chairman emeritus | | Committee Independence | Chairs and all members of each of the board’s committees – audit, compensation, compliance oversight and nominating and governance – are independent |
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Our nominating and governance committee and full board evaluate, consider, and discuss our board leadership structure and company leadership annually. During fiscal year 2023, acting on the recommendation of our nominating and governance committee, our board changed the current board leadership structure such that Michael Farrell serves as board chairman and chief executive officer. As a result, Peter Farrell ceased serving as our chairman of the board, a role he had held since 1989, and was given the title of chairman emeritus to recognize his distinguished service as our founder and board chairman. In making its decision, the board concluded that having Michael Farrell serve as chairman of the board and chief executive officer is the most appropriate leadership structure for us and in the best interests of our stockholders at this time. Combining the two roles is more efficient, creates clear lines of authority, and is consistent with the prevailing practice among medical equipment companies in the S&P 500. The board believes the advantages described above outweigh any theoretical risks or disadvantages arising from Michael Farrell’s current role as chief executive officer. The board has had the opportunity to observe Michael Farrell's leadership in the boardroom during his 12 years of service as a director, and found him to be an effective leader in setting the board's agenda, encouraging directors to share diverse viewpoints and raise questions, and facilitating a positive board culture. And the connection between the two roles is particularly important when the company faces competitive and operational challenges, including for example the overwhelming demand for our products when a competitor announced a global recall. Michael Farrell is also assisted in board leadership by Ronald Taylor, our lead director, and Richard Sulpizio, the chair of our nominating and governance committee. The board believes our overall board structure ensures independent oversight from the board. Nine of our eleven directors are independent, which provides a counterbalance to a combined chief executive officer and chairman. Our independent directors meet in executive session, alone, at each board meeting, and our board’s committees are filled entirely by independent directors, enabling the board to fulfill its independent oversight responsibilities. Since July 1, 2013, Ronald Taylor has served as our lead director. The role of our lead director provides additional governance structure supporting an effective independent board. The primary responsibilities of the lead director are to: •preside over board meetings in the absence of the chairman, including when the performance and compensation of the chairman and chief executive officer is discussed and approved; •preside over sessions of the independent directors, which occur at each regularly scheduled meeting, and as otherwise deemed appropriate; •act as a liaison between the independent directors and chairman; •guide the chairman on board meeting agendas and schedules, as well as the adequacy of information to be presented to the board; and •other duties that may be delegated by the board, independent directors, chairman, or the nominating and governance committee. As lead director, Mr. Taylor keeps Mr. Farrell apprised of issues discussed during the independent sessions of the board and consults with Mr. Farrell on other matters pertinent to the company and the board. Mr. Taylor discusses with the independent directors any concerns they may have and, as appropriate, relays those concerns to the full board, the chairman or members of senior management. As chair of the nominating and governance committee since May 2024, Mr. Sulpizio has joined the discussion with Mr. Taylor and Mr. Farrell on the board’s independence, performance and leadership structure. Mr. Taylor's extensive experience and skills as a medical technology founder and chief executive officer, public company board director, and his venture capital experience, combined with Mr. Sulpizio's extensive history as a director of our company and experience as president and chief operating officer of a global technology company, make them well qualified to serve as the voice of the independent members of the board when engaging with Mr. Farrell as board chairman and chief executive officer. For the reasons discussed above, our board believes the current leadership structure is in our best interests at this time. However, our corporate governance guidelines give the board the flexibility to change its leadership over time, as needed. The board will continue to evaluate whether its leadership structure is appropriate as our business evolves. Board Committees The board has four standing committees to assist in the oversight of our affairs: audit, compensation, compliance oversight, and nominating and governance. The charters of each of our committees is reviewed annually. A copy of the charters for each of these standing committees can be found on our website at investors.resmed.com. Assuming stockholders elect the director candidates nominated by the board, we do not anticipate any changes to our committee assignments after the annual meeting.
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| Committee Leadership The nominating and governance committee reviews and regularly updates its views on the leadership of the board committees in light of skill mix, tenure, and board refreshment. In fiscal year 2024, the nominating and governance committee recommended, and the board agreed, to make changes to the leadership of two of our four committees. Specifically, Ms. Drexler was appointed as the chair of the compensation committee, and Mr. Sulpizio was appointed as chair of our nominating and governance committee. The changes were approved by the board as part of our overall approach to board governance, providing new leadership opportunities to our board members, continuity in existing committee membership, and retaining the experience of our nominating and governance committee. Mr. Taylor continues to serve an important role as our lead director, and a member of our nominating and governance committee. Mr. Taylor is an important voice for board communications with senior management and particularly our combined board chairman and chief executive officer. We believe that as a consequence of our board evaluation approach, we have an outstanding mix of seasoned and new board members, committee leadership and membership. |
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| Chair Carol Burt Other Members Christopher DelOrefice Jan De Witte Harjit Gill Richard Sulpizio Ronald Taylor Independent: 100% Meetings in Fiscal Year 2024: 8 Fiscal Year 2024 Meeting Attendance: 100% | Audit Committee Our board has determined that each of the audit committee members is financially literate and independent within the meaning of the current listing standards of the NYSE and SEC applicable to audit committee members. In addition, our board has identified all members of the audit committee as financial experts under the SEC’s requirements. Primary Responsibilities The audit committee’s primary purposes are to assist the board with its oversight responsibilities regarding: •management’s conduct of, and the integrity of, our financial reporting; •our systems of internal control over financial reporting and disclosure controls and procedures; •compliance with our code of conduct and ethics; and •qualifications, engagement, compensation, independence, and performance of our independent registered public accounting firm. |
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| Chair Karen Drexler Other Members Harjit Gill Richard Sulpizio Desney Tan Independent: 100% Meetings in Fiscal Year 2024: 5 Fiscal Year 2024 Meeting Attendance: 100% | Compensation Committee Our board has determined that each of the compensation committee members meet the independence requirements for board and compensation committee service under the current listing standards of the NYSE and SEC. Primary Responsibilities The compensation committee’s primary purposes are to: •establish and review the compensation of our executive officers; •oversee management’s decisions regarding our compensation philosophies, practices, and procedures; and •advise the board on the compensation of directors. The compensation committee works primarily with our chief people officer and our global general counsel and their staff to gather internal data and solicit management’s recommendations regarding compensation. The compensation committee also communicates directly with our board chair and chief executive officer for recommendations and information, particularly about his direct reports’ compensation. In addition, the compensation committee consults with our chief financial officer and his staff regarding the financial impact of certain compensation decisions. The compensation committee determines the compensation for each of our individual executive officers outside the presence of the affected officer. The compensation committee also advises and consults with other non-executive board members as it determines appropriate regarding compensation issues. Independent Consultants During fiscal year 2024 as in prior years, the compensation committee retained a nationally recognized independent consultant, Frederic W. Cook & Co., Inc. (FW Cook). FW Cook is engaged directly by the committee to render advisory services and to serve as the compensation committee’s independent consultant on compensation-related matters for our executives and board. During fiscal year 2024, these compensation matters included: •our executive compensation programs, including salaries, target and actual short-term incentive amounts, and long-term incentive equity grants, and positioning among peer groups; •aggregate equity pay practices at our peer group companies, including long-term incentive design features and alternatives; •board compensation, including board fees and equity grants and peer group practices; •industry trends, best practices, and regulatory changes; and •companies included in our peer group for competitive comparisons. During fiscal year 2024, FW Cook did not provide any services other than compensation-related matters for our executives and board. During fiscal year 2024, Infinite Equity, Inc. (Infinite Equity) provided the compensation committee with calculations of total stockholder return to evaluate performance metrics under our performance stock units. Infinite Equity also provided services associated with the pay versus performance disclosures. The compensation committee has reviewed the independence of FW Cook and Infinite Equity, including considering the factors required by NYSE listing standards. After the review, the compensation committee determined that each of FW Cook and Infinite Equity, Inc. is independent and that no conflict of interest exists that would prevent either from providing independent and objective advice to the compensation committee. |
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| Chair Carol Burt Other Members Jan De Witte John Hernandez Ronald Taylor Independent: 100% Meetings in Fiscal Year 2024: 4 Fiscal Year 2024 Meeting Attendance: 100% | Compliance Oversight Committee Primary Responsibilities The compliance oversight committee’s primary purposes are to: •review and oversee our compliance with US federal healthcare laws and regulations, including our obligations under the corporate integrity agreement we entered in December 2019; and •to lead the board’s compliance with its obligations under the agreement. The compliance oversight committee is briefed by our chief compliance officer each quarter, and is assisted by an outside compliance expert retained by the company. A senior member of the independent review organization that audits our compliance with the corporate integrity agreement reports regularly to the compliance oversight committee and to the senior management of the company responsible for identifying compliance risks. The corporate integrity agreement expires in December 2024, and the company expects to complete its efforts to wrap up compliance with the corporate integrity agreement shortly after the end of fiscal year 2025. |
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| Chair Richard Sulpizio Other Members Ronald Taylor Carol Burt Karen Drexler Independent: 100% Meetings in Fiscal Year 2024: 4 Fiscal Year 2024 Meeting Attendance: 100% | Nominating and Governance Committee Primary Responsibilities The nominating and governance committee’s primary purposes are to: •assure that the composition, practices, and operation of our board contribute to lasting value creation and effective representation of our stockholders; and •assist the board with selecting board and committee members, committee selection and rotation practices, evaluating the board’s overall effectiveness, and reviewing and considering developments in corporate governance practices |
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Director Engagement During fiscal year 2024, each director attended 100% of the meetings of our board and of the committees on which the director served. Our board and standing committees met, as follows: •Board: four meetings; •Compensation committee: five meetings; •Audit committee: eight meetings; •Compliance oversight committee: four meetings; and •Nominating and governance committee: four meetings. During each regular board meeting, our independent directors met without Mr. Michael Farrell and Mr. Peter Farrell, and our lead director chaired those sessions and thereafter provided feedback from the board to Michael Farrell as our chairman and chief executive officer. Our board members also connect with senior management outside the context of board meetings. For example, board members participated in question and answer sessions with senior employees responsible for shaping our 2030 strategic plan. In addition to meetings, the members of our board and its committees sometimes act by written consent in lieu of a meeting, as permitted under Delaware corporate law, or discuss company business without calling a formal meeting. All our directors were present for our 2023 annual stockholders meeting. We encourage directors to attend our annual meetings and we generally schedule board meetings to coincide with the annual meeting to facilitate directors’ attendance. Board Evaluation Process After each fiscal year, the nominating and governance committee oversees an annual assessment by the board of the board's performance individually and as a whole. The nominating and governance committee establishes and refreshes the evaluation criteria and implements the evaluation process. The assessment includes annual individual director assessments--including an evaluation of the performance of each director--committee assessments, and board assessments. The process includes a review of areas that the board or management believes the board can better contribute to the company's governance as well as a review of committee structure, membership, leadership, and succession. The nominating and governance committee uses the results of the board evaluation process to assess and determine the characteristics and skills required of existing and prospective board members. Board Oversight Role Board Oversight of Strategy Our chief executive officer serves as the chairman of our board and leads the board’s participation in the continued evolution of our corporate strategy. This structure results in effective participation in the company's strategy by the board in advance of and in response to the competitive conditions facing our company. Board feedback is shared regularly and continuously. The board also participates in a collective review of the company's strategy annually and as needed during individual board meetings. The board receives periodic strategic presentations by senior management of the company, including both product and SaaS leadership, as well as other key members of management. The board is also introduced to the company's products through briefings on product development and evolution of the company's global go to market strategies. The board has visited retail sites in Sydney, Australia, and toured manufacturing facilities in Singapore and Lyon, France. The board has been briefed on the company's new global operating model by the chief executive officer and his executive leadership team. The company's 2030 strategy has been presented to the board for review and active discussion on the many choices facing our company as we seek to continue and accelerate our growth trajectory. In each board meeting, the board participates in director round table sessions with senior and mid-level leaders regarding the competitive landscape facing the company. The board regularly participates in regular director education sessions on topics that affect the company as it moves forward. Board Oversight of Risk The general risk oversight function, including with respect to sustainability issues and cybersecurity, is retained by the full board. The standing committees of the board, comprised and chaired by our independent directors, retain primary responsibility for risk identification and analysis in the key areas further identified below. The committees periodically update the board about significant risk management issues and management’s response.
