DEF 14A of Zimmer Biomet Holdings, Inc.
Filed Apr 14, 2025 · FY20240000950170-25-053494
Our Director Nominees
Our Director Nominees The following table provides summary information about each of the 10 director nominees. Each director is elected annually by a majority of votes cast.
Our Director Nominees
| Name Principal Occupation | Age | Director Since | Independent | Other Public Boards | Committee Memberships | | | | | | | | | | A | C&MD | CG | QR&T | | Betsy J. Bernard Retired President, AT&T Corp. | 69 | 2009 | ✓ | — | ✓ | | Chair | | | Michael J. Farrell Chair and CEO, ResMed Inc. | 52 | 2014 | ✓ | 1 | | Chair | | ✓ | | Robert A. Hagemann Retired Senior VP & CFO, Quest Diagnostics Incorporated | 68 | 2008 | ✓ | 2 | Chair | | ✓ | | | Arthur J. Higgins Operating Advisor to Abu Dhabi Investment Authority | 69 | 2007 | ✓ | 1 | | ✓ | | ✓ | | Maria Teresa Hilado Retired Executive VP & CFO, Allergan plc | 60 | 2018 | ✓ | 2 | ✓ | | ✓ | | | Syed Jafry Retired SVP & President, Regions, Thermo Fisher Scientific Inc. | 61 | 2018 | ✓ | — | | ✓ | | ✓ | | Sreelakshmi Kolli EVP, Chief Product and Digital Officer, Align Technology, Inc. | 50 | 2021 | ✓ | 1 | ✓ | | | Chair | | Devdatt Kurdikar President & CEO, Embecta Corp. | 56 | 2024 | ✓ | 1 | | ✓ | ✓ | | | Louis A. Shapiro Senior Advisor, General Atlantic Retired President & CEO, Hospital for Special Surgery | 65 | 2024 | ✓ | — | ✓ | | | ✓ | | Ivan Tornos President & CEO, Zimmer Biomet Holdings, Inc. | 49 | 2023 | x | 1 | | | | |
Our Director Nominees
| A: Audit | C&MD: Compensation & Management Development | CG: Corporate Governance | QR&T: Quality, Regulatory & Technology |
Our Director Nominees
Demographic information is self-reported by directors in their annual directors’ and officers’ questionnaires. Demographic data is not standardized and director responses are not required.
DIRECTOR NOMINEES
DIRECTOR NOMINEES
DIRECTOR NOMINEES
| | | | President of AT&T Corp. from October 2002 until her retirement in December 2003. From April 2001 to October 2002, Ms. Bernard was Chief Executive Officer of AT&T Consumer. Prior to joining AT&T, Ms. Bernard held senior executive positions with Qwest Communications International Inc., US WEST, Inc., AVIRNEX Communications Group and Pacific Bell. Ms. Bernard received a B.A. degree from St. Lawrence University, an MBA from Fairleigh Dickenson University and an M.S. in management from Stanford University’s Sloan Fellowship Program. Other Public Board Memberships • Past director of Principal Financial Group, Inc. (until June 2020) • Past director of SITO Mobile, Ltd. (until June 2017) Other Relevant Experience • Director of LEAP Guarantee Skills and Qualifications Betsy J. Bernard’s past experience in senior executive roles with leading global telecommunications companies, including her service as President of AT&T Corp., has provided her with expertise in financial management, brand management, marketing, enterprise sales, customer care, operations, product management, electronic commerce, executive compensation, strategic planning and mergers and acquisitions. Ms. Bernard’s experience has led our Board to determine that she is an “audit committee financial expert” as that term is defined in SEC rules. She has served for more than 20 years as a director of other public companies, including service as chairman of the board and lead independent director, and she has experience chairing the nominating and governance committees of several public company boards, including ours. | Chief Executive Officer of ResMed Inc. since March 2013 and Chairman of ResMed Inc. since January 2023. Prior to his appointment as Chief Executive Officer, Mr. Farrell served as President, Americas for ResMed from 2011 to 2013. He was previously Senior Vice President of the global business unit for sleep apnea therapeutic and diagnostic devices from 2007 to 2011, and before that he held various senior roles in marketing and business development. Before joining ResMed in September 2000, Mr. Farrell worked in management consulting, biotechnology, chemicals and metals manufacturing at Arthur D. Little, Sanofi Genzyme, Dow Chemical and BHP. Mr. Farrell holds a bachelor of engineering, with first-class honors, from the University of New South Wales, a master of science in chemical engineering from the Massachusetts Institute of Technology and an MBA from the MIT Sloan School of Management. Other Public Board Memberships • ResMed Inc. Other Relevant Experience • Director of AdvaMed, Chairman-elect of the AdvaMed Board of Directors Skills and Qualifications Michael J. Farrell’s service as Chairman and CEO of ResMed Inc., a global leader in the development, manufacturing, distribution and marketing of medical products for the diagnosis, treatment and management of respiratory disorders, provides him with significant experience leading a highly regulated, global medical device company. Mr. Farrell is spearheading the company’s expansion into emerging markets and its investments in connected health and digital health, major growth initiatives for ResMed that fit well with our own plans for global growth. In his prior roles, Mr. Farrell led ResMed’s M&A and alliance creation activities, as well as the marketing function. In addition, during his tenure with ResMed, Mr. Farrell has gained domestic and international P&L experience, first as head of the company’s major global business unit, and then as President, Americas. Mr. Farrell’s experience has given him a strong understanding of key aspects of leading a highly regulated, global healthcare company such as ours, including financial management, business integration, strategic planning, operations, technology assessment and management, product innovation, new product launches and international expansion. |
DIRECTOR NOMINEES
| | | | Senior Vice President and Chief Financial Officer of Quest Diagnostics Incorporated until his retirement in July 2013. Mr. Hagemann joined Corning Life Sciences, Inc., a subsidiary of Quest Diagnostics’ former parent company, Corning Incorporated, in 1992, and held roles of increasing responsibility before being appointed Chief Financial Officer of Quest Diagnostics in 1998. Prior to joining Corning, Mr. Hagemann held senior financial positions at Prime Hospitality, Inc. and Crompton & Knowles, Inc. He was also previously employed by Arthur Young & Co., a predecessor company to Ernst & Young. Mr. Hagemann holds a B.S. in accounting from Rider University and an MBA from Seton Hall University. Other Public Board Memberships • Graphic Packaging Holding Company • Ryder System, Inc. Skills and Qualifications Robert A. Hagemann’s past experience as the CFO of Quest Diagnostics Incorporated, a leading provider of diagnostic testing information services, has given him financial management expertise, as well as significant experience in strategic planning, business development, business integration, operations, talent management and information technology. His experience as an executive in the healthcare industry and his financial acumen enable him to evaluate and understand the impact of business decisions on our financial statements and capital structure. Mr. Hagemann’s experience has led our Board to determine that he is an “audit committee financial expert” as that term is defined in SEC rules. He also serves, and has served for approximately ten years, as a director of other public companies. | Operating Advisor to the Abu Dhabi Investment Authority since June 2021, and Deputy Chairman of the Board of UNION therapeutics A/S since July 2021. Previously, Consultant, Blackstone Healthcare Partners of The Blackstone Group from June 2010 until June 2021. Mr. Higgins served as non-executive chairman of the board of Assertio Holdings, Inc., successor issuer to Assertio Therapeutics, Inc., from May 2020 until December 2020. Prior to that, he served as President, Chief Executive Officer and a member of the board of directors of Assertio Therapeutics, Inc. from March 2017 until its merger with Zyla Life Sciences in May 2020. Previously, Mr. Higgins served as Chairman of the Board of Management of Bayer HealthCare AG from January 2006 to May 2010 and Chairman of the Bayer HealthCare Executive Committee from July 2004 to May 2010. Prior to joining Bayer HealthCare in 2004, Mr. Higgins served as Chairman, President and Chief Executive Officer of Enzon Pharmaceuticals, Inc. from 2001 to 2004. Prior to that, Mr. Higgins spent 14 years with Abbott Laboratories, most recently as President of the Pharmaceutical Products Division from 1998 to 2001. He graduated from Strathclyde University, Scotland and holds a B.S. in biochemistry. Other Public Board Memberships • Ecolab Inc. • Past director of Assertio Holdings, Inc. (until December 2020) • Past director of Assertio Therapeutics, Inc. (until May 2020) • Past director of Endo International plc (until March 2017) Skills and Qualifications Arthur J. Higgins has extensive senior leadership experience in the global healthcare market. Through leadership positions with large healthcare developers and manufacturers in both the U.S. and Europe, he has gained deep knowledge of the healthcare market and the strategies for developing and marketing products in this highly regulated area. His knowledge and industry background allow him to provide valuable insight to our business. In addition, his perspective gained from years of operating global businesses and his background in working with high growth companies provide him experiences from which to draw to advise us on strategies for sustainable growth. Through his past executive positions, he has also gained significant exposure to enterprise risk management as well as quality and operating risk management necessary in a highly regulated industry such as healthcare. |
DIRECTOR NOMINEES
| | | | Executive Vice President and Chief Financial Officer of Allergan plc, a global pharmaceutical company, from December 2014 until her retirement in February 2018. Prior to joining Allergan, Ms. Hilado served as Senior Vice President, Finance and Treasurer of PepsiCo Inc. from 2009 until 2014. She previously served as Vice President and Treasurer for Schering-Plough Corp. from 2008 to 2009 and spent more than 17 years with General Motors Co. in leadership roles of increasing responsibility, including Assistant Treasurer from 2006 to 2008 and Chief Financial Officer, GMAC Commercial Finance LLC from 2001 to 2005. She began her career with Far East Bank and Trust Co. in Manila, Philippines. Ms. Hilado earned a Bachelor’s degree in Management Engineering from Ateneo de Manila University in the Philippines and an MBA from the University of Virginia Darden School of Business. Other Public Board Memberships • Campbell Soup Company • Galderma Group AG • Past director of H.B. Fuller Company (until December 2021) • Past director of PPD, Inc. (until December 2021) Other Relevant Experience • Director, Curia Global, Inc. • Director, Simtra (Baxter Pharmaceutical LLC) Skills and Qualifications Maria Teresa (Tessa) Hilado has more than three decades of demonstrated financial expertise in leading roles at several large, global corporations, including her past experience as CFO of Allergan plc, a global pharmaceutical company. She has extensive experience in global finance, treasury, tax, mergers and acquisitions, business development and investor relations, as well as experience in the healthcare, consumer packaged goods and automotive industries. Ms. Hilado’s experience has led our Board to determine that she is an “audit committee financial expert” as that term is defined in SEC rules. She has also served as a director of other public companies. | Retired Senior Vice President and President, Regions of Thermo Fisher Scientific Inc. from September 2017 through his retirement in March 2022. Mr. Jafry was responsible for all business geographies outside the U.S. He joined Thermo Fisher Scientific in March 2005 and served in numerous roles of increasing responsibility prior to being appointed to his last position. Mr. Jafry started his career at Glaxo Pharmaceuticals in London. Prior to joining Thermo Fisher Scientific, he served for 18 years at General Electric, where he held commercial, product management and general management roles in the U.S., Netherlands, Switzerland and China, most recently serving as President of GE Sensing Asia. He joined the board of directors of GTCR, LLC, a private equity firm, in 2022. Mr. Jafry holds a Bachelor’s degree in Mechanical Engineering from Lahore University in Pakistan, a Master’s degree in Mechanical Engineering from the University of Massachusetts and a Master’s certificate in Marketing and Management from Harvard University Extension School. Other Relevant Experience • Director, GTCR, LLC Skills and Qualifications Syed Jafry has more than three decades of global operations and management experience in executive roles at several large, global organizations, including as Senior Vice President and President, Regions of Thermo Fisher Scientific Inc., a world leader in serving science, supporting customers in pharmaceuticals, biotech, healthcare and other industries. Mr. Jafry’s experience has given him a strong understanding of key aspects of leading a global, highly regulated business such as ours, including expansion into emerging markets, financial management, strategic planning, operations, product innovation, new product launches and business integration. His knowledge and industry background allow him to provide valuable insight to our business. |
DIRECTOR NOMINEES
| | | | Executive Vice President, Chief Product and Digital Officer of Align Technology, Inc., a global medical device company (“Align”), since December 2023. Ms. Kolli is responsible for Align's product lifecycle, from product ideation and innovation, to engineering, product launch and product performance. This includes leading the product and engineering teams and defining the technology strategy and development of product software, consumer, customer, manufacturing and enterprise applications enabling the Align Digital Platform. Ms. Kolli has led Align’s global business transformation initiative aimed at delivering platforms and technology to support customer experience and simplified business processes across the company. She joined Align in June 2003 and has held positions of increasing responsibility, leading and transforming business operations and engineering. She was promoted to Vice President, Information Technology in December 2012, to Senior Vice President, Global Information Technology in February 2018, to Senior Vice President – Chief Digital Officer in April 2020, and to Executive Vice President, Chief Digital Officer, in February 2022. Prior to joining Align, Ms. Kolli held technical lead positions with Citadon and Accenture. She is a member of the board of directors of Intuitive Surgical, Inc. Ms. Kolli earned an M.S. degree in Computer Applications at the National Institute of Technology in Trichy, India and is a graduate of the Stanford Executive Program offered by the Stanford Graduate School of Business in California. Other Public Board Memberships • Intuitive Surgical, Inc. Skills and Qualifications Sreelakshmi Kolli’s service as Executive Vice President and Chief Product and Digital Officer of Align Technology, Inc., a publicly traded company that designs, manufactures and offers the Invisalign® clear aligner system, intraoral scanners and services, and exocad CAD/CAM software, has provided her with significant experience in a highly regulated global medical device company. In her senior leadership roles, Ms. Kolli has gained deep knowledge of digital and emerging technologies, operations, strategic planning, marketing, product innovation, financial management and data privacy trends. Her knowledge and industry background allow her to provide valuable insight to our business as we expand our portfolio of integrated digital and robotic technologies that leverage data, machine learning and artificial intelligence. | President, Chief Executive Officer and Director of Embecta Corp., a global medical device company (“Embecta”), since its spinoff from Becton, Dickinson and Company (“BD”) in April 2022. Mr. Kurdikar was the Worldwide President of Diabetes Care at BD from 2021 until the spinoff. Prior to joining BD, Mr. Kurdikar was President and CEO of Cardiac Science Corporation from 2016 to 2019. Prior to that role, Mr. Kurdikar was the Vice President and General Manager, Men’s Health, within Urology and Pelvic Health at Boston Scientific Corporation (“Boston Scientific”) from 2015 to 2016. Mr. Kurdikar served in the same role at American Medical Systems (“AMS”) starting in 2013 and led the Men’s Health business through its carve-out, sale and integration into Boston Scientific. Before joining AMS, Mr. Kurdikar worked for 11 years with Baxter International, Inc., holding leadership roles of increasing responsibility in finance, strategy and integration, R&D planning and operations, ultimately serving as Vice President, Marketing, from 2011 through 2013. He began his career as a Senior Research Engineer at The Monsanto Company. Mr. Kurdikar holds a Bachelor in Chemical Engineering from the University of Bombay (India). He earned a Master of Science in Chemical Engineering from Washington State University, a Ph.D. in Chemical Engineering from Purdue University, and a Master of Business Administration from Washington University. In addition to serving on the Embecta board, Mr. Kurdikar serves on the board of directors of AdvaMed. Other Public Board Memberships • Embecta Corp. Other Relevant Experience • Director of AdvaMed Skills and Qualifications Devdatt (Dev) Kurdikar is an experienced healthcare executive who brings extensive experience in the medical device industry and with medical device technology, including connected medical devices. As Chief Executive Officer of a global medical device company, Mr. Kurdikar also provides our Board with valuable insights on matters pertaining to, among others, global business, operations and manufacturing, consumer/retail, strategy and innovation, cybersecurity, risk and crisis management, investor relations and regulatory and compliance matters, as well as experience with institutional investors. |
DIRECTOR NOMINEES
| | | | Senior Advisor, General Atlantic since October 2023. President and Chief Executive Officer of the Hospital for Special Surgery (“HSS”), a leading academic medical center focused on musculoskeletal health, from October 2006 until his retirement in October 2023. Prior to joining HSS, Mr. Shapiro worked at Geisinger Health System from 2002 to 2006, serving in roles with increasing leadership scope and ultimately advancing to Executive Vice President and Chief Operating Officer of the Clinical Enterprise. He served as a senior healthcare expert and consultant at McKinsey & Co. from 1999 to 2002 and held positions in other hospitals and health systems from 1983 through 1999. Mr. Shapiro has a Bachelor of Science degree in psychology from the University of Pittsburgh and a Master’s degree in health administration from the University of Pittsburgh Graduate School of Public Health. Mr. Shapiro also has extensive healthcare and nonprofit board service, including serving as a founding member of the board of directors of RightMove Health, as President of Medical Indemnify Assurance Company, and as the board chairman of the Greater New York Hospital Association. Other Relevant Experience • Chairman of the Board of Directors, PT Solutions Physical Therapy • Chairman of the Board of Directors, Alternate Solutions Health Network • Chairman of the Board of Directors, PeopleOne Health • Faculty, McKinsey & Company Bower Forum Skills and Qualifications Louis Shapiro led all strategic and operational aspects of HSS for over 17 years, leading its transformation from a boutique New York provider to a musculoskeletal healthcare system with more than 20 locations in four states that treats nearly 200,000 patients annually from all 50 states and more than 80 countries. Mr. Shapiro’s expertise spans from strategic innovation and service line development to technology integration, employee engagement and patient experience. He has served for more than 15 years as a director of not-for-profit and healthcare organizations, including service as Chairman of the Board. | President and Chief Executive Officer of the company and member of the company's Board of Directors since August 2023. Previously, Mr. Tornos served as the Chief Operating Officer of the company since March 2021, as the company’s Group President, Global Businesses and the Americas from December 2019 until March 2021, and as Group President, Orthopedics from joining the company in November 2018 until December 2019. Prior to joining the company, Mr. Tornos served as Worldwide President of the Global Urology, Medical and Critical Care Divisions of Becton, Dickinson and Company (“BD”) (and previously, C. R. Bard, Inc. (“Bard”)) from June 2017 until October 2018. From June 2017 until BD’s acquisition of Bard in December 2017, Mr. Tornos also continued to serve as President, EMEA of Bard, a position to which he was appointed in September 2013. Mr. Tornos joined Bard in August 2011 and, prior to his appointment as President, EMEA, served as Vice President and General Manager with leadership responsibility for Bard’s business in Southern Europe, Central Europe and the Emerging Markets Region of the Middle East and Africa. Before joining Bard, Mr. Tornos served as Vice President and General Manager of the Americas Pharmaceutical and Medical/Imaging Segments of Covidien International from April 2009 to August 2011. Before that, he served as International Vice President, Business Development and Strategy with Baxter International Inc. from July 2008 to April 2009 and, prior to that, Mr. Tornos spent 11 years with Johnson & Johnson in positions of increasing responsibility. Other Public Board Memberships • PHC Holdings Corporation Skills and Qualifications Ivan Tornos' service as our President and CEO, his prior service as our Chief Operating Officer, our Group President, Global Businesses and the Americas, and our Group President, Orthopedics, together with his past service as Worldwide President of the Global Urology, Medical and Critical Care Divisions of BD and Bard, have given him extensive experience in the medical device industry delivering transformative growth and leadership for large, highly regulated global enterprises. Mr. Tornos has significant experience in financial management, strategic planning, mergers and acquisitions, business integration, risk management and in dealing with the many regulatory aspects of our business. His deep knowledge and understanding of the medical device industry in general, and our global businesses in particular, enable him to provide crucial insight to our Board into strategic, management and operational matters. Mr. Tornos provides an essential link between management and the Board on management’s business perspectives. |
STANDING COMMITTEE ASSIGNMENTS
| COMPENSATION OF NON-EMPLOYEE DIRECTORS |
2024 Director Compensation Table
2024 Director Compensation Table
2024 Director Compensation Table
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | | (a) | (b) | (c) | (g) | (h) | | Christopher B. Begley | 240,000 | 205,000 | 18,429 | 463,429 | | Betsy J. Bernard | 125,000 | 205,000 | 18,347 | 348,347 | | Michael J. Farrell | 130,000 | 205,000 | 13,371 | 348,371 | | Robert A. Hagemann | 135,000 | 205,000 | 26,681 | 366,681 | | Arthur J. Higgins | 110,000 | 205,000 | 31,117 | 346,117 | | Maria Teresa Hilado | 110,000 | 205,000 | 7,570 | 322,570 | | Syed Jafry | 110,000 | 260,000 | 5,183 | 375,183 | | Sreelakshmi Kolli | 125,000 | 267,500 | 3,167 | 395,667 | | Devdatt Kurdikar(4) | 82,500 | 41,250 | 61 | 123,811 | | Michael W. Michelson(5) | 55,000 | — | 5,907 | 60,907 | | Louis A. Shapiro(6) | 110,000 | 260,000 | 407 | 370,407 |
2024 Director Compensation Table
(1) Amounts include fees that were paid in cash plus fees that were voluntarily deferred at each director’s election under our Deferred Compensation Plan for Non-Employee Directors. As explained more fully below, compensation that a director elects to defer is credited to the director’s deferred compensation account as either treasury units, dollar units or deferred share units (“DSUs”) and will be paid in cash following the director’s retirement or other termination of service from the Board. (2) Represents the grant date fair value of the stock awards granted in 2024 to the non-employee directors, determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). For these stock awards, the grant date fair value is the average of the high and low selling prices of our common stock on the New York Stock Exchange on the date of grant. All stock awards to directors are fully vested on the date of grant but are subject to mandatory deferral of settlement until the director’s termination of service from the Board, or later, as explained more fully below. (3) Amounts in this column represent the dollar value of dividend equivalents credited in the form of additional DSUs under the Deferred Compensation Plan for Non-Employee Directors. Dividend equivalents are credited at the same rate as cash dividends paid on our common stock. (4) Mr. Kurdikar was appointed to the Board effective June 20, 2024. (5) Mr. Michelson's service on the Board ended on May 10, 2024. Mr. Shapiro was appointed to the Board effective January 5, 2024. The following table sets forth the grant date fair value of annual grants of restricted stock units ("RSU") and DSUs awarded to each director elected or reelected at the 2024 annual meeting of shareholders and the grant date fair value of DSUs granted during 2024 pursuant to the mandatory deferral provisions of the Deferred Compensation Plan for Non-Employee Directors.
Executive Compensation Changes for 2025
Our NEOs’ total direct compensation is heavily weighted toward variable compensation elements, meaning actual amounts earned will vary as a result of company and individual performance, as well as business unit or geographic results where applicable. We emphasize performance-based compensation that appropriately rewards executives for delivering results that meet or exceed multiple pre-established goals over one-, two- and three-year periods, with metrics and targets selected because they are directly linked to our strategic goals. In addition, our long-term incentive program rewards absolute stock price growth as well as constant currency revenue growth, adjusted earnings per share growth and relative TSR. As executives assume greater responsibilities, more of their pay is contingent on company performance. With respect to 2024, 91.6% of our CEO's target total direct compensation at the time of grant was variable and tied to our annual and long-term performance, including stock price performance as to both his PRSUs and RSUs. The committee assesses each NEO’s target total direct compensation opportunity annually to facilitate alignment with the objectives of our compensation program and market practice.
Executive Compensation Changes for 2025
| 2024 Target Total Direct Compensation(1) | | | | | | NEO | Base Salary | Annual Incentive(2) | PRSUs(2) (Grant Date Fair Value) | RSUs(3) (Grant Date Fair Value) | | Ivan Tornos | 8.4% | 11.8% | 39.9% | 39.9% | | Suketu Upadhyay | 15.4% | 14.4% | 35.1% | 35.1% | | Mark Bezjak | 21.5% | 16.3% | 31.1% | 31.1% | | Sang Yi | 22.9% | 19.0% | 29.1% | 29.1% | | Wilfred van Zuilen | 21.0% | 22.3% | 28.3% | 28.3% |
Executive Compensation Changes for 2025
(1) Percentages are computed based on the underlying individual whole numbers and therefore may not equal 100%. (2) Denotes performance-based (i.e., at-risk) compensation. (3) In addition to the annual incentive and PRSUs being variable compensation, we also consider RSUs to be variable because their value is affected by stock price performance, but RSUs are not considered at-risk.