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| Board | | | | | | | | | | Audit Committee | Compensation Committee | Compliance Oversight Committee | Nominating and Governance Committee | | Overseeing financial risk, capital risk, financial compliance risk, code of conduct, ethics and legal compliance, and internal controls over financial reporting. | Overseeing our compensation philosophy and practices and evaluating the balance between risk-taking and rewards to senior officers, and reviews the sales compensation plans for potential risks. | Overseeing compliance with United States federal healthcare laws and regulations, and specifically obligations under the corporate integrity agreement we reached in 2019. | Evaluating each director’s independence, evaluating the effectiveness of our corporate governance guidelines, and overseeing management’s succession planning. | | | | | | | Management | | | | | Designated internal management, as well as certified professional accounting firms performing annual internal audits, regularly review and test functions, controls and processes to review, evaluate and recommend mitigation strategies, as may be warranted. Critical areas of focus include financial, operational, regulatory, compliance, economic, compensation, privacy, cybersecurity, and competition, among others. | | | |
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Sustainability Oversight The full board is responsible for general oversight of our environmental, social, governance, and sustainability strategy. We have designated a cross-functional management team to execute our sustainability programs. As a consequence of ongoing review and input, our chief executive officer, with the approval of our nominating and governance committee, has assigned leadership of sustainability reporting to our chief compliance officer for fiscal year 2025. We are well prepared to meet our public reporting obligations under the various laws in the countries in which we operate, and we regularly engage with our employees to educate them and our stockholders on the company’s efforts in sustainability. Cybersecurity Oversight The full board is responsible for general oversight of our cybersecurity program. Our full board meets regularly with our chief information security officer, privacy team, global general counsel, and other executives responsible for strategy and execution of our cybersecurity and data privacy programs. Our independent directors have attended cybersecurity training which covered the new SEC disclosure requirements and the use of artificial intelligence tools in our products. Additionally, in fiscal year 2024, the nominating and governance committee and the audit committee reviewed and recommended and the board adopted a new policy on board oversight for public reporting of material cybersecurity breaches, as required by new rules adopted by the SEC. The cybersecurity policy referenced above included input from the entire board. Information about our cybersecurity and privacy initiatives can be found at https://investors.resmed.com/ investor-relations/about-us/Corporate-Citizenship-at-ResMed/default.aspx and in our 2023 Report on Environmental, Social & Corporate Governance topics. Succession Planning Our board is actively engaged in succession planning of company leadership. The board reviews company succession plans on an annual basis, and meets frequently with members of the executive leadership team individually and as a group. The board has approved the company's emergency chief executive officer succession plan, and board leadership will be transitioned smoothly to our lead director in the event of Mr. Michael Farrell's departure as board chairman. As part of its practice of inviting senior management employees to participate in quarterly roundtable discussions, our board members have met with most members of management that have been identified as potential successors to executive leadership. Finally, board members often meet separately with senior management in connection with our board meetings. Sustainability, Environmental and Social Governance Matters At ResMed, one of our primary goals is to create a healthier, more sustainable future for all. We are obsessed with doing things right and ensuring a foundation of ethics, quality, sustainability, and excellence. We are enabling a sustainable business through our approach to environmental, social, and governance results, just as we do through product development, quality, regulatory, compliance, cybersecurity, and commercial operations. Our mission to change the lives of 250 million people in 2025 is the foundation of our sustainability strategy and is integrated into our business by thoughtfully balancing the needs of all our stakeholders. We are dedicated to our people and the patients, families, clinical communities, and care providers we serve. We prioritize the well-being of our ResMed communities. We are committed to moving global healthcare systems from those that retroactively care for the sick in hospital to proactive, more affordable, and more accessible systems that keep people well in their homes. At the most senior level, our board of directors has oversight of ResMed’s sustainability strategy. ResMed’s executive leadership works directly with the board chairman and chief executive officer and other senior leaders to implement the strategy to promote responsible and sustainable business practices through a culture of integrity and accountability across ResMed. We published our most recent sustainability report in February 2024. Information about our sustainability initiatives can be found in the governance documents section in our investor relations page at investors.resmed.com including our current report on environment, social, and corporate governance issues. The report highlights our commitment to sustainability standards. Our Products We have a strong track record of innovation in sleep and respiratory care. In 1989, we introduced our first continuous positive air pressure device. Since then, we have been committed to an ongoing program of product advancement and development. Currently, our product development and clinical trial efforts are focused on not only improving our current product offerings and usability, but also expanding into new digital product applications based on billions of nights of de-identified sleep data collected from over twenty six million connected sleep devices. Our core mission is to improve people’s health and wellbeing by providing innovative and high-quality products and services for sleep apnea, COPD, and other chronic respiratory conditions, as well as to help streamline the process of aiding and managing consumers of out-of-hospital care services with software used to provide care for patients outside the hospital, and preferably in the home. This focus on product innovation is reflected not only in the high regard our customers have for our products and services but in our vigilance in meeting our safety and marketing obligations. We have a strong track record of quality, innovation and continuous improvement and our quality management system guides our employees and suppliers’ operations to ensure our products are designed, manufactured, and distributed to meet patient needs and performance requirements. Environment We operate our business efficiently and responsibly consistent with our role as a medical device manufacturer, while always striving to reduce our environmental footprint throughout our business operations and supply chain. We are committed to working with our employees, suppliers, and customers to eliminate unnecessary waste in all our systems and processes, minimize pollution, decarbonize our operations, design and develop innovative products with reduced impact on the environment throughout their lifecycle, monitor our environmental performance, continually make improvements, and fulfill our compliance obligations. Specifically, we are focused on energy efficiency, managing our electricity consumption, greenhouse gas emissions, sustainable design and packing, improving waste and recycling, water stewardship and the use of paper. Our People The ResMed workforce is diverse and is compromised of professional (i.e. engineers and other equivalent qualified specialists positions), managerial, executive, and administrative employees, as well as production, warehouse, logistics and operational employees. ResMed facilitates employee communications through face to face briefings and technology solutions and offers ongoing global surveys to identify and respond to issues within the workplace. We routinely surpass industry benchmarks for both employee participation and satisfaction in our employee surveys. We are committed to building and fostering an extraordinary culture of belonging, inclusion, and diversity for success, where every ResMedian does their best work to help millions of people live healthier and higher-quality lives. We are committed to diversity and inclusion, people development, recruitment excellence, employee engagement and listening, work-life balance and flexible working, fair, equitable and competitive compensation and benefits, and employee consultation.
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Our board of directors regularly meets with ResMed employees in roundtable sessions during our board meetings, providing an additional opportunity for our employees to connect with our board, to share experiences, and to foster an ongoing dialogue about the workplace. Health and Wellbeing We recognize the benefits of a healthy workforce and adopt a holistic approach to the health and safety of our people. We provide onsite support for employee fitness when possible, for example at our major campuses in Sydney, San Diego, and Singapore. We offer employee health and wellbeing programs that may variously include on-site blood pressure, cholesterol, and heart testing. Programs may include seasonal flu vaccinations, subsidized quit-smoking programs, screening for sleep apnea, confidential third-party counseling and referrals on stress and mental health issues, support for a gym membership, and in some jurisdictions, company- sponsored private health insurance. Community Our community contributions reflect our mission to improve millions of lives worldwide through the treatment of chronic diseases like sleep apnea, COPD, and other chronic diseases, plus improved management of consumers benefiting from out-of-hospital care. We work with “healthcare ecosystem” participants to create opportunities that enable access to care, technology, and services needed for all people at the right time in the right settings. This means we conduct relevant research, engage with and support communities as a trusted partner through unwavering commitment. Our contributions to our local communities are made in both monetary contributions and the time and championship of our employees. Stakeholder Engagement and Director Communications ResMed’s management and investor relations team regularly engages with current and prospective investors in ResMed and with other stakeholders such as financial analysts, regulatory bodies, and the media. We use a variety of communication and engagement channels, including quarterly earnings releases and conference calls, phone call and video meetings, in-person and virtual conferences, management presentations, investor roadshows, onsite visits, and other interactions as appropriate. Topics regularly discussed include company financials and operational results, short-term and long-term strategy, headwinds or challenges in the business, and other topics as they come up. The investor relations team reports regularly to management and the Board. Communications with Our Board of Directors Any interested person, including any stockholder, may communicate with our non-employee board members by written mail addressed to the chair of the nominating and governance committee, care of Secretary, ResMed Inc., 9001 Spectrum Center Boulevard, San Diego, California 92123 USA. We encourage stockholders to include proof of ownership of our stock in their communications. The Secretary will forward all communications to the chair of the nominating and governance committee. Governance Policies and Practices Availability of Corporate Governance Documents Our corporate governance guidelines state goals regarding composition of the board and committees, meetings, and expectations of directors. A copy of our corporate governance guidelines may be found on our website at investors.resmed.com. Code of Ethics We have a code of business conduct and ethics for directors, officers, and employees, which can be found at investors.resmed.com. The code summarizes the compliance and ethical standards and expectations we have for all of our officers, directors, and employees, including our chief executive officer and senior financial officers, with respect to their conduct in connection with our business. Our code of business conduct and ethics constitutes our code of ethics within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and NYSE listing standards. Our chief compliance officer reviews, and suggests revisions to, our code of business conduct and ethics to our audit committee on an annual basis. We will disclose future material amendments to or waivers of certain provisions of our code of business conduct and ethics applicable to our principal executive officer, principal financial officer, principal accounting officer, controller, and individuals performing similar functions on our website at investors.resmed.com within five business days or as otherwise required by the SEC or the NYSE. Pledging and Hedging We have a policy prohibiting our directors, officers, and other employees from hedging or pledging their ResMed stock. This policy prohibits buying or selling puts or calls, short sales, collars, forward sale contracts, equity swaps, and any other financial instrument designed to hedge or offset a decrease in the market price of ResMed stock. Transactions with Related Persons Our code of conduct requires directors, executive officers, and employees to disclose any situation that would reasonably be expected to give rise to a conflict of interest. Conflicts involving executive officers may be waived only by our board or the appropriate board committee. Our related party transaction policy and procedures are available at investors.resmed.com. Under that policy, our audit committee will review and either approve or disapprove any transaction between ResMed and an executive officer, director, director nominee, or any other “Related Party” (as defined under Item 404 of SEC Regulation S-K) in which any Related Party has a direct or indirect material interest. Management is responsible for providing a report to the audit committee on an ongoing basis as to all potential related party transactions. Under this policy, the audit committee has pre-approved certain transactions, including: •any compensation arrangement that is approved by our compensation committee for payment to an executive officer, or to a family member of a board member or executive officer, if approved by the compensation committee or approved in the normal course of business without the participation by the board member or executive officer. We historically and currently review in detail the responses of our executive officers and directors to their directors’ and officers’ questionnaires for any reportable related party transactions; •transactions where the rates or charges involved are determined by competitive bids; •transactions that are in the Company’s ordinary course of business and where the interest of the related party arises only from the related party’s position as a director or less than 5% owner of another corporation or organization that is a party to the transaction; and •transactions where the amount involved is less than $120,000. Michael Farrell is our chief executive officer and chairman of the board of directors, and the son of Peter Farrell, our founder, a director, and chairman emeritus. Their compensation is discussed under the sections “Compensation Discussion and Analysis” for Michael Farrell, and “Director Compensation – 2024” for Peter Farrell. We set compensation for Michael Farrell and Peter Farrell in accordance with our related party transaction policy. In setting compensation, we followed the same policies and practices that we have historically used to set compensation for other similarly-situated employees and directors. In addition, all compensation paid to Michael Farrell was approved by our board upon recommendation by the compensation committee (without Peter Farrell’s participation). Similarly, all compensation paid to Peter Farrell was approved by the independent members of our board (without Michael Farrell’s participation), after considering a recommendation from our compensation committee (made without Michael Farrell’s participation).