Executive Compensation Changes for 2025
Base salary increases for our global employee population, including NEOs, are generally effective in April of each year. In February 2024, the committee approved NEOs’ base salaries for 2024, taking into consideration each NEO’s 2023 performance, our 2024 employee merit increase guidelines, market data based on peer group benchmarking, internal equity, retention and certain other factors. In particular, the committee considered Mr. Bezjak's promotion to President, Americas and the strong overall business performance of the Americas region under his leadership in 2023 in deciding to increase his base salary by 9.3%. The committee further recognized the strong overall business performance of the EMEA region under Mr. van Zuilen's leadership and his promotion to Group President, EMEA in 2023 in deciding to increase his base salary by 7.7%. After considering these factors, the committee approved base salaries for 2024 that represent year-over-year increases as follows:
Executive Compensation Changes for 2025
| CASH INCENTIVES |
Executive Compensation Changes for 2025
| Annual Cash Incentive Plan |
Executive Compensation Changes for 2025
| development, innovation and geographic expansion. The committee has established a 100% cap on payouts under the free cash flow measure if both the constant currency revenue and the adjusted operating profit measures achieve less than 100% (target) performance. Free cash flow is a non-GAAP financial measure.* |
Executive Compensation Changes for 2025
* See footnotes (3), (4) and (5) to the “2024 Annual Cash Incentive Plan” table below and Appendix A for a discussion of our non-GAAP financial measures and reconciliations of those measures to the most directly comparable financial measures determined in accordance with U.S. generally accepted accounting principles (“GAAP”). The committee believes that, together, these measures provide a balanced set of performance targets that focus on growth, profitability and operating efficiency, and are most important for generating total shareholder return. The committee set corporate performance metrics based on our consolidated results for Messrs. Tornos and Upadhyay. Mr. Bezjak is the executive with top-line responsibility for the Americas region, so the committee set performance measures based on a blend of 50% consolidated results and 50% on the results of our Americas region. Mr. van Zuilen is the executive with top-line responsibility for the EMEA region, so the committee set performance measures based on a blend of 50% consolidated results and 50% on the results of our EMEA region. Mr. Yi is the executive with top-line responsibility for the APAC region, so the committee set performance measures based on a blend of 50% consolidated results and 50% on the results of our APAC region. The committee believes this approach more closely aligns those executives’ pay with the performance of the portfolios for which they are primarily responsible. In addition to corporate performance metrics, NEOs had individual goals and objectives as described further below. The committee established specific goals for each of the measures based on the annual operating plan approved by the Board at the beginning of the year. The committee set each performance target at a level it believed would represent attractive performance by management in light of the environment in which we were operating, industry conditions and growth trends and which would be reasonably achievable, while requiring what it believed would be outstanding performance to achieve the maximum payout level. The achievement percentage ranges established by the committee for 2024 were narrower than those established for 2023, due to the improved operating environment following the COVID-19 pandemic. Because the operating plan forms the basis for both our financial guidance communicated to the investment community and the annual cash incentive plan, the interests of the NEOs are aligned with those of shareholders. The payout curves applied to these performance measures are shown below:
Executive Compensation Changes for 2025
| Payout curves applied to performance measures | | | | | | | Constant Currency Revenue | | Adjusted Operating Profit | | Free Cash Flow | | | Achievement Percentage | Payout (% of Target) | Achievement Percentage | Payout (% of Target) | Achievement Percentage | Payout (% of Target) | | 105%+ | 200% | 110%+ | 200% | 115%+ | 200% | | 100% | 100% | 100% | 100% | 100% | 100% | | 95% | 50% | 90% | 50% | 85% | 50% | | Less than 95% | 0% | Less than 90% | 0% | Less than 85% | 0% |
Executive Compensation Changes for 2025
| | ($ in millions) | | | | | | 2024 Annual Cash Incentive Plan Performance and Payout Percentages | Target ($) | Actual ($) | Achievement(1)(2) (%) | Weight (%) | Weighted Payout(1)(2) (%) | | Corporate – Messrs. Tornos and Upadhyay (100%); Messrs. Bezjak, van Zuilen and Yi (50%) | | | | | | | Consolidated constant currency revenue(3) | 7,748 | 7,689 | 99.2 | 40 | 36.9 | | Adjusted operating profit(4) | 2,248 | 2,195 | 97.7 | 40 | 35.4 | | Consolidated free cash flow(5) | 1,077 | 1,055 | 98.0 | 20 | 18.6 | | | | | Subtotal | | 90.9 | | | Impact of ESG global quality bonus modifier(6) | | | | x3.0 | | | Total weighted payout(7) | | | | 93.7 | | Americas – Mr. Bezjak (50%) | | | | | | | Constant currency revenue(3) | 4,592 | 4,471 | 97.4 | 40 | 29.4 | | Adjusted operating profit(4) | 2,497 | 2,413 | 96.6 | 40 | 33.2 | | Free cash flow(5) | 2,552 | 2,353 | 94.3 | 20 | 14.8 | | | | | Subtotal | | 77.5 | | | Impact of ESG global quality bonus modifier(6) | | | | x3.0 | | | | | Unit weighted payout | | 79.8 | | | | | At overall 50% weight | | 39.9 | | | | | Corporate total weighted payout | | 93.7 | | | | | At overall 50% weight | | 46.9 | | | Total weighted payout for Mr. Bezjak(7) | | | | 86.7 | | APAC – Mr. Yi (50%) | | | | | | | Constant currency revenue(3) | 1,242 | 1,244 | 100.2 | 40 | 41.6 | | Adjusted operating profit(4) | 487 | 499 | 102.6 | 40 | 50.4 | | Free cash flow(5) | 472 | 459 | 97.3 | 20 | 18.2 | | | | | Subtotal | | 110.2 | | | Impact of ESG global quality bonus modifier(6) | | | | x3.0 | | | | | Unit weighted payout | | 113.5 | | | | | At overall 50% weight | | 56.8 | | | | | Corporate total weighted payout | | 93.7 | | | | | At overall 50% weight | | 46.9 | | | Total weighted payout for Mr. Yi(7) | | | | 103.6 | | EMEA – Mr. van Zuilen (50%) | | | | | | | Constant currency revenue(3) | 1,700 | 1,728 | 101.7 | 40 | 53.4 | | Adjusted operating profit(4) | 554 | 573 | 103.5 | 40 | 53.9 | | Free cash flow(5) | 471 | 530 | 112.5 | 20 | 36.7 | | | | | Subtotal | | 144 | | | Impact of ESG global quality bonus modifier(6) | | | | x3.0 | | | | | Unit weighted payout | | 148.3 | | | | | At overall 50% weight | | 74.2 | | | | | Corporate total weighted payout | | 93.7 | | | | | At overall 50% weight | | 46.9 | | | Total weighted payout for Mr. van Zuilen(7) | | | | 121.0 |
Executive Compensation Changes for 2025
(1) Achievement percentages, weighted payout percentages, subtotal weighted payout percentages and total weighted payout percentages are computed from the underlying whole numbers rather than the rounded numbers presented in this table and, therefore, the percentages and totals may not correspond exactly to the rounded numbers. (2) The achievement percentage for each performance measure was applied to the relevant payout curve (set forth above) to determine the payout percentage for that measure. The resulting payout percentages were then weighted and summed. Results are computed based on the actual amounts. As a result, the sum of the components reported may not equal the total amount reported due to rounding. Percentages presented are calculated from the underlying unrounded amounts. When measuring actual performance against the target for revenue, the committee made adjustments to eliminate the impact of fluctuations in foreign currency exchange rates during the year, whether positive or negative, compared to the rates that were budgeted when the targets were set. The committee eliminated the impact of foreign currency translation so that only our underlying performance is measured; the committee does not believe it is desirable to either reward or penalize executives based on the impact of foreign currency swings. These adjustments result in “constant currency” revenue, which is a non-GAAP financial measure. See Appendix A for a reconciliation of reported revenue to constant currency revenue. The committee believes adjusted metrics allow us to connect pay and operational performance more effectively and are more aligned with how shareholders expect the company and our peers to measure performance. The goal of adjusting metrics from GAAP requirements is to provide meaningful incremental information that allows investors to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported income but that do not impact the fundamentals of our operations. The committee believes that adjusted metrics are therefore often the most appropriate metrics to use when incentivizing executives to make decisions that are aligned with the long-term interests of shareholders. While GAAP provides accounting uniformity across companies, GAAP requires the inclusion of items that may not be reflective of our core operations. In the case of adjusted operating profit, we adjust for certain items in the following categories: inventory and manufacturing-related charges; intangible asset amortization; restructuring and other cost reduction initiative expenses; acquisition, integration, divestiture and related expenses; litigation charges and gains; expenses to comply with the European Union Medical Device Regulation; and certain other charges. The committee believes using adjusted metrics is important when setting performance targets. Using only GAAP metrics could result in performance targets that incorporate certain items outside of a management team’s control and reduce comparability and could also result in performance targets that are misaligned with the long-term interests of the company and shareholders. We believe our shareholders recognize that adjusted metrics are indicators of core operational performance. We also understand that our shareholders commonly make adjustments to inform their own views of historical and future expectations for underlying operational performance. Our disclosures showing our adjustments to GAAP earnings help guide shareholders’ own evaluation of the company’s performance. The majority of S&P 500 companies disclose non-GAAP metrics when reporting financial results, which we believe is reflective of shareholders’ interest in, and understanding of, both GAAP and non-GAAP results. We provide thorough disclosure of the adjustments made to our GAAP financial information. We provide reconciliations between operating profit and adjusted operating profit on a quarterly and annual basis. In addition, if the committee, in its discretion, determines any additional adjustments are appropriate, those additional discretionary adjustments are disclosed in our proxy statement, as well as a narrative explaining any discretionary adjustments. Shareholders are therefore able to see the exact adjustments we make for the purposes of their analysis. However, the committee does not believe that GAAP metrics are as appropriate for purposes of our compensation program, as it believes adjusted results better reflect core operating results. See Appendix A for additional details on each adjustment as well as a reconciliation of operating profit to adjusted operating profit on a consolidated basis. (5) Free cash flow is determined by deducting our investments in surgical instruments (used by healthcare professionals during surgery to implant medical devices) and other property, plant and equipment from net cash provided by operating activities. Free cash flow represents the cash that we generate after accounting for cash outflows to support operations and maintain or expand our capital asset base, and is an indicator of our ability to pay debt, pay dividends, repurchase shares of our stock and facilitate the growth of our business. The committee believes this is a key measure of our performance for investors to understand and for which management should be held accountable in the annual cash incentive plan. Free cash flow is a non-GAAP financial measure. See Appendix A for a reconciliation of net cash provided by operating activities to free cash flow. (6) See below for a discussion of the ESG global quality bonus modifier. (7) Represents the weighted payout percentage under the company financial measures component of the 2024 annual cash incentive plan, as well as the impact of the ESG global quality bonus modifier. In addition, based on an assessment of achievement of each NEOs individual performance goals as described further below, the final payout amount for certain NEOs was adjusted for the individual award component, which was 85% for Mr. Bezjak, 150% for Mr. van Zuilen and 100% for each of Messrs. Tornos, Upadhyay and Yi.
ESG Global Quality Bonus Modifier
ESG Global Quality Bonus Modifier As noted on the inside front cover of this proxy statement, our second Guiding Principle is commitment to the highest standards of patient safety and quality in our products and services and to world-class integrity and ethical business practices. In support of this Guiding Principle, and to drive accountability for compliance with, and sustained improvements in, our global quality system, the committee again included a global quality bonus modifier component to the annual cash incentive plan for 2024. The committee believes that quality is a critical ESG measure for a medical device company. As it did in 2023, in 2024 the committee utilized an ESG global quality modifier to drive and sustain improved quality achievement and to further reflect the importance the committee places on this ESG goal for management. As depicted in the below payout matrix, as applied to NEOs, the modifier provides for an opportunity to change the payout for the NEOs either upward by up to 3% or downward by up to 5% based on the results of the following specified metrics related to our global quality program, except that, if the company receives any new FDA warning letter(s) in 2024, there will be no upward adjustment under the ESG global quality modifier. The payout matrix was developed based on the company’s historical performance.
ESG Global Quality Bonus Modifier
| 2024 ESG Global Quality Payout Matrix | | | | | Quality Measure | Increase | Neutral | Decrease | | FDA Warning Letters | N/A | No Warning Letter Issued+0% | Any Warning Letters Issued-2% | | Network FDA Form 483 Observations per Inspection | 0-2 Observations +2% | 3-4 Observations +0% | 5 or More Observations -2% | | Average Corrective and Preventive Actions (CAPA) On-Time Global Quality Report Score(1) | 10-9.5 +1% | 9.49-9.0 +0% | Below 9.0 -1% |
ESG Global Quality Bonus Modifier
Calculated based on internal tracking data. In 2024, across our global network, we received zero new FDA warning letters, received an average of two FDA Form 483 observations per inspection and our Average CAPA On-Time Global Quality Report Score was 9.86. As a result, the ESG global quality modifier applied at the maximum level, increasing bonus payouts by 3%.
Individual Performance
Individual Performance Individual performance reflects ten percent of each NEO's annual bonus opportunity. After the potential payout amounts under the annual cash incentive plan were computed based on our financial performance, as described above, the committee considered each NEO’s individual performance during 2024 to determine the actual cash incentive payment amounts. Those results were then adjusted by the impact of the ESG global quality bonus modifier. During 2024, the committee determined to evaluate each NEO's contribution to the company's overall achievement of certain key performance indicators relating to employee engagement, human capital management, quality and other measures. Based on the committee's assessment of each NEO’s individual contribution to the achievement of these key performance indicators, the committee could determine that the NEO's individual performance component could pay out at zero to two hundred percent (0-200%) of the NEO’s target opportunity. With respect to Mr. van Zuilen, based on its assessment of his individual contribution to the Company's achievement of its key performance indicators, including specifically due to the strong overall business performance of the EMEA region under his leadership, the committee determined it was appropriate to increase his payout by $33,788, reflecting 150% achievement of his individual performance goals and resulting in a total payout under the 2024 annual cash incentive plan of 127.1% of target (as compared to his 121.0% weighted payout percentage under the annual financial performance measures discussed above). With respect to Mr. Bezjak, based on its assessment of his individual contribution to the Company's achievement of its key performance indicators, including specifically due to the relatively lower business performance of the Americas region under his leadership, the committee determined it was appropriate to decrease the individual component of his payout by $7,354, reflecting 85% achievement of his individual performance goals and resulting in a total payout under the 2024 annual cash incentive plan of 85.4% of target (as compared to his 86.7% weighted payout percentage under the annual financial performance measures discussed above). With respect to the other NEOs, the committee determined that each achieved 100% of his individual performance goals, and therefore approved actual payments equal to the weighted payout percentage under the annual cash incentive plan set forth above applicable to such NEO.