Other NEOs FY24 Compensation Summary
| • • • • • • • • | | Director Compensation |
Other NEOs FY24 Compensation Summary
Overview Dual listing; US pay model. On an annual basis, the compensation committee and board review data on both US peers and Australian peers, reflecting the company’s dual-listing locations. In May 2023, as part of this regular review, they considered FW Cook’s report covering cash and equity compensation, compared to a peer group of 19 medical device and medical technology companies in the US. More information on the peer groups is included in the section in our Compensation Discussion and Analysis section entitled “Peer group comparisons.” Australia and the US generally have different pay philosophies for compensating non-executive directors. ResMed’s Australian peers generally pay non-executive directors higher cash, award little or no equity, and have overall lower compensation than ResMed’s US peers. The grant of equity awards to directors is routine in the US. All but one of our US peers grant equity to their non-executive directors, and as of May 2023 approximately 95% of those granting equity used full value shares, while approximately 40% of US peers also granted stock options. The board and compensation committee believe that director equity grants, coupled with our equity ownership guidelines, promote long-term ownership and align our directors with stockholders. While the board considers Australian director pay practices, the board believes US peers are most relevant for ResMed director compensation. ResMed’s primary listing is on the NYSE, we are primarily subject to US corporate governance requirements and risks, and eight of our nine independent directors reside in the US. In addition, this US perspective is consistent with our executive compensation philosophy which gives more weight to ResMed’s US peers’ pay practices, and more directly aligns the interests of our board members with those of our stockholders through equity ownership. Finally, we do not wish to create internal or cultural divisions by using different pay models for directors based in the US and other countries. The compensation committee and board will continue to monitor compensation trends, competitive practices, tax regulations, and other matters related to non-executive director compensation, and adjust as appropriate. Elements After considering the FW Cook report regarding market competitiveness among US peer companies, the compensation committee recommended, and in May 2023 the board approved, an increase in the lead director retainer and non-executive director equity value for fiscal year 2024, effective as of July 1, 2023, as shown in the table below. The equity component of the director compensation program was last changed in 2010. We do not provide an additional retainer to, or fees for meeting attendance by committee members.
Other NEOs FY24 Compensation Summary
| Director | Fees Earned or Paid in Cash(a) | Option Awards(b) | Restricted Stock Units(c) | Other Compensation(e) | Total | | Carol Burt | $110,000 | | $259,967 | | $369,967 | | Jan De Witte | $70,000 | | $259,967 | | $329,967 | | Karen Drexler | $75,000 | $129,986 | $129,983 | | $334,969 | | Peter Farrell | $70,000 | | $259,967 | $389,719 | $719,686 | | Harjit Gill | $70,000 | | $259,967 | | $329,967 | | John Hernandez | $70,000 | $129,986 | $129,983 | | $329,969 | | Richard Sulpizio | $88,750 | | $259,967 | | $348,717 | | Desney Tan | $70,000 | | $259,967 | | $329,967 | | Ronald Taylor | $121,250 | | $259,967 | | $381,217 |
Other NEOs FY24 Compensation Summary
(a)Each director was also reimbursed for expenses incurred for attending meetings (although these amounts are not reflected in the table above). Ms. Drexler, Mr. Sulpizio and Mr. Taylor received pro-rated committee chair retainers as a result in the change of chairperson for the compensation and nominating & governance committees. (b)The dollar value of the option awards shown are computed in accordance with FASB ASC Topic 718, and are based on the Black- Scholes model of option valuation, with an exercise price of $148.90, reflecting the closing price on the date of grant and the remaining assumptions shown in footnote 11 “Stockholders Equity” to our financial statements contained in our Form 10-K for the fiscal year ended June 30, 2024. (c)The dollar value of the RSU awards shown represent the grant date fair value of the stock awards granted, computed in accordance with FASB ASC Topic 718. The RSU fair value of $147.04 is based on (i) the grant date closing price adjusted by (ii) the present value of lost dividends over the vest period. (d)The following table sets forth the number of options (both exercisable and unexercisable) and RSUs held by each of our non-employee directors and Dr. Farrell as of June 30, 2024, the end of fiscal year 2024:
Other NEOs FY24 Compensation Summary
| Director | Options Outstanding at Fiscal Year End | Restricted Stock Units Outstanding at Fiscal Year End | | Carol Burt | 0 | 1,768 | | Jan De Witte | 0 | 1,768 | | Karen Drexler | 10,467 | 884 | | Peter Farrell | 13,137 | 884 | | Harjit Gill | 0 | 1,768 | | John Hernandez | 0 | 1,768 | | Richard Sulpizio | 0 | 1,768 | | Desney Tan | 0 | 1,768 | | Ronald Taylor | 0 | 1,768 |
Table of Contents
| Grants of Plan-Based Awards | 69 | | Outstanding Equity Awards at Fiscal Year-End | 71 | | Option Exercises and Stock Vested | 73 | | Nonqualified Deferred Compensation | 73 | | Potential Payments on Termination or Change of Control | 75 | | Chief Executive Officer Pay Ratio | 79 | | Pay versus Performance | 80 |
Other NEOs FY24 Compensation Summary
| Goal | Target Performance | Actual Performance* | % of Goal Achieved | % of Payout Earned (Before Weighting) | | Corporate adjusted net sales | $4,768 | $4,720 | 99.00% | 96.65% | | Corporate adjusted net operating profit | $1,493 | $1,563 | 104.69% | 115.63% | | Corporate weighted earnout - 106.14% | | | | | | SaaS adjusted net sales | $593 | $587 | 99.04% | 96.78% | | SaaS adjusted net operating profit | $145 | $159 | 109.95% | 133.18% | | SaaS and Corporate combined weighted earnout - 110.56% | | | | |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.” We set challenging goals for our executives for fiscal year 2024. All fiscal year 2024 cash incentive plan target goals were substantially higher than fiscal year 2023 actual performance and fiscal year 2023 target goals, despite the challenging operating environment including the surge in global demand for our products, supply chain constraints, and an increase in manufacturing, warehouse and component costs. As in past years, our short-term incentive goals are aligned with our internal budget as approved by our board, and as adjusted per plan parameters. Long-Term Equity Incentive Compensation Our equity program design is balanced, with 50% of grant value in long-term performance units, providing a direct link with the long-term interests of our stockholders. Our fiscal year 2024 equity program is illustrated below:
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| | | 25% PSUs earned based on performance (absolute TSR) | | PSUs, vesting after four years, unless accelerated for performance after three years, based on TSR | | Long-term incentive grant value | | 25% PSUs earned based on performance (relative TSR) | | PSUs, vesting after three years, based on relative TSR performance against S&P 500 index peer group | | | | 50% time-vested options and/or RSUs based on threshold performance | | Choice of options, RSUs, or a 50/50 split, vesting ratably over three years. RSUs earned based on adjusted net operating profit targets. |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
The grant date for our awards and the commencement of the performance period for our PSUs historically has been on the date of our annual stockholder meeting in November during that fiscal year. Going forward that date will be shortly after the Form 8-K filing with the SEC which includes the results of the vote at that annual stockholder meeting. New relative TSR performance measure with challenging targets over three-year performance period adopted commencing with fiscal year 2024 PSU Program. Commencing with the grants made in November 2023, one half of PSUs awarded, or 25% of total equity award value for fiscal 2024, is based on our relative TSR performance as compared to the TSR performance of the S&P 500 Index companies over a three- year performance period. Payout would range from 45% to 200% of target PSUs granted, with threshold relative TSR performance at 30th percentile resulting in 45% payout, target relative TSR performance at 60th percentile resulting in 100% payout, and relative performance at the 95th percentile or better resulting in a 200% payout; provided, however, that if our absolute TSR is negative, then payout for our relative TSR performance cannot exceed 100% regardless of our relative percentile performance. No payout occurs for below threshold performance. Absolute TSR PSUs, with challenging TSR targets. For fiscal year 2024, half of the PSUs granted in fiscal 2024, and all PSUs granted for prior years, may be earned based on minimum annual growth of our absolute TSR on the NYSE that exceeds 5%, with a target earnout set at 10% compounded annual returns, as set forth in the table below.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| TSR Requirements | Annual Base TSR | Cumulative 4-year TSR | Accelerated Cumulative 3-Year TSR | Payout Percentage of Target Shares Granted | | Below threshold | Below 5% | Less than 21.6% | Less than 15.8% | 0% | | Threshold | 5% | 21.6% | 15.8% | 50% | | Target | 10% | 46.4% | 33.1% | 100% | | Maximum(a) | 15% | 74.9% | 52.1% | 200% |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
(a)Maximum earnout is 225% for outstanding PSU grants made in fiscal years 2021 and 2022. Annual awards granted since November 2022 have a maximum earnout capped at 200% of target PSUs to align with peer practices and the interests of our shareholders. Our Absolute TSR PSU program design encourages accelerated achievement of targeted growth by including an additional feature whereby 25% of the target Absolute TSR PSUs (representing less than 7% of the executive's total fiscal year award) may be earned and banked if, during the first three years, at the end of any fiscal quarter, cumulative TSR since grant is equal to or greater than 33%, which is the required minimum performance for payout at target after three full years. Banked awards are paid at the end of three years and count against actual awards earned based on performance at the end of the performance period. Once the banking condition is met, no additional banking may occur. The PSUs that may be earned based on our relative TSR performance do not have any banking feature. The committee believes this PSU design closely aligns with actual stockholder experience, mitigates for point-to-point stock price volatility, provides a strong retention mechanism, and rewards long-term value creation for our stockholders. Payout Tracking under PSUs Demonstrates Alignment with Our Stockholders. Recovery of long-term stockholder value and impact on Absolute and Relative TSR PSUs. Our stock price suffered a set-back in early fiscal 2024. Our stock price, which was at $218.50 at June 30, 2023, was $148.90 on the November 23rd annual equity award grant date for our PSUs, recovered to $191.42 at fiscal year end of June 30, 2024 and has improved to $247.15 as of the record date. Historically, our Absolute TSR PSUs have been earned after the three-year accelerated payout performance period. As a result of stock price decline in the second quarter of fiscal 2024, the unbanked PSUs granted in November 2020 (fiscal year 2021) did not payout after the three-year accelerated performance period that ended in November 2023, when the stock price was $148.90. In November 2023, 25% of the fiscal year 2021 target PSUs that had previously been earned and banked based on interim stock performance vested and were paid at the end of the three-year performance period for banking, as shown in the table below.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Named Executive Officer | Target Number of Shares at Grant | Banked Number of Shares Distributed | | Michael Farrell | 17,875 | 4,469 | | Bobby Ghoshal | 2,786 | 697 | | Justin Leong | 2,554 | 638 | | Michael Rider(a) | 0 | 0 | | Brett Sandercock | 4,643 | 1,161 |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
(a)Mr. Rider was not granted PSUs prior to his promotion on July 1, 2023. Based on our stock price of $191.42 as of June 28, 2024, the last trading day of our 2024 fiscal year, the remaining fiscal 2021 Absolute TSR PSUs, and the Absolute TSR PSUs granted in fiscal years 2022 and 2023 would result in no payout, as illustrated in the table below. The portion of the PSUs that were granted in fiscal 2024 based on absolute TSR performance would result in a payout as shown below, with 25% of such fiscal 2024 Absolute TSR PSUs earned and banked, based on stock price at June 30, 2024. The earned and banked PSUs are subject to vesting until the end of the three-year performance period for banking in November 2027. While the information presented is based on fiscal year-end stock price value, the performance periods end, and thus the applicable stock price for determining PSUs earned, is three to four years, if applicable, following the November grant date of the PSUs. The table below illustrates the grant dates and stock price at the time of PSU grant, and whether the PSUs would payout based on our stock price at the end of fiscal year 2024 of $191.42. The closing stock price on the record date of $247.15 would similarly result in no payout under the fiscal year 2021, 2022 and 2023 PSUs. These potential no-payout results under our PSUs further illustrate our focus on tying at-risk pay to performance and alignment with stockholder interests and our stock price performance.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Fiscal Year | PSU Grant Date | Starting Price | TSR | 25% of Absolute TSR PSUs Earned and Banked | Percent of Target Payout Based on (June 28, 2024) Stock Price of $191.42 | | 2021 | November 19, 2020 | $211.76 | Absolute | Distributed November 2023 | 0% | | 2022 | November 18, 2021 | $263.16 | Absolute | No | 0% | | 2023 | November 16, 2022 | $224.58 | Absolute | No | 0% | | 2024 | November 16, 2023 | $148.90 | Absolute | Earned June 2024 subject to vesting | 87% | | 2024 | November 16, 2023 | $148.90 | Relative | Not applicable | 189% |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