2024 Annual Cash Incentive Payouts
2024 Annual Cash Incentive Payouts Set forth below are the payouts to our NEOs under our annual cash incentive plan for 2024 based on company and individual performance as described above.
2024 Annual Cash Incentive Payouts
| | Annual Cash Incentive Plan | | | | | | Opportunity | | Actual Payment | | | NEO | (as a % of Base Salary) | (at Target Performance) | (as a % of Target Opportunity) | 2024 Annual Cash Incentive Plan Payout | | Ivan Tornos | 150% | $1,855,385 | 93.7% | $1,738,495 | | Suketu Upadhyay | 100% | $876,154 | 93.7% | $820,956 | | Mark Bezjak | 90% | $565,438 | 85.4% | $482,881 | | Sang Yi(1) | 80% | $551,175 | 103.6% | $571,018 | | Wilfred van Zuilen(2) | 85% | $666,296 | 127.1% | $709,543 |
2024 Annual Cash Incentive Payouts
(1) Mr. Yi’s compensation is paid in Hong Kong Dollars and has been converted to U.S. Dollars for purposes of this table using the average exchange rate for 2024 of 1 HKD = 0.1282 USD (rounded). (2) Mr. van Zuilen's compensation is paid in Swiss francs and has been converted to U.S. Dollars for purposes of this table using the average exchange rate for 2024 of 1 CHF = 1.1355 USD (rounded).
2024 Annual Cash Incentive Payouts
| EQUITY INCENTIVES |
2024 Annual Cash Incentive Payouts
Equity incentives are the most significant component of each NEO’s compensation package. The committee believes the emphasis on equity awards is appropriate as these officers have the greatest role in establishing the company’s direction and should have the greatest proportion of their compensation aligned with the long-term interests of shareholders. In 2024, the committee did not make any equity awards to our NEOs other than the annual grants of RSUs and PRSUs.
2024 Annual Cash Incentive Payouts
| Annual Equity Awards |
Equity Grant Value Determination
Equity Grant Value Determination In determining target grant values for the 2024 annual grant of long-term equity-based awards, the committee reviewed market data based on peer group benchmarking in order to determine grant levels that would be competitive with the market. The committee also took into consideration other factors, including the target annual grant value awarded to each NEO in 2023; each NEO’s 2023 performance, including the NEO’s contribution to our 2023 performance; the committee’s expectations of each NEO’s future contributions to the company; internal equity; external market conditions; shares available to be granted; potential shareholder dilution; and the expense associated with stock-based compensation. After considering these factors, the committee approved the following grant date value of 2024 equity awards in February 2024, as compared to the grant date value of 2023 equity awards:
Equity Grant Value Determination
| | Grant Date Fair Value of Target 2023 LTI Awards | | | | | NEO | Annual Award(1) | Promotion and Recognition Awards(2) | Grant Date Fair Value of Target 2024 Annual LTI Award | Percentage Change of Target 2024 LTI Awards From All 2023 Annual LTI Awards at Target, each at Time of Grant | | Ivan Tornos | $4,025,183 | $3,447,401 | $11,750,148 | 57% | | Suketu Upadhyay | $3,375,111 | $5,000,017 | $4,000,072 | (52)% | | Mark Bezjak | $1,200,000 | $— | $1,850,170 | 54% | | Sang Yi | $1,750,247 | $250,026 | $1,750,095 | (13)% | | Wilfred van Zuilen | $1,600,169 | $— | $1,800,130 | 12% |
Equity Grant Value Determination
(1) Reflects only the grant date fair value of equity awards approved by the committee at its March 6, 2023 meeting. (2) Reflects the grant date fair value of the equity awards approved by the committee at its August 16, 2023 meeting in connection with the special transitional, promotional and recognition grants for certain NEOs, as previously disclosed. The committee considered these target grant values in connection with its determination of each NEO’s total compensation for 2024. The change in value of LTI awards from 2023 to 2024 is driven in part by certain promotional and recognition awards made in 2023. As previously discussed, Mr. Tornos’ 2023 LTI reflects the annual award granted for service as the company’s Chief Operating Officer as well as a prorated CEO transition award. As a result, the value of his 2023 total LTI was lower than typical for a full year of service as the CEO, driving the 57% year-over-year increase. Mr. Upadhyay also received a promotion-related PRSU award in addition to his standard annual award. As a result of the one-time promotion award, the value of the 2023 total LTI was notably higher than the 2024 annual award, driving the 52% year-over-year decrease. As discussed above, the committee considered Mr. Bezjak’s promotion to President, Americas and the strong overall business performance of the Americas region under his leadership in 2023 in deciding to increase his annual LTI award by 54%.
Equity Award Types
Equity Award Types The 2024 annual equity awards granted to the NEOs included an equal mix (based on grant date fair value) of RSUs and PRSUs. The annual RSUs vest ratably over three years. The vesting of the annual PRSUs is contingent on achievement of financial performance measures over a three-year period.
PRSU Design for Awards Made in 2024
| PRSU Payouts |
2023 Promotion PRSUs Awarded to Mr. Upadhyay
| Performance Measures | Year 1 10/1/2023 through 9/30/2024 | | Year 1 Actual Performance | Achievement Level | PRSUs Earned in Year 1 | | | Threshold 50% Payout | Maximum 100% Payout | | | | | Constant Currency Revenue Growth(1) | 5% Growth | 6% Growth | 5.2% | 50% | 5,316 | | Cost Reduction(2) | $80 | $95 | $103.2 | 100% | 10,632 |
2023 Promotion PRSUs Awarded to Mr. Upadhyay
| Employment and Change in Control Severance Agreements |
2023 Promotion PRSUs Awarded to Mr. Upadhyay
We do not have employment agreements with our NEOs, other than as required under the laws of non-U.S. jurisdictions; however, we have entered into change in control severance agreements with them. These agreements are intended to maintain continuity of management, particularly in the context of a transaction in which we undergo a change in control. These agreements are “double trigger,” which means that an executive is only entitled to severance payments if: • we experience a change in control as defined in the agreement; and • the executive’s employment is terminated in a qualifying termination. The committee believes that it is appropriate to provide the NEOs with the specified severance in the event that their employment is terminated in connection with a change in control or their position is modified in such a way as to diminish their compensation, authority or responsibilities. See “Change in Control Arrangements” in the narrative discussion following the Potential Payments upon Termination of Employment table for a more detailed description of the material terms of these agreements. Since 2009, all change in control severance agreements that we have entered into with newly hired or promoted executives contain no excise tax gross-up provisions. Accordingly, we only have one agreement with an executive who is not an NEO that contains such provisions. During the first quarter of 2024, in connection with a survey of peer group practices by our independent compensation consultant Semler Brossy, we amended our change in control severance agreements with each of our executive officers (including NEOs), except for the one agreement that contains excise tax gross-up provisions as noted above, to better conform to current market practices related to the treatment for excise taxes. The amendments changed the payout limit, which previously provided that if amounts payable in connection with a change in control would be subject to the excise tax imposed under the Internal Revenue Code, then the value of those payments would be reduced to the extent necessary so that the payments would not trigger the excise tax. The amendments modify this provision such that payments will either be reduced so as not to trigger the excise tax, or will be paid in full, depending on which course of action would result in the better net after-tax result for the executive.
2023 Promotion PRSUs Awarded to Mr. Upadhyay
| Severance Benefits (Unrelated to a Change in Control) |
2023 Promotion PRSUs Awarded to Mr. Upadhyay
We maintain an Executive Severance Plan applicable to certain members of our executive leadership team, which currently consists of our executive officers and certain other members of senior management. Under the plan, following a termination by us of a participant’s employment, unless his or her employment is terminated for misconduct or any of the other reasons specified in the plan, a participant will be eligible to receive a lump-sum severance amount equal to two times (for Mr. Tornos) or one times (for other participants) the sum of (1) his or her annualized base salary in effect when the termination occurs and (2) his or her target annual bonus amount in effect when the termination occurs. In addition, if a participant’s employment is terminated on or after January 1 but prior to the payment date for bonuses related to the previous calendar year under the annual cash incentive plan, and the participant was eligible to participate in the annual cash incentive plan immediately prior to the separation and is entitled to severance benefits under the Executive Severance Plan, the participant’s severance benefit will be increased by the value of the bonus he or she would have received under the annual cash incentive plan, if any, had he or she remained employed on the payment date. Participants eligible to receive severance benefits under the Executive Severance Plan and who are eligible to elect COBRA will also be eligible to receive a lump-sum amount equal to the then-current monthly COBRA premium (for medical and dental insurance only) in effect the day prior to the separation date, multiplied by 24 for Mr. Tornos and by 12 for other participants. Eligible participants will also be offered outplacement services with a value not to exceed $25,000, or an equivalent cash benefit in the plan administrator’s discretion. Similar to our broad-based severance plan, to receive benefits under the Executive Severance Plan, a participant must sign a general release of claims and continue to be bound by the terms of his or her non-competition agreement with us. If a participant violates or breaches any term of the plan or the general release or any restrictive covenant agreement with us, or if facts are later disclosed or discovered that could have supported the participant’s termination for cause and would have rendered the participant ineligible to receive severance benefits under the plan, then the participant will forfeit any and all rights to benefits under the plan and, to the extent benefits have already been paid, must repay the full amount within 15 days of written notice from us.
2023 Promotion PRSUs Awarded to Mr. Upadhyay
Role of Committee and Input from Management. The committee is responsible for determining our executive compensation strategies, structure, policies and programs and must specifically approve compensation actions relating to our NEOs. When setting compensation for our executives, the committee receives input from management and from its independent compensation consultant. The committee gives significant consideration to the recommendations of management when setting compensation for our NEOs other than our CEO. Management’s recommendations include specific amounts for base salaries, target cash incentive opportunities and equity-based awards. These recommendations are typically developed initially by our Human Resources personnel in consultation with the committee’s independent compensation advisor, taking into consideration such factors as compensation history, tenure, internal equity, responsibilities and retention concerns to maintain consistency among our executives. These recommendations are then reviewed, and may be adjusted, by our CEO, who also considers his own assessment of the performance of each executive officer other than himself. All proposals are then reviewed by the committee’s independent compensation advisor. Our CEO and senior Human Resources personnel participate in committee meetings to provide background information and explanations supporting compensation recommendations. The committee and other independent members of the Board review our CEO’s performance and determine his compensation, taking into consideration his achievement of specified goals and objectives and the company’s performance. The committee receives input and recommendations with respect to our CEO’s compensation from its independent compensation consultant. The committee also reviews and approves actions related to other aspects of compensation that affect employees below the senior executive level, including compensation philosophy, annual incentive plan design and performance goals, equity award design and performance goals, equity value ranges and share pools. Use of Peer Group Data. The committee reviews compensation data for a peer group of publicly traded companies, including other large healthcare equipment and services companies, life sciences services companies and companies with whom we compete for business and for executive talent, as a market reference point for executive compensation levels, equity usage and incentive plan design, industry trend analysis and for performance comparisons. The committee reviews the peer group annually and selects the companies which it believes provide the best match for the company and its characteristics, including industry served, market capitalization, innovation and other factors. The peer group data is one of several inputs the committee considers when making compensation determinations. At the time compensation recommendations were developed and decisions were made relating to 2024 compensation, the following 14 companies made up the peer group:
2023 Promotion PRSUs Awarded to Mr. Upadhyay
| Peer group at the time 2024 compensation decisions were made: | | | | Company | Trading Symbol | Market Capitalization at March 21, 2025 (in $ millions)(1) | | Agilent Technologies, Inc. | A | 34,426 | | Align Technology, Inc. | ALGN | 12,409 | | Baxter International Inc. | BAX | 16,981 | | Becton, Dickinson and Company | BDX | 66,107 | | Boston Scientific Corporation | BSX | 148,596 | | DexCom, Inc. | DXCM | 28,839 | | Edwards Lifesciences Corporation | EW | 41,423 | | Hologic, Inc. | HOLX | 13,793 | | Intuitive Surgical, Inc. | ISRG | 175,650 | | Laboratory Corporation of America Holdings | LH | 19,603 | | Quest Diagnostics Incorporated | DGX | 18,546 | | Stryker Corporation | SYK | 141,608 | | Teleflex Incorporated | TFX | 6,564 | | The Cooper Companies, Inc. | COO | 16,340 |
2023 Promotion PRSUs Awarded to Mr. Upadhyay
(1) Source: S&P Global Market Intelligence. The company’s market capitalization at March 21, 2025, as determined by S&P Global Market Intelligence, was $22,042 million. The committee routinely reviews the continuing relevancy of the companies in the peer group and makes changes as circumstances warrant. There were no changes to our peer group during 2024. Role of Compensation Consultant. The committee has engaged Semler Brossy as its independent compensation consultant to provide advice and guidance to the committee on compensation proposals, including changes to compensation levels, the design of incentive plans, the setting of performance goals, and the design of other forms of compensation and benefits programs, as well as relevant information about market practices and trends. Typically, Semler Brossy attends committee meetings, reviews existing compensation programs to ensure consistency with our compensation philosophy and current market practices, and produces the comparative information derived from peer group and published survey data that the committee reviews when setting compensation. With respect to 2024, Semler Brossy's major activities included: developing recommendations regarding our performance-based compensation programs; • assisting us in evaluating proxy advisory firm feedback and shareholder commentary obtained through our 2024 Say on Pay related outreach; • reviewing our annual and long-term incentive program design structures; • reviewing performance measures and targets for the annual and long-term incentive programs; • reviewing the proposed amendments to our Employee Stock Purchase Plan; • reviewing potential changes to our executive stock ownership guideline methodology; • evaluating leadership team perquisites; • reviewing guidelines regarding the use of equity grants; • presenting current issues and trends in executive compensation; • developing recommendations regarding the composition of our peer group; • performing a market review of executive compensation; • advising and providing recommendations regarding compensation for executive new hires and transitions; • developing recommendations regarding the compensation of our CEO; • reviewing materials prepared for the committee by management; • assisting with executive compensation disclosures for the annual proxy statement filing; • attending committee meetings; and • assessing our executive compensation program and its relationship to organizational risk. The results of this assessment are discussed on page 19. In accordance with SEC rules, prior to retaining an independent compensation consultant, and on an annual basis, the committee considers any factors relevant to the consultant's independence from management, including the factors specified in the New York Stock Exchange listing standard, to evaluate whether the services to be performed will raise any conflicts of interest or compromise the independence of the consultant. Based on its review of these factors, the committee concluded that the work of Semler Brossy did not raise any conflicts of interest.
2023 Promotion PRSUs Awarded to Mr. Upadhyay
| GOVERNANCE FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM | | Equity Incentive Grant Practices |
2023 Promotion PRSUs Awarded to Mr. Upadhyay
The committee approves annual equity-based awards to NEOs at approximately the same time each year, typically the day of its meeting in February or March. In 2024, the committee established a late February grant date for annual equity grants to all eligible employees. The grant date timing was driven by these considerations: • It coincides with our calendar-year-based performance management cycle, allowing supervisors to communicate the equity award decisions close in time to performance appraisals, which increases the impact of the awards by strengthening the link between pay and performance. • It follows the annual earnings release. • The annual operating plan is available at that time and is considered by the committee when setting targets for performance measures. The committee also approves equity-based awards outside of the annual grant cycle from time to time ("off-cycle awards") for purposes of attracting new hires for executive-level positions, in connection with promotions to executive-level positions, to reward superior performance, to recognize exceptional effort and commitment, to retain and motivate executive-level employees or for other purposes the committee deems appropriate. The committee approves target grant values for long-term equity awards on or prior to the grant date. On the grant date in 2024, those values were converted to a number of RSUs and PRSUs based on: • the average of the high and the low selling prices of our common stock on the grant date; and • the same valuation methodology we use to determine the accounting expense of the grants under ASC 718. By approving annual equity grants during its meeting in February or March, the company's prior fourth-quarter and full year financial results have typically been disclosed at the time the equity grants are made, as a result of which there typically is no material nonpublic information that remains to be disclosed. The company has not timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. The committee typically delegates authority to our CEO to grant a limited number of off-cycle awards to non-executive level employees as he deems appropriate. The aggregate number of shares underlying all such grants by our CEO during 2024 was approximately 43,758. The CEO subsequently reports all such grants to the committee. New hire grants are effective on the first trading day of the month following the later of the CEO’s approval of the grant or the new hire’s start date.
2023 Promotion PRSUs Awarded to Mr. Upadhyay
Our NEOs must meet stock ownership guidelines set by the Board. The committee oversees compliance with these guidelines and periodically reviews the guidelines. The guidelines require our CEO to own shares or units with a value equal to at least six times his or her base salary and the other NEOs to own shares or units with a value equal to at least three times their respective base salaries. NEOs have a period of five years to reach the guideline level of ownership. The value of long shares and time-based RSUs is counted toward these guidelines. The value of unearned PRSUs and the unrealized gain on unvested and vested stock options is not counted toward achievement. NEOs may not sell shares acquired through option exercises or vesting of RSUs or PRSUs (other than to pay option exercise costs and cover any required tax withholding obligation) until the minimum ownership requirements have been met. As of December 31, 2024, all NEOs are in compliance with the guidelines (as calculated both including and excluding the unrealized gain on vested stock options) or are within the time period prior to required compliance, except for Mr. Yi. Mr. Yi returned to compliance with the stock ownership requirement on February 22, 2024 upon the vesting of his earned 2022 PRSUs. The Board additionally adopted a new NEO stock retention guideline in 2025 following engagement with a shareholder who had submitted a proposal. Under the new guideline, which takes effect for shares vesting during 2025 and afterwards, each NEO is required to retain at least 25% of the shares of Company stock that vest during a year in which such person is an NEO, net of any shares sold or withheld to cover any required taxes associated with interests in Company stock granted as compensation. Each NEO shall be required to retain such shares until the NEO ceases to be employed with the Company or its subsidiaries. The Company will report on compliance with this retention guideline in its annual proxy statement commencing in 2026. We have approved procedures by which every executive officer must obtain clearance prior to selling any shares of our common stock, in part to ensure no executive falls out of compliance with these guidelines.
2024 SUMMARY COMPENSATION TABLE
2024 SUMMARY COMPENSATION TABLE The following table sets forth the compensation awarded to or earned by our NEOs for the years ended December 31, 2024, 2023, and 2022:
2024 SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) ($) | All Other Compensation(5) ($) | Total ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | | Ivan Tornos | 2024 | 1,236,923 | — | 11,750,148 | — | 1,738,495 | — | 267,301 | 14,992,868 | | President and CEO | 2023 | 968,702 | — | 7,472,584 | — | 1,603,022 | — | 147,168 | 10,191,476 | | | 2022 | 823,077 | — | 2,408,723 | 1,975,002 | 1,059,530 | — | 168,735 | 6,435,067 | | Suketu Upadhyay | 2024 | 876,154 | — | 4,000,072 | — | 820,956 | — | 182,379 | 5,879,562 | | CFO and EVP - Finance, | 2023 | 801,839 | — | 8,375,128 | — | 1,054,435 | — | 153,527 | 10,384,929 | | Operations and Supply Chain | 2022 | 753,080 | — | 2,067,692 | 1,650,017 | 928,587 | — | 123,942 | 5,523,318 | | Mark Bezjak(6) | 2024 | 637,280 | — | 1,850,170 | — | 482,881 | — | 76,242 | 3,046,574 | | President, Americas | | | | | | | | | | | Sang Yi(7) | 2024 | 688,969 | — | 1,750,095 | — | 571,018 | — | 144,273 | 3,154,355 | | Group President, APAC | 2023 | 609,950 | — | 2,000,273 | — | 633,166 | — | 141,605 | 3,384,994 | | | 2022 | 638,853 | — | 1,361,788 | 851,046 | 595,104 | — | 124,048 | 3,570,839 | | Wilfred van Zuilen(8) | 2024 | 666,296 | — | 1,800,130 | — | 709,543 | 209,072 | 98,790 | 3,483,831 | | Group President, EMEA | 2023 | 629,267 | — | 1,600,169 | — | 745,102 | 344,026 | 99,611 | 3,418,175 | | | 2022 | 555,629 | — | 700,197 | 700,018 | 572,182 | 118,602 | 92,505 | 2,739,133 |
2024 SUMMARY COMPENSATION TABLE
(1) The amounts in the “Stock Awards” column do not represent amounts the NEOs received or are entitled to receive; rather, the reported amounts represent the aggregate grant date fair value of stock awards granted in that year computed in accordance with ASC 718. For a discussion of the method of valuation and any assumptions made in the valuation of the stock awards, see Note 6 to the Consolidated Financial Statements included in our 2024 Form 10-K. We do not pay or accrue dividends or dividends equivalents on PRSUs or RSUs. The stock awards reported in the table with respect to 2024 consist of: (i) annual awards of PRSUs to all NEOs, which are subject to both internal (constant currency revenue growth and adjusted EPS growth) and market-related (relative TSR) performance goals over a three-year performance period; and (ii) annual awards of three-year ratably vesting time-based RSUs to all NEOs. PRSU awards represent the grant date fair value based upon the probable outcome of the performance conditions at the date of grant. Annual PRSUs awarded in 2024 and in 2023 have the conditions and goals described above in this footnote. PRSUs awarded in 2022 are subject to internal performance goals of constant currency revenue growth and adjusted EPS growth over a three-year performance period. The grant date fair value of the relative TSR component for all awards with such goal was determined using a Monte Carlo simulation model. The following table presents the grant date fair value of the PRSUs subject to performance conditions included in the “Stock Awards” column and the grant date fair value of these awards assuming that the highest level of performance conditions would be achieved.
2024 SUMMARY COMPENSATION TABLE
| | 2024 PRSU Awards | | 2023 PRSU Awards | | 2022 PRSU Awards | | | Name | Grant Date Fair Value (Based on Probable Outcome) ($) | Grant Date Fair Value (Based on Maximum Performance) ($) | Grant Date Fair Value (Based on Probable Outcome) ($) | Grant Date Fair Value (Based on Maximum Performance) ($) | Grant Date Fair Value (Based on Probable Outcome) ($) | Grant Date Fair Value (Based on Maximum Performance) ($) | | Ivan Tornos | 5,875,100 | 11,750,199 | 3,762,635 | 7,525,270 | 1,975,015 | 3,950,030 | | Suketu Upadhyay | 2,000,056 | 4,000,111 | 6,687,563 | 13,375,126 | 1,650,016 | 3,300,032 | | Mark Bezjak | 925,089 | 1,850,179 | 600,075 | 1,200,149 | 600,081 | 1,200,162 | | Sang Yi | 875,088 | 1,750,176 | 1,125,157 | 2,250,314 | 850,026 | 1,700,052 | | Wilfred van Zuilen | 900,025 | 1,800,050 | 800,056 | 1,600,112 | 700,035 | 1,400,071 |
2024 SUMMARY COMPENSATION TABLE
(2) The amounts in the “Option Awards” column do not represent amounts the NEOs received or are entitled to receive; rather, the reported amounts represent the aggregate grant date fair value of option awards granted in that year computed in accordance with ASC 718. For a discussion of the assumptions made in the valuation of our stock options, see Note 6 to the Consolidated Financial Statements included in our 2024 Form 10-K. (3) Amounts reported consist of the annual cash incentive award under the EPIP. Amounts reported represent the change in actuarial present value of Mr. van Zuilen’s accumulated benefit under the plans indicated below from December 31, 2023 to December 31, 2024, from December 31, 2022 to December 31, 2023, and from December 31, 2021 to December 31, 2022, respectively. The accumulated benefit is the benefit to which Mr. van Zuilen would be entitled had he terminated employment as of December 31 of the applicable year and elected to commence his benefit at the earliest age at which he would receive an unreduced benefit, assuming he had met the eligibility conditions, payable as a monthly benefit for as long as he lived.