Compensation Governance Best Practices Our compensation committee, assisted by its independent compensation consultant, continuously monitors emerging best executive compensation practices, particularly at our peer companies. As part of this review, and also based on communications with our stockholders, during fiscal year 2024, we continued use compensation practices that we believe are consistent with best practices, and do not have practices generally viewed as problematic: •Compensation recovery or "Clawback" policy. We recently updated our compensation recovery policy, which provides for the recovery of incentive compensation from our executive officers and other senior management consistent with NYSE rules. Our updated compensation recovery policy replaced our 2017 compensation recovery policy, effective as of October 2, 2023. •Stock ownership and holding guidelines. We maintain robust stock ownership guidelines, requiring our chief executive officer to hold stock valued at 600% of salary and our other named executive officers to hold stock valued at 300% of salary. •Double-trigger equity acceleration. In our change of control agreements, accelerated vesting of time-vested equity occurs only if a named executive officer's employment is terminated under specified circumstances within six months before or one year after a change of control. •No excise tax gross-ups in change of control agreements. Our change of control agreements do not provide excise tax gross-ups. They include a “best pay” limitation, which reduces the severance payments and benefits payable to the extent necessary so that no portion of any payments or benefits payable in connection with a change of control would be subject to excise tax if the reduction would result in the net amount payable to the employee being greater than the net amount received without the reduction. •Limited severance. All of our named executive officers are employed at-will and have no contractual right to cash severance on termination, except for qualifying terminations in the event of a change of control. The cash severance on change of control is limited to a double-trigger (requiring both a change of control and a termination) and the highest multiplier is for our chief executive officer, at 200% of salary and short-term incentive. •Limited retirement plans. We do not provide supplemental pension plans for our named executive officers. Our executives in the US and Australia participate in our 401(k) plan and superannuation plans, respectively, on the same statutory basis as all other employees. We provide pro-rata equity vesting for officers who retire at or after age 60, with at least 5 years’ service, on the same basis available to all employees who reach these milestones. •Pledging and hedging prohibited. We have a policy prohibiting our officers and directors from hedging or pledging their ResMed stock. See “Pledging and hedging company stock prohibited,” above. •Equity awards do not include dividends. No dividends accrue or are paid on our outstanding equity awards. •Adoption of 10b5-1 plans. We encourage our named executive officers and board members to use 10b5-1 plans whenever they want to engage in any stock sales. Information on the use of those plans by that group is included in our annual report on form 10K. Impact of Dual Market Listing and Say on Pay Results Market-competitive compensation and balancing US and Australian pay practices. The compensation committee reviews benchmark data, but does not target a specific benchmark level. The committee's objective is to provide a target total compensation program that is competitive with similarly-sized US-based public companies in the medical device and medical technology industries with which we compete for executive talent, which is critically important given that we are headquartered in the United States, the majority of our sales come from the United States, and the majority of our officers work and reside in the United States. One of the continued foundations of our ResMed 2025 strategy, as reflected in our new global operating model, is to attract, retain and motivate high-performing, diverse, and entrepreneurial people, which we believe requires providing total direct compensation for executives that is at least near the median of the US market and conforms to US market compensation best practices. Our US-based pay philosophy results in executive compensation that is markedly different than the Australian model, with lower base salary, higher short-term cash incentives, and higher target equity value in alignment with US best practices. US norms also have a lower percentage of equity value subject to performance conditions than exhibited by Australian companies. We balance these competing philosophies by adhering to US best practices and grant 50% of equity in a mix of relative and absolute TSR PSUs. Historical strong say on pay results. At our annual meeting held in November 2023, our stockholders voted to approve, on an advisory basis, the fiscal year 2023 compensation of our executive officers, with approximately 82% of the shares that voted on this proposal voting in favor of our executive compensation. The 82% support was a decrease from the 90% approval in November 2022, and our historical 90% approval rate. We believe our dual US and Australia stockholder base affects our say-on-pay support in a manner that does not apply to many of our US competitors. There is a desire by some Australian stockholders that the compensation of our executive team should reflect the local Australian labor market, rather than the US market where most of our senior leadership team are domiciled and where ResMed is headquartered and competes for talent. Based on feedback from our stockholders, we believe the reduced level of support at our 2023 annual meeting was also a reflection of the disappointment of our stockholders with ResMed's performance and stock price in the periods leading up to the November 2023 annual meeting. We believe we have addressed these concerns through the implementation of our new operating model, along with improved revenue growth, cost discipline, and accelerated profitability as reflected in our fiscal 2024 fiscal year-end results. We also believe that our fiscal year 2024 financial and operational successes in a challenging environment, at risk compensation, such as our PSUs, that are not paid when we do not perform, and five-year TSR strength support the view that the current compensation structure is incentivizing the right behavior, aligns pay with performance, and results in long-term value creation for our stockholders in both the United States and in Australia. Compensation Decision-Making Process Compensation Committee Role The compensation committee establishes our general compensation policies, and reviews and approves salaries, short-term incentives, equity-based compensation, and all other elements of the compensation offered to our executive officers (including our named executive officers). The board has determined that all members of the compensation committee are independent directors under NYSE standards. The committee also reviews our peer group, our executive benefits and perquisites, our equity pay practices, our director compensation, the independence of its advisors, and the risks related to our compensation programs, on an annual basis. The committee regularly considers supplemental compensation policies and practices such as change of control, severance, and retirement. Timing of decisions
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
Historically, the committee reviews and sets our executive officers’ cash compensation, sets the terms of our cash incentive plan, and approves equity grant date values in August following fiscal year- end. Any changes to cash compensation are generally made effective on December 1, to align with our annual equity grant, which historically occurred on our annual stockholder meeting in November. In fiscal year 2024 we delayed compensation decisions regarding equity values and cash compensation until November 2023 in light of the finalization and adoption of our new global operating model. The goals of our annual cash incentive program are a function of our budget, which was not delayed and was approved by the board in August 2023. For fiscal year 2025, our compensation committee returned to its ordinary practice and made fiscal year 2025 compensation decisions at its August 2024 meeting. Historically, the company’s practice is to make annual equity award grants to directors, named executive officers and non-executive management effective on the date of the annual stockholders meeting. Given our traditional earnings release date in late October or early November, the stockholders meeting grant date typically occurs in an open trading window after release of material non-public information. The stockholders meeting date is set several months in advance, providing further transparency and objectivity to the process. In light of the new disclosure requirements under Item 402(x) of Reg. S-K, and to avoid any concern that the Form 8-K setting forth the specific votes for each proposal at the annual meeting (despite the announcement of voting results at the annual stockholders meeting) would be deemed material, the company will delay the annual equity award grant date for directors, executive officers and other employees from the date of the annual stockholders meeting to two business days after the publishing of the annual meeting voting results on Form 8-K. In fiscal 2024, the annual equity awards were granted on the date of the 2023 annual meeting, which was two business days before the filing of the Form 8-K announcing the voting results of that same meeting. Long before that meeting, Mr. Farrell elected to receive 50% options and 50% RSUs for the portion of his annual award that was not PSUs. All other named executive officers elected to receive 100% RSUs. The following information regarding this option grant is provided in accordance with Item 402(x)(2):
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Name | Grant Date | Number of Securities Underlying Award | Exercise Price | Grant Date Fair Value | Percentage Change in the Closing Market Price of the Securities Underlying the Award Between the Trading Day Ending Immediately Prior to the Disclosure of Material Nonpublic Information and the Trading Day Beginning Immediately Following the Disclosure of Material Nonpublic Information | | Michael Farrell | 11/16/2023 | 55,468 | $148.90 | $2,800,025.00 | 2.4% |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
Our equity grant practice is that the granting of incentive awards for promotions, new hires, and other special situations must be properly approved before the grant date, and the grant date is to occur on the first business day of the month after the promotion, new hire or other special situation. The company will no longer provide the choice of stock option grants to any new executives upon promotion or hire so as to reduce the likelihood that an option grant could fall into a window surrounding a public filing. Regardless of grant date, the exercise price for options must equal the closing price of our common stock on the actual grant date, and the price on that date is an important input for determining the number of equity awards granted based on previously awarded grant date values. Independent Compensation Consultants In making its decisions, the committee reviews data obtained from peer group companies and considers the recommendations of management and the analysis and advice of its independent compensation consultant regarding each element of compensation. The committee has independent authority to retain advisors. The committee has retained FW Cook, Inc., an independent compensation consultant, to advise the committee with respect to compensation matters for executive officers. FW Cook performs no work for us other than its work providing executive compensation consulting services to the committee. During fiscal year 2024, the committee reviewed market practices and benchmark data from FW Cook, ResMed’s and our executives’ relative performance, and the recommendations of its consultant. FW Cook further advised the committee regarding long-term incentive design practices and alternatives as well as peer group equity practices. In addition to FW Cook, management retained Infinite Equity, Inc. to advise on valuing performance results of our PSUs and to assist with new SEC disclosure requirements. The committee also considered the experience and knowledge of committee members regarding compensation practices for comparable positions at other companies. Although the committee considers various sources of information and recommendations, ultimately, of course, the committee relies on its own independent judgment. Management’s Role Our management team, particularly our chief people officer and her team, provide input and recommendations to the committee regarding executive compensation. Management provides historical and prospective financial analysis of compensation components and financial performance data. Management also makes recommendations for the committee’s review and decision. While management members typically attend committee meetings, the committee chair excuses individual management members as appropriate for independent review and decision-making. Peer Group Comparisons In making its decisions on executive compensation, the committee refers to competitive analyses prepared by FW Cook, which review each position against third-party compensation survey data and/or peer group officer pay data. The US peer companies are medical device or medical technology companies generally within one-quarter and four times the size of our revenue and market capitalization, with ResMed positioned within a reasonable distance from the median. The committee periodically reviews the composition of the peer group and the criteria and data used in compiling the list and considers modifications to the group. In February 2023, before making fiscal year 2024 compensation decisions, the committee reviewed the US peer group used for fiscal year 2024 and removed one company, Abiomed, due to its acquisition, and maintained the other 19 peer companies from 2023. As a result, the following 19 companies comprised the US peer group that informed our fiscal 2024 compensation decisions:
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| US Peer Group | | | Agilent Technologies, Inc. | Hologic Inc. | | Align Technology, Inc. | IDEXX Laboratories, Inc. | | Baxter International, Inc. | Illumina, Inc. | | Bio-Rad Laboratories, Inc. | Intuitive Surgical, Inc. | | Boston Scientific | Mettler-Toledo International Inc. | | Charles River Laboratories International, Inc. | Revvity, Inc. | | The Cooper Companies Inc. | STERIS plc | | Dentsply Sirona Inc. | Teleflex Incorporated | | Dexcom, Inc. | Waters Corporation | | Edwards Lifesciences Corp. | |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
The committee believes that this peer group reflected a reasonable cross-section of our labor market for talent and included companies that our investors might consider in determining the reasonableness of our pay and alignment of our pay with our performance. From time to time, the committee also considers compensation data analyzed by FW Cook regarding similarly-sized ASX-traded publicly listed companies for our Australia-based chief financial officer, and for other executives based in Australia, as well as for our chief executive officer. The committee did not perform a detailed review against Australian market practices for fiscal 2024 compensation. The committee considers but generally gives less weight to the Australian market data, because the ASX peer group is less comparable to ResMed, and because ResMed compensates senior executives and directors on a US-style pay model, which is structurally and quantitatively different from the typical practices of companies in the ASX peer group. When it was last reviewed in February 2023, the committee considered the existing Australian peer group, and maintained all 15 following Australian peer group companies from the prior year:
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Australian Peer Group | | | Amcor | REA Group | | Aristrocrat Leisure | Reece Limited | | Brambles | Sonic Healthcare | | Cochlear Limited | Seek Limited | | CSL Limited | Telstra | | Fisher & Paykel Healthcare Limited | Transurban | | James Hardie Industries PLC | Xero | | Ramsay Healthcare | |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
At the time the Australian companies were reviewed, ResMed was above the 75th percentile in market capitalization compared to our Australian peer group, and approximately at the median in trailing twelve-months’ revenue. This was in part due to three companies falling below the committee's market capitalization guideline, but the committee determined, in part on the recommendation of FW Cook, to keep the same peer group for continuity and given the limited number of alternative companies. The committee maintains a reference group of SaaS companies (set forth below) to be used as a secondary source of information that is reviewed from time to time. For fiscal 2024 compensation decisions, the committee did not perform a detailed review against SaaS companies, nor did it review the potential reference group of SaaS companies.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| SaaS Reference Group | | | Akami Technologies, Inc. | NetApp, Inc. | | Arista Networks | ServiceNow, Inc. | | Atlassian Corporation Plc | Veeva Systems, Inc. | | DocuSign, Inc. | |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
Compensation Risk Assessment During fiscal year 2024, the compensation committee reviewed our compensation programs, policies and practices for executives as well as for all employees, including sales employees, to evaluate whether the policies or practices present an environment that would facilitate excessive risks or behaviors. The committee was assisted in its various compensation reviews by advice from its independent compensation consultant. The committee believes that our programs, policies and practices are not reasonably likely to have a material adverse effect on our company. The committee believes that the structure and design of the programs do not create incentives to take on too much risk, and that we have policies in place to mitigate risk-taking and support a long-term orientation. These conclusions are supported by the combination of controls and considerations used in our compensation program, including the annual review of the program, blend of short-term, long-term, and incentive-based compensation, the use of performance-based targets and evaluations, oversight of the programs by the committee and senior management, hold back and clawback provisions, and caps on payouts in certain circumstances. The committee believes incentive arrangements encourage behaviors aligned with the long-term interests of stockholders. Fiscal Year 2024 NEO Compensation Base Salary Base salaries provide our executives with a degree of financial certainty and stability. To attract and retain highly qualified executives, we pay within salary ranges that are generally based on similar positions in companies of comparable size and complexity in the US. Using the peer group data, the committee assesses market base salaries at the median, 60th and 75th percentiles. Our executive compensation philosophy is to be guided by salaries for high performing and experienced officers among our US peer group. Adjustments are made based on the committee’s assessment of position, performance, experience, location, and role. We typically review annual salary adjustments for our named executive officers each August with an effective adjustment date in December of each year. For fiscal 2024, after consideration of market data, the committee determined in November 2023, in connection with the adoption of the new global operating model, to increase Mr. Leong's base salary by 40% to reflect his new key role, to increase Mr. Rider's base salary by 5% to reflect his promotion on July 1, 2023 and to increase other employee base salaries by approximately 3-4%. The table below shows the base salaries for our named executive officers. For Mr. Leong and Mr. Sandercock, who are based in Australia, the amounts shown in the table below represent the US dollar equivalent of their non-US dollar-denominated salaries, which is impacted by currency fluctuations. We believe that year-to-year currency fluctuations make the constant currency increases most meaningful for officers residing outside the US.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Named Executive Officer | Fiscal Year 2024 Base Salary | Fiscal Year 2023 Base Salary | Constant Currency Percentage Increase From 2023 to 2024 | | Michael Farrell | $1,185,000 | $1,146,600 | 3.3% | | Chief executive officer | | | | | Bobby Ghoshal | $640,000 | $619,800 | 3.3% | | Chief commercial officer - SaaS | | | | | Justin Leong | $686,289(a) | $487,930(a) | 40.7% | | Chief product officer | AUD 1,016,800 | AUD 722,913 | | | Michael Rider | $500,000 | $475,000 | 5.3% | | Global general counsel and secretary | | | | | Brett Sandercock | $491,836(a) | $475,232(a) | 3.5% | | Chief financial officer | AUD 728,700 | AUD 704,100 | |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
(a)These amounts reflect the exchange rate we used in setting our budget for the respective fiscal year. The exchange rate used for 2024 was approximately AUD:USD 1 to 0.6749, and the exchange rate for 2023 was approximately AUD:USD 1 to 0.6904. The committee approved base salary in local currency. Annual Performance-Based Short-Term Cash Incentives The purpose of our annual short-term cash incentive program is to motivate our executives to meet or exceed our company-wide and business unit short-term operating performance objectives and strategies. The program is intended to motivate our management team to execute on our business goals, to exceed our budgeted performance, to share our success with eligible executives to the extent warranted by our performance, and to provide competitive compensation. Amounts earned are based on a targeted percentage of actual salary paid for the year, rather than the base salary in effect at the end of the year. In setting short-term incentive target opportunities for fiscal year 2024, the committee reviewed data for the 50th, 60th, and 75th percentiles of the peer group. For fiscal year 2024, the committee made no change to the target short-term incentive opportunity for our named executive officers, which range from 60% to 130%. The committee believes it best to tie each executive’s incentive pay to the areas over which the executive can assert the most influence and to vary the weighting to reflect the relative focus desired by the executive for each metric. For fiscal year 2024, the key features of the short-term incentive program continued from fiscal year 2023, with a small shift in weighting for the business unit leader from 60% business unit/40% corporate performance to a 50% split. The committee believed these weightings balance overall enterprise financial performance and specific areas of individual responsibility, while aligning incentives of the executive leadership team to promote cooperation. The performance measures and their weighting by named executive officer for fiscal year 2024 were:
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Named Executive Officer | Adjusted Net Sales | Adjusted Operating Profit | Specific Business Adjusted Net Sales | Specific Business Adjusted Operating Profit | | Michael Farrell | 50% | 50% | 0 | 0 | | Bobby Ghoshal | 25% | 25% | 25% (SaaS) | 25% (SaaS) | | Justin Leong | 50% | 50% | 0 | 0 | | Mike Rider | 50% | 50% | 0 | 0 | | Brett Sandercock | 50% | 50% | 0 | 0 |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
The payout structure for our short-term cash incentive program has remained the same for several years although the goals are updated each year to align with the annual business plan. Amounts earned are based on achieving pre-established goals for each performance metric, applied to each metric individually, as described in the following table. Payouts are expressed as a percentage of short-term incentive opportunity for that performance metric. Performance between the achievement levels is paid based on linear interpolation. The committee has established a cap on the maximum short-term incentive total payout at 200% of each officer’s target short-term incentive opportunity, with no payout on a performance measure if performance is less than 85% of target goal for that measure.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| No Payout | 50% Payout | 100% Payout | 150% Payout | 200% Payout | | <85% of goal | 85% of goal | 100% of goal | 115% of goal | ≥130% of goal |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
The committee approves the actual short-term incentive amounts for executive officers under these criteria after the end of the fiscal year, and after reviewing our financial data and performance. To promote the retentive value of our incentive programs, and subject to the requirements of local law, the committee has adopted a policy that if an executive officer voluntarily separates employment before the date of payment, we will not be contractually obligated to pay any cash or other short-term incentive awards. The goals and actual performance for each of the metrics for the 2024 fiscal year that ended on June 30, 2024, are listed below:
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Short-Term Incentive Component | Threshold Performance- 50% Payout ($ in Thousands) | Targeted Performance- 100% Payout ($ in Thousands) | Maximum Performance- 200% Payout ($ in Thousands) | Actual Performance ($ in Thousands) | Percentage of Targeted Performance Achieved | Short-Term Incentive Percentage Earned Based on Percentage Achieved | | Adjusted net sales | $4,053 | $4,768 | $6,198 | $4,720 | 99.00% | 96.65% | | Adjusted operating profit | $1,269 | $1,493 | $1,941 | $1,563 | 104.69% | 115.64% | | Total achieved after weighting | | | | | | 106.14% | | (50% each) | | | | Farrell, Leong, Rider, and Sandercock | | | | SaaS business adjusted net sales | $504 | $593 | $770 | $587 | 99.04% | 96.78% | | SaaS business adjusted operating profit | $123 | $145 | $188 | $159 | 109.95% | 133.18% | | Total achieved after weighting | | | | | | 110.56% | | (25%-25%-25%-25%) | | | | | | Ghoshal |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