2024 SUMMARY COMPENSATION TABLE
| | 2024 ($) | 2023 ($) | 2022 ($) | | SVE(a) | 86,647 | 63,665 | 27,891 | | JJS(a) | 740,856 | 554,766 | 246,514 | | Total | 827,503 | 618,431 | 274,405 |
2024 SUMMARY COMPENSATION TABLE
(a) SVE and JJS refer to our defined benefit cash balance type pension plans generally available to all employees in Switzerland. The SVE provides benefits based on compensation up to $167,070, $181,729 and $156,278 for 2024, 2023 and 2022, respectively, and the JJS provides benefits based on compensation in excess of the SVE amount up to $963,936, $1,048,522 and $901,678 for 2024, 2023 and 2022, respectively. The assumed interest rates for 2024, 2023 and 2022 are 1.50%, 1.50% and 2.25%, respectively. The mortality assumptions for 2024, 2023 and 2022 are based on the BVG 2020 Generational Mortality Table. The JJS has a maximum allowable monthly retirement pension of $7,560, $8,738 and $7,703 for 2024, 2023 and 2022, respectively. Mr. van Zuilen has an accumulated benefit of $3,217, $ $2,445 and $1,320 monthly under the JJS, payable at age 65, as of 2024, 2023 and 2022, respectively. The reported amounts are based upon the portion of the accumulated benefits attributable to company contributions. (5) Amounts reported for 2024 include the following:
2024 SUMMARY COMPENSATION TABLE
| | | I. Tornos ($) | S. Upadhyay ($) | M. Bezjak ($) | S. Yi ($) | W. van Zuilen ($) | | Company matching contributions to 401(k) plan | | 20,700 | 20,700 | 20,700 | — | — | | Company matching contributions to deferred compensation plan (credited to participants’ accounts in 2025) | | 74,215 | 95,135 | 53,320 | — | — | | Non-business use of corporate aircraft(a) | | 150,960 | 45,206 | — | — | — | | Automobile allowance | | — | — | — | 67,923 | 31,340 | | Office parking fees | | — | — | — | 4,614 | — | | Disability insurance premiums | | 2,520 | 3,263 | 2,223 | — | — | | Mandatory Provident Fund contribution(b) | | — | — | — | 68,897 | — | | Executive physical | | 7,060 | 6,075 | — | — | — | | Personal tax assistance | | 11,845 | 12,000 | — | 2,840 | — | | Corporate paid apartment | | — | — | — | — | 67,449 | | | Total | 267,301 | 182,379 | 76,242 | 144,273 | 98,790 |
2024 SUMMARY COMPENSATION TABLE
(a) Messrs. Tornos and Upadhyay are permitted limited personal use of our corporate aircraft, up to $190,000 and $50,000, respectively, in aggregate incremental cost to us per year. For purposes of the value disclosed in this proxy statement, we calculate incremental cost using a method that takes into account all variable costs, such as fuel, crew travel expenses, landing and parking fees and plane repositioning costs. Since we use our aircraft primarily for business travel, we do not include as part of incremental cost the fixed costs that do not change based on usage, such as pilot salaries, the purchase or leasing costs of our aircraft and the cost of maintenance. The incremental cost, if any, of travel by an NEO’s spouse or guests when accompanying the NEO is included. NEOs are responsible for the payment of any tax on any income imputed to the NEO as a result of personal use of corporate aircraft and we do not provide them with income tax gross-up payments. (b) Our employees in Hong Kong who are Hong Kong citizens or permanent residents receive a pension benefit from the Mandatory Provident Fund (“MPF”), a compulsory social security savings plan provided by that country’s government to which we make contributions as required by Hong Kong law. In 2024, we made mandatory contributions to the MPF with respect to Mr. Yi, as he is a Hong Kong citizen. (6) Mr. Bezjak became an executive officer in December 2023 and was not an NEO prior to 2024. (7) Mr. Yi’s compensation was paid in Hong Kong Dollars and has been converted to U.S. Dollars using the average exchange rate for 2022, 2023 and 2024 of 1 HKD = 0.1277 USD, 1 HKD = 0.1279 USD, and 1 HKD = 0.1282 USD, rounded, respectively. Mr. van Zuilen’s compensation was paid in Swiss Francs and has been converted to U.S. Dollars using the average exchange rate for 2022, 2023 and 2024 of 1 CHF =1.0480 USD, 1 CHF = 1.1450 USD, and 1 CHF = 1.1355 USD, rounded, respectively.
GRANTS OF PLAN-BASED AWARDS IN 2024
GRANTS OF PLAN-BASED AWARDS IN 2024 The following table sets forth non-equity incentive plan arrangements and equity awards granted to our NEOs in 2024.
GRANTS OF PLAN-BASED AWARDS IN 2024
| | | | | | | | | | All Other Stock | | | | | | Estimated Possible Payouts | | | Estimated Future Payouts | | | Awards: Number | Grant Date | | | | Date of | Under Non-Equity Incentive | | | Under Equity Incentive | | | of Shares | Fair Value | | | | Comp. | Plan Awards(1) | | | Plan Awards | | | of Stock | of Stock | | | Grant | Committee | Threshold | Target | Maximum | Threshold | Target | Maximum | or Units | Awards(2) | | Name | Date | Action | ($) | ($) | ($) | (#) | (#) | (#) | (#) | ($) | | (a) | (b) | | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (l) | | Ivan Tornos | | | 927,692 | 1,855,385 | 3,710,769 | | | | | | | Annual PRSU | 2/20/2024 | 2/20/2024 | | | | 23,089 | 46,177 | 92,354 | | 5,875,100 | | Annual RSU | 2/20/2024 | 2/20/2024 | | | | | | | 47,987 | 5,875,048 | | Suketu Upadhyay | | | 438,077 | 876,154 | 1,752,308 | | | | | | | Annual PRSU | 2/20/2024 | 2/20/2024 | | | | 7,860 | 15,720 | 31,440 | | 2,000,056 | | Annual RSU | 2/20/2024 | 2/20/2024 | | | | | | | 16,336 | 2,000,016 | | Mark Bezjak | | | 282,719 | 565,438 | 1,130,876 | | | | | | | Annual PRSU | 2/20/2024 | 2/20/2024 | | | | 3636 | 7,271 | 14,542 | | 925,089 | | Annual RSU | 2/20/2024 | 2/20/2024 | | | | | | | 7,556 | 925,081 | | Sang Yi(3) | | | 275,588 | 551,175 | 1,102,351 | | | | | | | Annual PRSU | 2/20/2024 | 2/20/2024 | | | | 3,439 | 6,878 | 13,756 | | 875,088 | | Annual RSU | 2/20/2024 | 2/20/2024 | | | | | | | 7,147 | 875,007 | | Wilfred van Zuilen(4) | | | 333,148 | 666,296 | 1,332,593 | | | | | | | Annual PRSU | 2/20/2024 | 2/20/2024 | | | | 3,537 | 7,074 | 14,148 | | 900,025 | | Annual RSU | 2/20/2024 | 2/20/2024 | | | | | | | 7,352 | 900,105 |
GRANTS OF PLAN-BASED AWARDS IN 2024
(1) Amounts in the first line associated with each executive’s name consist of the cash incentive opportunity amounts under the EPIP for 2024. (2) The values reported in this column represent the grant date fair value of stock awards computed in accordance with ASC 718 and may differ from the values represented in the 2024 Summary Compensation Table due to rounding. See footnote 1 to the 2024 Summary Compensation Table for additional information regarding the determination of grant date fair value of stock awards. (3) Mr. Yi’s compensation is paid in Hong Kong Dollars and has been converted to U.S. Dollars for purposes of this table using the average exchange rate for 2024 of 1 HKD = 0.1282 USD (rounded). (4) Mr. van Zuilen’s compensation is paid in Swiss Francs and has been converted to U.S. Dollars for purposes of this table using the average exchange rate for 2024 of 1 CHF = 1.1355 USD (rounded). Narrative Discussion Non-Equity Incentive Plan Awards. The non-equity incentive plan awards reflected in the first row of the table for each NEO in columns (c) through (e) represent the annual cash incentive opportunity under the EPIP for 2024. Material terms of the awards, including a discussion of the applicable performance measures and target and actual performance for 2024, are described in the CD&A. Amounts actually earned for 2024 performance are shown in column (g) of the 2024 Summary Compensation Table. Equity Incentive Plan Awards. The equity incentive plan awards reflected in columns (f) through (h) were granted under the 2009 Plan and represent PRSUs. For all NEOs, these PRSUs were the annual PRSU grant and had a grant date fair value of $127.23 per unit. These PRSUs are subject to internal performance goals (constant currency revenue growth and adjusted EPS growth) and market-related (relative TSR) performance goals over a three-year performance period. The grant date fair value of the annual PRSUs represents the weighted average fair value of the three PRSU tranches. For the constant currency revenue growth performance goal and for the adjusted EPS growth performance goal, the grant date fair value is based upon our stock price on the grant date and the time period to vest. For the market-related (relative TSR) performance goal, the performance period has a grant date fair value based upon a Monte Carlo simulation model covering the period. The material terms of the PRSUs, including applicable performance measures and targets, are described in the CD&A. We do not pay or accrue dividends or dividend equivalents on PRSUs. Other Stock Awards. The equity incentive plan awards reflected in column (i) were granted under the 2009 Plan and represent the annual grant of RSUs. The grant date fair value of the RSUs was $122.43 per unit. We do not pay or accrue dividends or dividend equivalents on RSUs. Material terms of the RSUs are described in the CD&A.
OUTSTANDING EQUITY AWARDS AT 2024 FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT 2024 FISCAL YEAR-END The following table summarizes the outstanding equity awards held by the NEOs as of December 31, 2024.
OUTSTANDING EQUITY AWARDS AT 2024 FISCAL YEAR-END
| | Option Awards(1) | | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price(2) ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(3) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(3) ($) | | (a) | | (b) | (c) | (e) | (f) | (g) | (h) | (i) | (j) | | Ivan Tornos | 2/18/2022 | 41,164 | 20,582 | 117.22 | 2/18/2032 | | | | | | | 2/25/2021 | 27,966 | 9,322 | 158.90 | 2/25/2031 | | | | | | | 2/21/2020 | 43,288 | — | 152.84 | 2/21/2030 | | | | | | | 2/26/2019 | 41,277 | — | 120.04 | 2/26/2029 | | | | | | | 12/3/2018 | 15,198 | — | 113.69 | 12/3/2028 | | | | | | | 12/3/2018 | 17,878 | — | 113.69 | 12/3/2028 | | | | | | | 2/20/2024 | | | | | | | 23,089(4) | 2,438,838 | | | 9/1/2023 | | | | | | | 15,392(5) | 1,625,857 | | | 3/6/2023 | | | | | | | 15,307(5) | 1,616,878 | | | 2/20/2024 | | | | | 47,987(6) | 5,068,867 | | | | | 9/1/2023 | | | | | 9,660(7) | 1,020,386 | | | | | 3/6/2023 | | | | | 10,876(7) | 1,148,832 | | | | Suketu Upadhyay | 2/18/2022 | 34,391 | 17,195 | 117.22 | 2/18/2032 | | | | | | | 2/25/2021 | 26,216 | 8,741 | 158.90 | 2/25/2031 | | | | | | | 2/21/2020 | 41,657 | — | 152.84 | 2/21/2030 | | | | | | | 7/1/2019 | 65,464 | — | 114.29 | 7/1/2029 | | | | | | | 2/20/2024 | | | | | | | 7,860(4) | 830,252 | | | 9/1/2023 | | | | | | | 21,264(8) | 2,246,116 | | | 3/6/2023 | | | | | | | 12,835(5) | 1,355,761 | | | 2/20/2024 | | | | | 16,336(6) | 1,725,572 | | | | | 3/6/2023 | | | | | 9,119(7) | 963,240 | | | | Mark Bezjak | 2/18/2022 | 12,505 | 6,254 | 117.22 | 2/18/2032 | | | | | | | 2/25/2021 | 5,679 | 1,895 | 158.90 | 2/25/2031 | | | | | | | 2/21/2020 | 9,395 | — | 152.84 | 2/21/2030 | | | | | | | 4/1/2019 | 4,035 | — | 124.07 | 4/1/2029 | | | | | | | 2/26/2019 | 1,345 | — | 120.04 | 2/26/2029 | | | | | | | 3/20/2018 | 2,862 | — | 111.03 | 3/20/2028 | | | | | | | 5/1/2017 | 4,123 | — | 116.89 | 5/1/2027 | | | | | | | 3/21/2017 | 1,999 | — | 118.25 | 3/21/2027 | | | | | | | 2/20/2024 | | | | | | | 3,636(4) | 384,018 | | | 3/6/2023 | | | | | | | 4,564(5) | 482,095 | | | 2/20/2024 | | | | | 7,556(6) | 798,140 | | | | | 3/6/2023 | | | | | 3,242(7) | 342,452 | | |
OUTSTANDING EQUITY AWARDS AT 2024 FISCAL YEAR-END
| | Option Awards(1) | | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price(2) ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(3) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(3) ($) | | (a) | | (b) | (c) | (e) | (f) | (g) | (h) | (i) | (j) | | Sang Yi | 2/18/2022 | 26,575 | — | 117.22 | 2/18/2032 | | | | | | | 2/25/2021 | 25,053 | — | 158.90 | 2/25/2031 | | | | | | | 2/21/2020 | 26,135 | — | 152.84 | 2/21/2030 | | | | | | | 2/26/2019 | 26,919 | — | 120.04 | 2/26/2029 | | | | | | | 3/20/2018 | 24,816 | — | 111.03 | 3/20/2028 | | | | | | | 2/20/2018 | 22,228 | — | 116.04 | 2/20/2028 | | | | | | | 3/21/2017 | 21,978 | — | 118.25 | 3/21/2027 | | | | | | | 3/21/2016 | 24,460 | — | 100.91 | 3/21/2026 | | | | | | | 6/24/2015 | 21,637 | — | 110.44 | 6/24/2025 | | | | | | | 6/24/2015 | 21,640 | — | 110.44 | 6/24/2025 | | | | | | | 2/20/2024 | | | | | | | 3,439(4) | 363,262 | | | 9/1/2023 | | | | | | | 2,199(5) | 232,280 | | | 3/6/2023 | | | | | | | 6,656(5) | 703,073 | | | 2/20/2024 | | | | | 7,147(6) | 754,938 | | | | | 3/6/2023 | | | | | 4,729(7) | 499,524 | | | | Wilfred van Zuilen | 2/18/2022 | 14,589 | 7,296 | 117.22 | 2/18/2032 | | | | | | | 7/1/2021 | 31,083 | 10,362 | 157.11 | 7/1/2031 | | | | | | | 2/20/2024 | | | | | | | 3,537(4) | 373,613 | | | 3/6/2023 | | | | | | | 6,085(5) | 642,759 | | | 2/20/2024 | | | | | 7,352(6) | 776,592 | | | | | 3/6/2023 | | | | | 4,323(7) | 456,638 | | | | | 7/1/2021 | | | | | 2,631(9) | 277,913 | | |
OUTSTANDING EQUITY AWARDS AT 2024 FISCAL YEAR-END
Stock options granted to the NEOs in 2022 vest in increments of one-third on each of the first, second and third anniversaries of the grant date, subject to continued employment. Stock options granted to the NEOs prior to 2022, other than those granted to Mr. Yi on February 20, 2018, vest 25% per year on each of the first, second, third and fourth anniversaries of the grant date, subject to continued employment. Stock options granted to Mr. Yi on February 20, 2018 vested on the second anniversary of the grant date. Option awards may vest on an accelerated basis after the NEO has held the award for at least one year if the NEO reaches age 60 or retires, or if the NEO’s employment is terminated involuntarily without cause and the NEO signs a general release of claims in favor of the company. (2) The option exercise price is equal to the average of the high and low selling prices of our common stock as reported by the New York Stock Exchange on the date of grant, as subsequently adjusted in connection with the March 1, 2022 spinoff of ZimVie Inc. The modified awards attempted to preserve the same intrinsic value and general terms and conditions (including vesting) as were in place immediately prior to the modification. (3) Market value is calculated by multiplying the number of units in column (g) or (i), as applicable, by $105.63, the closing price of our common stock as reported by the New York Stock Exchange on December 31, 2024. (4) This number of unearned PRSUs is based on achieving threshold performance. To the extent any of the PRSUs is earned based on performance over the three-year period of January 1, 2024 through December 31, 2026, such earned PRSUs would vest on February 20, 2027. (5) This number of unearned PRSUs is based on achieving target performance. To the extent any of these PRSUs is earned based on performance over a three-year period of January 1, 2023 through December 31, 2025, such earned PRSUs would vest on March 6, 2026. (6) These RSUs vest in thirds on each of February 20, 2025, February 20, 2026 and February 20, 2027, subject to continued employment. (7) These RSUs vest in thirds on each of March 6, 2024, March 6, 2025 and March 6, 2026, subject to continued employment. (8) This number of unearned PRSUs is based on achieving target performance. To the extent any of these PRSUs is earned based on the performance goals over the performance period of October 1, 2024 to September 30, 2025, such earned PRSUs would vest on November 10, 2025. These RSUs vest on July 1, 2025, subject to continued employment.
OPTION EXERCISES AND STOCK VESTED IN 2024
OPTION EXERCISES AND STOCK VESTED IN 2024 The following table sets forth certain information regarding stock options exercised by our NEOs in 2024 and RSUs held by our NEOs that vested in 2024.
OPTION EXERCISES AND STOCK VESTED IN 2024
| | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting(2) | Value Realized on Vesting(2)(3) | | Name | (#) | ($) | (#) | ($) | | (a) | (b) | (c) | (d) | (e) | | Ivan Tornos | — | — | 43,661 | 4,907,017 | | Suketu Upadhyay | — | — | 49,174 | 5,418,316 | | Mark Bezjak | — | — | 11,015 | 1,205,129 | | Sang Yi | 1,705 | 61,090 | 20,602 | 2,342,109 | | Wilfred van Zuilen | — | — | 13,970 | 1,488,562 |
OPTION EXERCISES AND STOCK VESTED IN 2024
(1) Value realized on exercise is calculated on the basis of the difference between the exercise price and the closing price of our common stock as reported by the New York Stock Exchange on the date of exercise, multiplied by the number of shares of common stock underlying the options exercised. (2) Includes, for all NEOs, RSUs that vested in 2024 and the 2022 PRSUs that were determined to be earned for the 2022-2024 performance period and vested in February 2025; additionally includes, for Mr. Upadhyay, the promotion-related PRSUs that were earned for the first performance running from October 1, 2023 to September 30, 2024 which vested in November 2024. (3) Value realized on vesting is calculated by multiplying the closing price of our common stock on the New York Stock Exchange on the date of vesting by the number of shares of common stock that vested.
PENSION BENEFITS IN 2024
PENSION BENEFITS IN 2024 The following table sets forth information on defined pension plans in which Mr. van Zuilen participated in 2024. None of the other NEOs is eligible to, or does, participate in any defined benefit pension plans.
PENSION BENEFITS IN 2024
| Name | Plan Name(1) | Number of Years Credited Service (#) | Present Value of Accumulated Benefit(2) ($) | | (a) | (b) | (c) | (d) | | Wilfred van Zuilen | SVE | 3.58 | 86,647 | | | JJS | 3.58 | 740,856 |
PENSION BENEFITS IN 2024
(1) The full name of the plan referred to as SVE is the Sulzer Vorsorgeeinrichtung. The full name of the plan referred to as JJS is the Johann Jakob Sulzer Stuftung. (2) The accumulated benefit is the benefit to which Mr. van Zuilen would be entitled had he terminated employment on December 31, 2024 and elected to commence his benefit at the earliest age at which he would receive an unreduced benefit, assuming he had met the eligibility conditions, payable as a monthly benefit for as long as he lived, with 60% of his benefit continuing to his surviving spouse following his death. The expected benefit payments are discounted using interest and mortality assumptions to produce the present value of the accumulated benefit as of December 31, 2024. The assumed interest rate is 1.50% and the mortality assumption is based on the BVG 2020 Generational Mortality Table. The reported amounts represent the portion of the accumulated benefits attributable to company contributions. Narrative Discussion During 2024, our U.S.-based NEOs were not eligible to participate in any defined benefit pension plans sponsored by the company. Non-U.S. Pension Plans. We maintain a number of pension plans for our employees whose principal place of employment is outside the U.S. These pension plans are governed, and in some cases mandated, by the laws of the applicable countries and can vary significantly from plan to plan. We do not offer a company-sponsored retirement plan for employees in Hong Kong. Our employees in Hong Kong who are Hong Kong citizens or permanent residents receive a pension benefit from the Mandatory Provident Fund (“MPF”), a compulsory social security savings plan provided by that country’s government to which we make contributions as required by Hong Kong law. In 2024, we made mandatory contributions to the MPF with respect to Mr. Yi, as he is a Hong Kong citizen. Mr. van Zuilen participated in two cash balance defined benefit pension plans generally available to all employees in Switzerland, known as the SVE and the JJS. We contributed a percentage of Mr. van Zuilen’s pay, which varied by plan, into each of the SVE and the JJS. At the time of his retirement, Mr. van Zuilen may elect to receive his account balances in a lump sum payment, partial or full, or in an annuity payment up to a maximum limit, with any residual account balance paid as a lump sum. If Mr. van Zuilen terminates employment prior to becoming eligible for retirement benefits, he will receive his account balances in a lump sum payment.
NONQUALIFIED DEFERRED COMPENSATION IN 2024
NONQUALIFIED DEFERRED COMPENSATION IN 2024
NONQUALIFIED DEFERRED COMPENSATION IN 2024
| Name | Executive Contributions in Last FY(1) ($) | Registrant Contributions in Last FY(2)(3) ($) | Aggregate Earnings in Last FY(4) ($) | Aggregate Balance at Last FYE(3)(5) ($) | | (a) | (b) | (c) | (d) | (f) | | Ivan Tornos | | | | | | DCP | 74,215 | 74,215 | 95,477 | 718,267 | | Suketu Upadhyay | | | | | | DCP | 115,835 | 95,135 | 308,049 | 1,649,481 | | Mark Bezjak | | | | | | DCP | 86,356 | 53,320 | 64,982 | 621,366 | | Sang Yi | — | — | — | — | | Wilfred van Zuilen | — | — | — | — |
NONQUALIFIED DEFERRED COMPENSATION IN 2024
(1) Amounts shown in this column are reported in the 2024 Summary Compensation Table, as follows:
NONQUALIFIED DEFERRED COMPENSATION IN 2024
| | Amount Reported as Salary for 2024 | Amount Reported as Non-Equity Incentive Compensation for 2024 | | | ($) | ($) | | Ivan Tornos | | | | DCP | 74,215 | — | | Suketu Upadhyay | | | | DCP | 115,835 | — | | Mark Bezjak | | | | DCP | 86,356 | — | | Sang Yi | — | — | | Wilfred van Zuilen | — | — |
NONQUALIFIED DEFERRED COMPENSATION IN 2024
(2) The amounts shown in this column are reported in the 2024 Summary Compensation Table as part of All Other Compensation. (3) Our matching contributions to the DCP for 2024 reported in column (c) were not credited to participants’ accounts until 2025. Therefore, these matching contributions are not reflected in the aggregate balance at last fiscal year end in column (f). (4) The amounts shown in this column are not reported as compensation in the 2024 Summary Compensation Table as they do not represent above-market or preferential earnings on deferred compensation. (5) Of the amounts shown in this column (including any amounts that would be shown in this column absent a decrease in value), the following amounts are or were previously reported in the Summary Compensation Table:
NONQUALIFIED DEFERRED COMPENSATION IN 2024
| | Aggregate Amount Reported in the Summary Compensation Table of this and prior Proxy Statements | | | ($) | | Ivan Tornos | | | DCP | 543,781 | | Suketu Upadhyay | | | DCP | 1,222,855 | | Mark Bezjak | | | DCP | 140,066 | | Sang Yi | — | | Wilfred van Zuilen | — |
NONQUALIFIED DEFERRED COMPENSATION IN 2024
Deferred Compensation Plan (“DCP”). We adopted the DCP effective as of January 1, 2016 and froze all other nonqualified defined contributions plans for employees as of December 31, 2015. The DCP provides U.S.-based executives with the opportunity to defer each year, on a pre-tax basis, up to 50% of base salary and up to 95% of annual incentive awards. To be effective, a participant must have made the election by December 31 of the year preceding the year in which the compensation was earned. We will match 100% of a participant’s contributions, up to a maximum of 6% of the participant’s aggregate base salary and annual incentive award, minus our matching contributions under the 401(k) plan. An executive must be employed on December 31 of the year the compensation was earned to be eligible to receive our matching contributions, unless termination of employment was due to the executive’s death, disability or retirement, as defined in the DCP. Our matching contributions vest 25% per year of service. The plan does not offer any above-market rates of return. Participants may select from various investment alternatives to serve as the measure of investment earnings on their accounts. Investment alternatives under this plan are slightly different than those offered under the 401(k) plan. During 2024, the investment alternatives included 16 different mutual funds from a number of different fund families. Our contributions follow the investment direction of participant contributions. Participants may change the investment direction of their existing account balances at any time by contacting the plan administrator. During 2024, the rates of return of the various investment alternatives available under the plan ranged from 1.34% to 25.00%. We do not hold contributions to the plan in a trust and, therefore, they may be subject to the claims of our creditors in the event of our bankruptcy or insolvency. When payments come due under the plan, we distribute cash from our general assets. The plan does not permit loans. During employment, the plan permits hardship distributions of vested amounts prior to the scheduled payment date only in the event of an unforeseeable emergency and only if the financial hardship resulting from the unforeseeable emergency cannot be relieved by other means, including cessation of deferrals under the DCP. If a participant receives a hardship distribution, the participant will be ineligible to defer compensation under the DCP for the remainder of that year and the following year. At the time a participant makes an annual deferral election, the participant also chooses a withdrawal payment date and the form of payment he or she wishes to receive with respect to the payment of the vested amounts attributable to those deferrals. A participant may choose to commence payments on a specified date in the future or following separation from service. If a participant elects to commence payments on a specified date in the future, the participant may elect to receive his or her vested amounts in a lump sum or in substantially equal annual installments over two to five years. If a participant elects to commence payments following separation from service, the participant may elect to receive his or her vested amounts in a lump sum or in substantially equal annual installments over five to 15 years. In accordance with Section 409A of the Code, payments are delayed six months following a participant’s separation from service. If an executive is terminated for cause (as defined under the DCP, including willfully engaging in conduct that is demonstrably and materially injurious to us or our subsidiaries, monetarily or otherwise), or information is discovered after the executive’s separation that would have allowed us to terminate the executive for cause, then the executive will forfeit any and all amounts in his or her company matching contribution account.