We set challenging goals for fiscal year 2024. Each of our target goals for 2024 required growth over the prior year performance, but also reflected expectations for higher costs associated with continuing supply chain constraints and related cost increases as a consequence of the global pandemic. The increase in demand caused by our competitor's recall drove more sales of flow generators in 2024, but at a lower operating profit based on geographic and product mix. Nonetheless, the targeted goals established for fiscal 2024 were greater than the prior year’s targeted goals and were greater than fiscal year 2023 actual performance. Our fiscal year 2024 adjusted net sales (adjusted for committee-approved plan calculations) target of $4.768 billion represents 14.5% growth over our actual adjusted net sales of $4.163 under the plan for fiscal year 2023. Our actual fiscal year 2024 adjusted net sales growth performance (adjusted for committee-approved plan calculations) was 13.3%, from $4.163 billion in fiscal year 2023 to $4.720 billion in fiscal year 2024, resulting in 96.65% of target opportunity earned for this metric before weighting. The below target payout reflects the rigor of this goal. Our fiscal year 2024 target for adjusted operating profit target of $1.493 billion represents 16.8% growth over our actual adjusted operating profit of $1.278 billion under the plan for fiscal 2023. Our actual adjusted operating profit performance (adjusted for committee-approved plan calculations) increased by 22.3%, from $1.278 billion in fiscal year 2023 to $1.563 billion in fiscal year 2024, resulting in 115.64% of target opportunity earned for this metric before weighting, reflecting our improved cost discipline and accelerated profitability, both of which were a focus of our executive team and a benefit our stockholders. Incentive Plan Adjustments The short-term incentive targets are set when our internal forecasts and budget for the full fiscal year are finalized and approved by the board, which for fiscal year 2024 occurred in August 2023. Our internal forecasts for the GAAP measures of net sales and operating profit set the basis for our short-term incentive targets. In calculating short-term incentive metrics achievement, the committee made adjustments, consistent with plan parameters, as shown in the table below, from our GAAP financial statement revenue and operating profit calculations and from our internal reporting, to eliminate the impact of certain non-operating revenue and expenses as set forth in the table below. There were no adjustments to net sales and operating profit under the short-term incentive program.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| STI Metric and Adjustment(s) | Amount (000's) | | Net sales (GAAP) | $4,685,298 | | use budgeted exchange rates | $34,869 | | exclude sales from unbudgeted acquisitions | $— | | Adjusted net sales | $4,720,167 | | Operating profit (GAAP) | $1,319,895 | | exclude stock-based compensation | $80,184 | | exclude amortization of acquired intangibles | $79,484 | | exclude acquisition-related costs | $483 | | exclude restructuring expenses | $64,228 | | exclude masks with magnets field safety notification expenses | $6,351 | | exclude Astral field safety notification expenses | $7,911 | | use budgeted exchange rates | $4,647 | | Adjusted operating profit | $1,563,183 | | Net sales - SaaS business (non-GAAP from internal reporting) | $584,082 | | use budgeted exchange rates | $2,802 | | Adjusted net sales - SaaS business | $586,884 | | Operating profit - SaaS business (non-GAAP from internal reporting) | $154,450 | | exclude profits and losses from unbudgeted acquisitions | $— | | exclude lease impairments | $4,132 | | use budgeted exchange rates | $626 | | Adjusted operating profit - SaaS business | $159,209 |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
The following table shows the 2024 fiscal year cash incentives at target and as earned. All actual short-term incentive payments were funded in accordance with the pre-established formulas; there was no discretionary or individual adjustment by the compensation committee.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Named Executive Officer | Annual Short-Term Incentive Target Percentage | Annual Short-Term Incentive Target | Annual Short-Term Incentive Earned | Actual Short-Term Incentive as a Percentage of Target | | Michael Farrell | 130% | $1,519,684 | $1,613,032 | 106.14% | | Bobby Ghoshal | 80% | $505,262 | $558,618 | 110.56% | | Justin Leong | 80% | $469,044(a) | $497,856(a) | 106.14% | | Michael Rider | 60% | $293,745 | $311,789 | 106.14% | | Brett Sandercock | 80% | $376,832(a) | $399,979(a) | 106.14% |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
(a)These amounts are in USD and are converted from the amounts that were approved in local currency by the committee. The foreign currency is converted to USD based on the fiscal year 2024 average annual exchange rate of approximately AUD:USD 1 to 0.6556. The committee has approved a short-term incentive program for the named executive officers for fiscal year 2025 that continues the 2024 program design with no structural changes. Long-Term Incentive Equity Award Program
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| | | 25% PSUs earned based on performance (absolute TSR) | | PSUs, vesting after four years, unless accelerated for performance after three years, based on TSR | | Long-term incentive grant value | | | | | | | | 25% PSUs earned based on performance (relative TSR) | | PSUs, vesting after three years, based on relative TSR performance against S&P 500 index peer group | | | | 50% time-vested options and/or RSUs based on threshold performance | | Choice of options, RSUs, or a 50/50 split, vesting ratably over three years. RSUs earned based on adjusted net operating profit targets. |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
The largest component of our named executive officers’ direct compensation provides a long-term incentive and alignment with stockholders through equity participation. The primary purpose of granting equity awards is to link our officers’ financial success to that of our stockholders, with the value of the equity awards increasing only as our stock price increases, and to promote long-term value creation. Our equity mix is 50% in long-term performance-based PSUs (for fiscal 2024, comprised of Absolute TSR PSUs and Relative TSR PSUs, with a 50/50 split), and the remaining 50% in performance-based RSUs and/or stock options. This mix increases the capability of the committee to effectively manage our use of shares under our stock plan, balances the performance leverage and performance risk provided by various equity vehicles, more closely conforms with practices at our peer companies, and promotes long-term stock appreciation and value creation. During fiscal year 2024, we continued to grant PSUs for 50% of the annual equity value for executive officers, and to provide named executive officers the choice to select whether the balance of their equity awards would be entirely in the form of stock options, entirely in RSUs (which are subject to performance measures) or evenly split (in value) between the two. The combined availability of options and RSUs gives our executives the opportunity to balance the incentive award in a manner that suits their particular risk profile and their own preferences in financial or tax planning in US and non-US jurisdictions. We do not pay dividends or dividend equivalents on any of our unvested or unearned equity awards. Fiscal Year 2024 Equity Grant Values Each year, the committee establishes equity grant values, with the number of PSUs, RSUs, and/or stock options determined by the per share grant date values computed under Financial Accounting Standards Board Accounting Standards Codification Topic 718 as determined by an independent consultant. In determining the value of awards granted to specific named executive officers, the committee reviewed our performance, the number of outstanding awards available, the present value of the proposed grant, existing unvested equity ownership, the awards granted in prior years, and the grant practices of our peer group companies. For fiscal year 2024, the committee reviewed peer company data to determine competitive equity award values, at the median, 60th, and 75th percentiles, for each officer’s position. The committee also considered internal equity relationships, to promote a team-based approach for our senior management team. In arriving at the specific grant size, the committee considered the peer group benchmarks at an individual level, as well as aggregate equity compensation for similar groups at our peers. The committee also considered our officers’ individual performance during the prior fiscal year as well as their experience in their role, and expected future contributions. Taking all those factors into account, the committee approved increased 2024 equity grant values as follows: •our chief executive officer received a 1.8% increase, which was informed by company performance in 2023, and to maintain the market competitiveness of his equity compensation; •our chief financial officer and our chief commercial officer- SaaS each received a 4.5% increase, to align with comparable market values; •our chief product officer received a 60% increase to reflect his new global responsibility for driving product innovation, and to better align with the chief commercial officer - SaaS; and •our global general counsel who was promoted to this position effective July 1, 2023, received a 65.8% increase to recognize his increased responsibilities and to move him closer to market for his new position. The following table sets forth annual equity grant values provided to our named executive officers in fiscal year 2024 (compared to fiscal 2023), as well as the elections made by our named executive officers regarding the form of award to receive for fiscal 2024.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Named Executive Officer | Prior Year Approved Grant Value | Approved Grant Value | Percentage of Grant Value in Performance- Based Stock Units(a) | Percentage of Grant Value in Stock Options | Percentage of Grant Value in Restricted Stock Units | | Michael Farrell | $11,000,000 | $11,200,000 | 50% | 25% | 25% | | Bobby Ghoshal | $2,200,000 | $2,300,000 | 50% | 0% | 50% | | Justin Leong | $1,500,000 | $2,400,000 | 50% | 0% | 50% | | Michael Rider | $785,000 | $1,300,000 | 50% | 0% | 50% | | Brett Sandercock | $2,200,000 | $2,300,000 | 50% | 0% | 50% |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
(a)Beginning in 2024, performance stock units were comprised of 50% of the award based on absolute TSR and 50% on relative TSR. Terms of Performance Stock Units Program design. Equity grants to named executive officers during fiscal year 2024 were made under our ResMed Inc. 2009 Incentive Award Plan, as amended and restated (“2009 Amended and Restated Plan”). Long-term PSUs are granted in November as compensation for that same fiscal year. The PSUs for fiscal year 2024 were granted in November 2023 with 50% of the PSUs granted being earned based on our TSR performance relative to the TSR of the S&P 500 Index companies over a three-year performance period and the remaining 50% of PSUs being earned based on our absolute TSR performance. Absolute TSR PSUs. Absolute TSR PSUs are earned and cliff vest after the fourth anniversary of the grant based on our absolute TSR performance during that four-year period, with an opportunity to accelerate payouts after year three if TSR performance is at or above threshold TSR for the three-year performance period, as shown in the table below. If there is acceleration for TSR performance to three years, then the PSU performance period is complete and there is no opportunity to earn shares after the end of the accelerated three-year period. Since the adoption of this PSU structure in 2015, PSU grants made through fiscal year 2020 have been earned based on performance at the end of the three-year performance period. The PSUs granted in November 2020 (fiscal year 2021), other than the 25% previously earned and banked PSUs which were paid in November 2023, did not achieve the required goals for an accelerated three-year payout and may be earned in November 2024 subject to satisfaction of the four-year goals. The share price at the grant date (in November) is used as the starting point for the TSR calculation, and a trailing 30 trading-day average share price is used to calculate the share price at the end of each performance period.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| TSR Requirements | Annual Base TSR | Cumulative 4-year TSR | Accelerated Cumulative 3-year TSR | Payout Percentage of Target Shares Granted | | Below threshold | Below 5% | Less than 21.6% | Less than 15.8% | 0% | | Threshold | 5% | 21.6% | 15.8% | 50% | | Target | 10% | 46.4% | 33.1% | 100% | | Maximum(a) | 15% | 74.9% | 52.1% | 200% |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
(a)The maximum payout was changed from 225% to 200% commencing with grants made in November 2022. Shares earned between these achievement levels are based on linear interpolation. The program has several features to minimize the impact of daily volatility and point-to-point variation, and to encourage accelerated achievement of absolute TSR goals. A 30 trading-day average price is used to measure performance at the end of the period. If cumulative absolute TSR is 15.8% or greater after three years, representing 5% annual growth required for threshold performance, then threshold is earned, with interpolation for three-year cumulative TSR between approximately 16%, 33%, and 52%, as shown in the chart above. If, during the first three years, cumulative TSR after grant is greater than 33.1% at the end of any fiscal quarter, representing target performance after three years, then 25% of the target award would be deemed earned, is banked, and paid out at the end of year three, even if performance at the end of year three is below the three-year threshold. The banking can only occur once, and any final payout would be net of the banked amount. The rationale for banking this relatively small (7% of the overall value of the equity grant) payout that remains unvested until year three is to retain award holders for at least three years while rewarding targeted stockholder value creation, when stockholders have had the opportunity to realize a minimum level of 33.1% TSR in a short time. Relative TSR PSUs. In August 2023, after consideration of input from our independent compensation consultant and review of market practices, the compensation committee determined to revise our PSU program effective with the fiscal 2024 grants made in November 2023, to include, as 50% of the PSUs to be granted, PSUs that are earned based on our relative TSR performance compared to the TSR performance of the S&P 500 Index over a three-year performance period. Payout can range from 45% to 200% of target PSUs granted, with threshold relative TSR performance at the 30th percentile resulting in a 45% payout, target relative TSR performance at 60th percentile resulting in 100% payout, and relative performance at 95th percentile or better resulting in 200% payout; provided, however, that if our absolute TSR is negative, then payout of Relative TSR PSUs cannot exceed 100% regardless of relative percentile performance. No payout is earned for below threshold performance. Shares earned between threshold and maximum achievement levels are based on linear interpolation. A 30 trading-day average price is used to measure performance at the end of the period. There is no banking feature with the Relative TSR PSUs. Our executives’ PSU grants are aligned with the interests of our stockholders. The Absolute TSR PSUs granted in November 2020 (fiscal year 2021), other than the 25% previously earned and banked Absolute TSR PSUs which were paid in November 2023, did not achieve the required goals for an accelerated three-year payout at the end of fiscal 2024 and will only be earned in November 2024 subject to satisfaction of the four-year goals. The banked 25% of target fiscal 2021 Absolute TSR PSUs were based on performance for the fiscal quarter ended September 30, 2021, when the TSR exceeded 33%. The limited pay-for-performance outcome after year three aligns pay delivery with performance, with no discretionary adjustments by the committee. Our named executive officers earned shares from the fiscal 2021 Absolute TSR PSU grants as shown in the table below.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Named Executive Officer | Target Number of Shares at Grant | Banked Number of Shares Distributed | | Michael Farrell | 17,875 | 4,469 | | Bobby Ghoshal | 2,786 | 697 | | Justin Leong | 2,554 | 638 | | Michael Rider(a) | 0 | 0 | | Brett Sandercock | 4,643 | 1,161 |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
(a)Mr. Rider was not granted PSUs prior to his promotion on July 1, 2023. Based on our stock price on the June 30, 2024 of $191.42, and our stock price on the record date of $247.15, apart from the Absolute TSR PSUs granted in November 2023, there has been insufficient growth since the grant date such that no payouts would occur. The portion of the PSUs that were granted in fiscal 2024 based on absolute TSR performance would result in a payout, and 25% of such fiscal 2024 Absolute TSR PSUs were earned and banked as of the quarter ending June 30, 2024 and are subject to vesting until the end of the three-year performance period for banking. While the information presented is based on fiscal year-end stock price value, in accordance with SEC rules, performance periods end, and thus the applicable stock price for determining PSUs earned, is three to four years, if applicable, following the November grant date of the PSUs. These potential no-payout results under our Absolute TSR PSUs granted in fiscal 2021, 2022 and 2023, as well as the potential payout of the fiscal 2024 grants given the stock price recovery, further illustrate our focus on tying at-risk pay to performance and alignment with stockholder interests and our stock price performance.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Fiscal Year | PSU Grant Date | Starting Price | TSR | 25% of Absolute TSR PSUs Earned and Banked | Percent of Target Payout Based on (June 28, 2024) Stock Price of $191.42 | | 2021 | November 19, 2020 | $211.76 | Absolute | Distributed November 2023 | 0% | | 2022 | November 18, 2021 | $263.16 | Absolute | No | 0% | | 2023 | November 16, 2022 | $224.58 | Absolute | No | 0% | | 2024 | November 16, 2023 | $148.90 | Absolute | Earned June 2024 subject to vesting | 87% | | 2024 | November 16, 2023 | $148.90 | Relative | Not applicable | 189% |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
Terms of Restricted Stock Units and Stock Options For fiscal year 2024, we continued our policy of allowing our named executive officers the choice of whether to receive all options, all performance-based RSUs, or a 50:50 split of the two award types for the 50% of their award that is not granted in PSUs. That choice is made well in advance of the grant date. Restricted stock units. Our RSUs are subject to performance conditions to vesting based on meeting threshold levels of profitability measured by our actual adjusted earnings compared to board approved targeted levels of earnings for each of the three performance periods: (1) third fiscal quarter; (2) fourth fiscal quarter; and (3) the third and fourth fiscal quarters combined. One half of the RSUs granted may be earned based on the earnings for each of the third and fourth fiscal quarters. No more than 100% of the RSUs granted may be earned, and once the target is met for a performance period, all RSUs associated with that period are earned. If the target for a performance period is not met, none of the RSUs for that period are earned. Once earned, the RSUs are subject to time-based vesting in one-third annual increments from the date of the grant, based on continued service with us, which facilitates retention. We do not pay dividends or dividend equivalents on any of our unvested equity awards including RSUs. In August 2024, the committee determined that the performance condition for the November 2023 RSU grants to executive officers had been met, and 100% of the RSUs granted were earned, as shown in the table below. The earned RSUs remain subject to one-third annual vesting increments from the date of grant, based on continued service.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
| Performance Component | Threshold | Approximate Actual Performance | Percentage Earned of RSU Award for the Metric | | Fiscal year 2024 third quarter adjusted earnings | $173,806,482 | $378,193,258 | 50% | | Fiscal year 2024 fourth quarter adjusted earnings | $181,390,144 | $384,752,507 | 50% | | 2024 third and fourth quarter adjusted earnings | $355,196,625 | $762,945,765 | 100% |
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
Stock options. The 2009 Amended and Restated Plan requires that the exercise price of options equal the fair market value on the grant date, as measured by the closing price of our common stock on the NYSE on that date. Stock options granted to named executive officers and certain other senior executives during the November annual grant process become exercisable one-third per year on November 11 of each year after the grant date, subject to the executive’s continued service with us, and have a seven-year term unless the executive’s employment with us ends. The committee considers stock options performance-based compensation. The ultimate economic value received by an option recipient depends on our future stock price performance, and could be zero, if the stock price does not increase above the strike price. These features of stock options align our executives’ interests with stockholders’ interests. Perquisites and Other Benefits During fiscal year 2024, after review by the committee, we continued the limited benefits described below to our named executive officers. The incremental cost to us for these benefits is described in the summary compensation table. •We provided comprehensive medical examinations to promote personal health and work/life balance. We believe this benefits us as well as the individuals through improved health, productivity, and longevity, and is consistent with ResMed’s mission as a health and wellness solutions innovator. •We also provided paid time-off, medical plans, dental plans, vision plans, tax-qualified defined contribution retirement plans (including matching contributions and government-mandated contributions). Named executive officers are eligible to participate in these benefit programs on the same basis as other similarly-situated employees in their respective locations. We provide our named executive officers with supplemental life and disability insurance benefits not generally available to employees outside of the U.S., although the disability insurance is generally available on the same terms to all U.S. employees. •We participate in an aircraft travel program to provide for more efficient use of time and to provide a more confidential and secure travel environment in which to conduct company business. This program is used primarily for business purposes but is available for personal use by our chief executive officer, and our non-officer chairman emeritus. Personal use by other named executive officers is on an exception basis and requires our chief executive officer’s approval. The aggregate incremental cost to us for any personal use is reviewed at least annually by the compensation committee, and during fiscal year 2024, the committee used a guideline of $200,000 for the maximum value of an individual’s annual personal use. Aircraft use by an employee, spouse or guest that does not constitute business use based on IRS guidance is treated as imputed income to the employee, based on the IRS standard industry fare level. We do not reimburse for taxes on the imputed income. We believe that these policies are appropriate to provide increased productivity and security, as well as a comprehensive and competitive compensation package for our chief executive officer. •We typically provide benefits in connection with sales incentive award travel programs, including travel, hotel, meals, entertainment, and other expenses of the executive officer and the officer’s spouse or guest. Our policy reflects the committee’s belief that our named executive officers’ attendance at these programs is a part of their general business duties and not a perquisite. The programs are primarily targeted for sales personnel and other key management who regularly interact with our customers and to recognize their contributions to us. The committee believes that participation by executive officers in these programs enhances the overall sales incentive programs and requires their attendance, to the extent determined by the appropriate operating officer. We provide these benefits on the same general basis as we provide to non-executives who qualify to participate in the programs, including a tax gross-up. The tax gross-up is provided to all participants so that they are not discouraged from participating in the program due to tax expenses that would otherwise be a personal expense. •We have provided certain of our named executive officers with relocation benefits in connection with their relocation for company purposes, consistent with our mobility policy. Other Compensation Policies and Practices Equity Ownership and Retention Guidelines We have rigorous equity share ownership guidelines for our executive officers to improve long-term alignment of stockholder and management interests. Our guidelines require our chief executive officer to achieve stock ownership levels in ResMed common stock of at least six times his annual base salary, while all other named executive officers are required to own at least three times their respective annual salaries. All guidelines must be met within five years after appointment or promotion. In calculating stock ownership, we exclude the value of restricted stock units or performance stock units subject to unmet performance criteria and stock options, while we include restricted stock units subject to time-based vesting conditions. Any time these guidelines are not met (whether during the initial five-year period or after they have previously been met), then on vesting of RSUs or option exercise, the officer must retain shares equal to 50% of the after-tax value of shares acquired on the vesting or exercise until the officer’s guidelines are met. As of our June 30, 2024, fiscal year-end measurement date, each of our named executive officers (other than Mr. Rider who became subject to the guidelines on July 1, 2023) are in compliance with our ownership guidelines. As of the record date, Mr. Rider is also in compliance. Change of Control, Termination, and Retirement Arrangements Our named executive officers have limited contractual rights to receive severance payments if employment is terminated, as described below. Change of Control Agreements We have change of control agreements with each of our named executive officers and certain other members of our senior management team. The change of control agreements we have with our executive officers provide for double-trigger accelerated vesting for stock options and restricted stock units on a change of control, while performance-based stock units are earned and vested as of the date of the change of control, with the number of units earned based on performance through the date of the change of control. These agreements also provide for double-trigger severance payments with a multiplier (based on position, which for our chief executive officer is two times, and for other named executive officers is one and one-half times) of salary, short-term incentive, and other benefits, to be made to our named executive officers if their employment is terminated under specified circumstances within six months before or one year after a change of control.
*Adjustments to actual performance under the 2024 cash incentive plan are set forth under “Incentive Plan Adjustments.”
In August 2024, after review and consultation regarding market practices, the committee eliminated the payment of company contributions to retirement plans, unless required under local law, for a qualifying termination in connection with a change in control. Our agreements do not contain excise tax gross-up benefits, reflecting the committee’s view of best practice, and in response to views expressed by our stockholders. The agreements include instead a “best pay” limitation, which reduces the severance payments and benefits payable to the extent necessary so that no portion of any payments or benefits payable upon a change of control of our company would be subject to the excise tax under Section 280G of the US Internal Revenue Code if the reduction would result in the net amount payable to the employee being greater than the net amount received without the reduction. The agreements do provide a limited additional lump sum gross-up payment amount to offset any tax obligations attributable to the medical and dental health benefits in the event of a qualifying termination in connection with a change of control. A description of the material terms of our change of control agreements can be found in “Potential payments on termination or change of control.” The committee believes that these agreements are needed to attract and retain senior level candidates considering the relatively specialized nature of our offerings and the continued potential for merger and acquisition activity in the medical technology market sector. Also, the committee believes that the agreements assure appropriate motivation by senior management to evaluate potential transactions that may involve us. Equity Award Agreement Terms All currently unvested RSUs and stock options held by the named executive officers will only accelerate vesting on a double-trigger basis, that is, if the executive officer's employment is terminated under specified circumstances within six months before or one year after a change of control. Deferred Compensation Plan We maintain the ResMed Inc. Deferred Compensation Plan, under which eligible US employees (including executive officers) selected to participate in the deferred compensation plan may elect to defer a portion of their base salary, short-term incentive, commissions, and other specified compensation. The amounts deferred under the plan represent an unsecured general obligation to make payments to the participant in the future. Amounts deferred under the plan are credited to accounts maintained under the plan for each participant and are credited with earnings, gains, or losses based on investment options chosen by the participant. The committee believes that the deferred compensation plan represents an additional retention tool for executive management, as well as an attractive vehicle in recruiting talent to our executive team. Clawback Policy We recently updated our compensation recovery policy, which provides for the recovery of incentive compensation from our executive officers consistent with NYSE rules. In addition to the requirements of these rules, our updated policy includes stock options and other forms of time-based compensation as incentive compensation that is subject to recovery, or that may be used as a means of satisfying recovery obligations. Our updated compensation recovery policy replaced our 2017 compensation recovery policy, effective as of October 2, 2023. Hedging and Pledging Policy We have a policy prohibiting our officers and directors from hedging or pledging their ResMed stock. See “Pledging and hedging company stock prohibited,” above. Compensation Committee Report The compensation committee has reviewed and discussed the compensation discussion and analysis with management, and based on the review and discussions, the compensation committee has recommended to our board that the compensation discussion and analysis be included in our 2024 annual report on Form 10-K (where it is incorporated by reference) and in this proxy statement for the 2024 annual meeting of stockholders.
Desney Tan
| Name and Principal Position | Year | Salary(a) | Stock Awards(c) | Option Awards(d) | Non-Equity Incentive Plan Compensation(e) | All Other Compensation(f) | Total | | Michael Farrell | 2024 | $1,168,987 | $8,400,057 | $2,800,025 | $1,613,032 | $138,728 | $14,120,829 | | Chief executive officer | 2023 | $1,128,211 | $8,249,986 | $2,749,989 | $1,510,264 | $230,191 | $13,868,641 | | | 2022 | $1,080,608 | $9,000,005 | $0 | $1,349,578 | $229,024 | $11,659,215 | | Bobby Ghoshal | 2024 | $631,577 | $2,299,905 | $0 | $558,618 | $40,770 | $3,530,870 | | Chief commercial officer, SaaS | 2023 | $600,000 | $1,650,047 | $550,013 | $475,780 | $33,680 | $3,309,520 | | | 2022 | $568,725 | $1,750,150 | $0 | $512,398 | $28,790 | $2,860,063 | | Justin Leong(g) | 2024 | $586,305(b) | $2,399,823 | $0 | $497,856 | $113,256 | $3,597,240 | | Chief product officer | | | | | | | | | Michael Rider(h) | 2024 | $489,575 | $1,300,072 | $0 | $311,789 | $52,957 | $2,154,393 | | Global general counsel and secretary | | | | | | | | | Brett Sandercock | 2024 | $471,039(b) | $2,299,905 | $0 | $399,979 | $62,642 | $3,233,565 | | Chief financial officer | 2023 | $467,002 | $2,200,049 | $0 | $384,705 | $57,934 | $3,109,690 | | | 2022 | $472,225 | $1,999,936 | $0 | $362,932 | $56,238 | $2,891,331 |
Desney Tan
| Fiscal Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for non-PEO NEOs(3) | Average Compensation Actually Paid to non-PEO NEOs(4) | Value of Initial Fixed $100 Investment Based On: | | Net Income ($M) | Adjusted Net Sales ($M)(6) | | | | | | | RMD Total Shareholder Return | Dow Jones US Med. Equipment Total Shareholder Return(5) | | | | 2024 | $14,120,829 | $10,329,790 | $3,129,017 | $2,578,989 | $99.70 | $131.90 | $1,021.0 | $4,720.2 | | 2023 | $13,868,641 | $16,867,038 | $4,147,542 | $4,909,275 | $113.80 | $129.79 | $897.6 | $4,163.2 | | 2022 | $11,659,215 | $4,374,620 | $3,625,326 | $-55,486 | $109.18 | $114.04 | $779.4 | $3,616.1 | | 2021 | $10,389,326 | $32,799,199 | $4,165,235 | $12,203,786 | $128.40 | $135.10 | $474.5 | $3,174.3 |
Compensation Actually Paid vs. Adjusted Net Sales
Compensation Actually Paid vs. Adjusted Net Sales
Compensation Actually Paid vs. Adjusted Net Sales
| n | PEO CAP ($M) | n | Average Non-PEO NEO CAP ($M) | | Adjusted Net Sales ($M) |
Compensation Actually Paid vs. RMD Net Income
Compensation Actually Paid vs. RMD Net Income
Compensation Actually Paid vs. RMD Net Income
| n | PEO CAP ($M) | n | Average Non-PEO NEO CAP ($M) | | Net Income($M) |
Compensation Actually Paid vs. ResMed & Peer TSR
Compensation Actually Paid vs. ResMed & Peer TSR
Compensation Actually Paid vs. ResMed & Peer TSR
| n | PEO CAP ($M) | n | Average Non-PEO NEO CAP ($M) | | RMD TSR | | Dow Jones U.S. Medical Equipment Index TSR |
Compensation Actually Paid vs. ResMed & Peer TSR
Tabular list of Financial Performance Measures Our compensation committee believes in a holistic evaluation of our NEOs, and the Company’s performance measures throughout our annual focal and long-term incentive compensation programs to align executive pay with Company performance. As required by SEC rules, listed in the table below are the performance measures identified by the compensation committee as being the most important performance measures used to link the “Compensation Actually Paid” to our NEOs for fiscal 2024 compensation, with each of which described in more detail in the section entitled “CD&A-Performance Metrics and Targets.”
Compensation Actually Paid vs. ResMed & Peer TSR
| Financial Performance Measures | | Adjusted Net Sales | | Net Operating Profit | | Total Shareholder Return (absolute TSR) | | Relative Total Shareholder Return (relative TSR) |
Compensation Actually Paid vs. ResMed & Peer TSR
| • • • • • • • • | | Stock Ownership Information |
Compensation Actually Paid vs. ResMed & Peer TSR
Common Stock Ownership of Principal Stockholders and Management The following table shows the number and percentage of shares of our common stock that, according to information supplied to us, are beneficially owned as of the record date by: (1) each person who, to our knowledge based on Schedules 13G filed with the SEC and Substantial Stockholder Notices filed with the ASX, is the beneficial owner of more than 5% of our outstanding common stock; (2) each person who is currently a director or a nominee for election as director; (3) each of the named executive officers; and (4) all current directors and executive officers as a group. In this proxy statement, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (that is, the power to dispose of, or to direct the disposition of, a security). All of the following calculations are based on 146,766,160 shares of our common stock outstanding (which excludes treasury shares) on September 24, 2024, the record date. Except to the extent indicated in the footnotes to the following table, the person or entity listed has sole voting and dispositive power with respect to the shares that are deemed beneficially owned by the person or entity, subject to community property laws, where applicable.
Compensation Actually Paid vs. ResMed & Peer TSR
| Name of beneficial owner | Amount and Nature of Beneficial Ownership | Percent of Outstanding Common Stock | | Vanguard 100 Vanguard Blvd. Malvern, PA 19355 | 18,478,846(a) | 12.56% | | Black Rock, Inc. 55 East 52nd Street New York, NY 10055 | 12,783,715(b) | 8.69% |
Compensation Actually Paid vs. ResMed & Peer TSR
| Named Executive Officers, Directors and Nominees | Amount and Nature of Beneficial Ownership(c) | Percent of Outstanding Common Stock | | Michael Farrell | 659,389 | * | | Peter Farrell | 100,341 | * | | Brett Sandercock | 99,919 | * | | Bobby Ghoshal | 42,835 | * | | Justin Leong | 40,463 | * | | Ronald Taylor | 22,615 | * | | Karen Drexler | 18,913 | * | | Richard Sulpizio | 16,713 | * | | Carol Burt | 16,660 | * | | Harjit Gill | 8,955 | * | | Jan De Witte | 7,519 | * | | John Hernandez | 5,537 | * | | Michael Rider | 4,609 | * | | Desney Tan | 3,846 | * | | Christopher DelOrefice | 0 | * | | All current executive officers, directors, and nominees as a group (15 persons) | 1,048,314 | 0.71% |
Compensation Actually Paid vs. ResMed & Peer TSR
* Less than 1%