NONQUALIFIED DEFERRED COMPENSATION IN 2024
| POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT |
NONQUALIFIED DEFERRED COMPENSATION IN 2024
The table below reflects the estimated amount of compensation payable to each of the NEOs in the event of the termination of the NEO’s employment. The table shows the potential compensation payable to each NEO, as applicable, upon a termination in connection with a change in control, voluntary resignation, retirement, death, disability, company-initiated (with cause) termination and company-initiated (without cause) termination, assuming such termination was effective as of December 31, 2024. The table and footnotes exclude certain amounts payable pursuant to plans that do not discriminate in favor of executive officers and that are available generally to all salaried employees. The amounts shown are only estimates of the amounts that would be payable to the NEOs upon termination of employment and do not reflect tax positions we may take or the accounting treatment of such payments or limitations on payments and benefits arising under change in control severance agreements for U.S.-based NEOs to avoid the application of an excise tax under Section 280G of the Internal Revenue Code. Actual amounts to be paid can only be determined at the time of separation.
NONQUALIFIED DEFERRED COMPENSATION IN 2024
| | Termination Scenario | | | | | | | | Compensation Components | Change in Control($) | Voluntary Resignation($) | Retirement($) | Death($) | Disability($) | Company- Initiated (with Cause)($) | Company- Initiated (without Cause)($) | | Ivan Tornos | | | | | | | | | Severance – Salary(1) | 3,744,000 | — | — | — | — | — | 2,496,000 | | Severance – Cash Incentive Award(2) | 5,616,000 | — | — | — | — | — | 3,744,000 | | 2024 Annual Cash Incentive Award(3) | 1,872,000 | — | — | 1,738,495 | 1,738,495 | — | — | | Stock Options (accelerated)(4) | — | — | — | — | — | — | — | | PRSUs and RSUs (accelerated)(5) | 17,180,825 | — | — | 1,148,832 | — | — | — | | DCP(6) | 718,267 | 718,267 | 718,267 | 718,267 | 718,267 | 421,679 | 718,267 | | Health and Welfare(7) | 74,651 | — | — | — | — | — | 72,779 | | Disability(8) | — | — | — | — | 11,361,871 | — | — | | Outplacement(9) | 25,000 | — | — | — | — | — | 25,000 | | Suketu Upadhyay | | | | | | | | | Severance – Salary(1) | 1,768,000 | — | — | — | — | — | 884,000 | | Severance – Cash Incentive Award(2) | 1,768,000 | — | — | — | — | — | 884,000 | | 2024 Annual Cash Incentive Award(3) | 884,000 | — | — | 820,956 | 820,956 | — | — | | Stock Options (accelerated)(4) | — | — | — | — | — | — | — | | PRSUs and RSUs (accelerated)(5) | 9,473,743 | — | — | 963,240 | — | — | — | | DCP(6) | 1,649,481 | 1,649,481 | 1,649,481 | 1,649,481 | 1,649,481 | 442,829 | 1,649,481 | | Health and Welfare(7) | 62,004 | — | — | — | — | — | 30,207 | | Disability(8) | — | — | — | — | 5,262,946 | — | — | | Outplacement(9) | 25,000 | — | — | — | — | — | 25,000 | | Mark Bezjak | | | | | | | | | Severance – Salary(1) | 1,300,000 | — | — | — | — | — | 650,000 | | Severance – Cash Incentive Award(2) | 1,170,000 | — | — | — | — | — | 585,000 | | 2024 Annual Cash Incentive Award(3) | 585,000 | — | — | 482,881 | 482,881 | — | — | | Stock Options (accelerated)(4) | — | — | — | — | — | — | — | | PRSUs and RSUs (accelerated)(5) | 2,944,542 | — | — | 342,452 | — | — | — | | DCP(6) | 621,366 | 621,366 | 621,366 | 621,366 | 621,366 | 267,299 | 621,366 | | Health and Welfare(7) | 61,527 | — | — | — | — | — | 30,207 | | Disability(8) | — | — | — | — | 3,777,765 | — | — | | Outplacement(9) | 25,000 | — | — | — | — | — | 25,000 | | Sang Yi(10) | | | | | | | | | Severance – Salary(1) | 1,396,000 | — | — | — | — | — | 698,000 | | Severance – Cash Incentive Award(2) | 1,116,800 | — | — | — | — | — | 558,400 | | 2024 Annual Cash Incentive Award(3) | 558,400 | — | — | 571,018 | 571,018 | — | — | | Stock Options (accelerated)(4) | — | — | — | — | — | — | — | | PRSUs and RSUs (accelerated)(5) | 3,700,641 | — | — | 499,524 | — | — | — | | Health and Welfare(7) | 164,807 | — | — | — | — | — | — | | Outplacement(9) | 25,000 | — | — | — | — | — | 25,000 | | Wilfred van Zuilen(11) | | | | | | | | | Severance – Salary(1) | 1,360,000 | — | — | — | — | — | 680,000 | | Severance – Cash Incentive Award(2) | 1,156,000 | — | — | — | — | — | 578,000 | | 2024 Annual Cash Incentive Award(3) | 578,000 | — | — | 709,543 | 709,543 | — | — | | Stock Options (accelerated)(4) | — | — | — | — | — | — | — | | PRSUs and RSUs (accelerated)(5) | 3,547,161 | — | — | 734,551 | — | — | — | | Swiss Pension Plans(12) | | | | | | | | | SVE | 75,371 | 75,371 | 86,647 | 75,371 | 75,371 | 75,371 | 75,371 | | JJS | 644,409 | 644,409 | 740,856 | 644,409 | 644,409 | 644,409 | 644,409 | | Health and Welfare(7) | 46,221 | — | — | — | — | — | — | | Disability(8) | — | — | — | — | — | — | — | | Outplacement(9) | 25,000 | — | — | — | — | — | 25,000 |
NONQUALIFIED DEFERRED COMPENSATION IN 2024
Amount shown in “Change in Control” column represents three times (for Mr. Tornos) or two times (for each of Messrs. Upadhyay, Bezjak, Yi and van Zuilen) the NEO’s base salary in effect as of December 31, 2024, which amount would have been payable in the event of a change in control of us and the NEO’s termination of employment by us without cause or by the NEO with good reason pursuant to the change in control severance agreements we have with each of the NEOs. See the narrative that follows this table for a description of the change in control severance agreements. Amount shown in “Company-Initiated (without Cause)” column represents two times (for Mr. Tornos) or one times (for each of Messrs. Upadhyay, Bezjak, Yi and van Zuilen) the NEO’s base salary in effect as of December 31, 2024, which amount would have been payable pursuant to the terms of our Executive Severance Plan in the event of the NEO’s involuntary termination of employment without cause on December 31, 2024. See the narrative that follows this table for a description of the Executive Severance Plan. (2) Amount shown in “Change in Control” column represents three times (for Mr. Tornos) or two times (for each of Messrs. Upadhyay, Bezjak, Yi and van Zuilen) the NEO’s target incentive award opportunity percentage under the 2024 annual cash incentive plan multiplied by the NEO’s base salary as of December 31, 2024, which amount would have been payable in the event of a change in control of us and the NEO’s termination of employment by us without cause or by the NEO with good reason pursuant to the change in control severance agreement we have with each of the NEOs. Amount shown in “Company-Initiated (without Cause)” column represents two times (for Mr. Tornos) or one times (for each of Messrs. Upadhyay, Bezjak, Yi and van Zuilen) the NEO’s target incentive award opportunity percentage under the 2024 annual cash incentive plan multiplied by the NEO’s base salary as of December 31, 2024, which severance would have been payable pursuant to the terms of our Executive Severance Plan in the event of his involuntary termination of employment without cause on December 31, 2024. (3) Amount represents the amount payable to the NEO under the annual cash incentive plan for 2024 assuming the NEO terminated employment effective December 31, 2024 as a result of the specified termination event. Amount in “Change in Control” column represents the NEO’s target award under the EPIP for 2024 as reported in column (d) of the “Grants of Plan-Based Awards in 2024” table. Amount in “Death” and “Disability” columns represents actual amount earned for 2024, as reported in column (g) of the 2024 Summary Compensation Table. (4) Amount represents the value of unvested stock options held by the NEO that would vest as a result of the specified termination event. This value is calculated on the basis of the difference between the exercise price and $105.63, the closing price of our common stock on the New York Stock Exchange on December 31, 2024, multiplied by the number of shares of common stock underlying “in-the-money” options. (5) Amount represents the value of unvested PRSUs and RSUs, as applicable, held by the NEO that would vest as a result of the specified termination event. For all NEOs this value is calculated by multiplying the number of unvested units that would vest by $105.63, the closing price of our common stock on the New York Stock Exchange on December 31, 2024. (6) For all columns other than “Change in Control” and “Company Initiated (with Cause)”, amount represents the NEO’s vested account balance in the DCP as of December 31, 2024. Amount in “Change in Control” column represents the NEO’s vested account balance in the DCP plus unvested employer contributions as of December 31, 2024. Amount in “Company Initiated (with Cause)” column represents the NEO’s vested account balance in the DCP minus all employer contributions and earnings attributable thereto as of December 31, 2024. U.S.-based executives are generally eligible to participate in the DCP. See “NONQUALIFIED DEFERRED COMPENSATION IN 2024 – Narrative Discussion – Deferred Compensation Plan (“DCP”)” for more information about this plan, including available forms of payment and material conditions applicable to receipt of payments. (7) Amount shown in “Change in Control” column represents the estimated cost of health and welfare benefits to be provided to the NEO in the event of a change in control and qualifying termination of employment under the change in control severance agreements we have with each of the NEOs. With respect to Mr. Yi, the reported amount also includes the cost of continuing to provide an automobile allowance and health and welfare benefits for a period of 24 months. With respect to Mr. van Zuilen, the reported amount also includes estimated automobile-related and apartment rent expenses for the six month statutory notice period under Swiss law. Amount shown in the “Company-Initiated (without Cause)” column represents the then-current monthly COBRA premium based upon the group health insurance (medical and dental, but excluding vision) in effect the day before the assumed date of termination of employment of December 31, 2024, multiplied by 24 for Mr. Tornos, and by 12 for the other NEOs, as provided for by the Executive Severance Plan. (8) U.S.-based executives are generally eligible to participate in our Long-Term Disability Income Plan for Highly Compensated Employees. The amount for each of Messrs. Tornos, Upadhyay, and Bezjak represents the present value of his benefit under the plan assuming he became disabled effective December 31, 2024. Under the plan as in effect as of that date, a participant would be entitled to a monthly benefit equal to 70% of his monthly base earnings (including salary, the average of the annual incentive earned for the year preceding the date of disability and the target annual bonus for the year in which the disability occurred, and sales commissions, as applicable) reduced by the benefits payable under our base long-term disability insurance plan, supplemental insurance policy and certain other sources of income (including social security disability benefits). Benefits would be payable until the earliest of the following: (1) the date the participant ceases to be totally disabled; (2) the date the participant accepts or refuses a job we offer to him at a salary at least equal to that which he was earning immediately prior to becoming disabled; or (3) the participant’s 65th birthday (or a later date if benefits commenced under the plan after the participant reached age 631/2). The present value was determined by discounting the expected benefit payments using an interest rate of 5.58% and a mortality table for disabled employees. The present value excludes benefits payable under our base long-term disability insurance plan, which does not discriminate in favor of executive officers and is available generally to all salaried employees. The present value does include the benefit payable under the insured, supplemental insurance policy because that benefit is paid for by us, but is not available to all salaried employees. (9) Amount represents the estimated cost of outplacement services to be provided to the NEO in the event of termination of employment as a result of the specified termination event. (10) Mr. Yi’s compensation is paid in Hong Kong Dollars and has been converted to U.S. Dollars for purposes of this table using the average exchange rate for 2024 of 1 HKD = 0.1282 USD (rounded). (11) Mr. van Zuilen’s compensation is paid in Swiss Francs and has been converted to U.S. Dollars for purposes of this table using the average exchange rate for 2024 of 1 CHF = 1.1355 USD (rounded).
NONQUALIFIED DEFERRED COMPENSATION IN 2024
With respect to these Swiss pension plans, amounts shown in the “Retirement” column represent the present value of Mr. van Zuilen’s accumulated benefit commencing at age 65. For all other termination scenarios, amounts shown represent the value of the cash balance account as of December 31, 2024. Reported amounts are based upon the portion of the accumulated benefit and cash balance account attributable to company contributions.
NONQUALIFIED DEFERRED COMPENSATION IN 2024
| CHANGE IN CONTROL ARRANGEMENTS |
NONQUALIFIED DEFERRED COMPENSATION IN 2024
We have entered into change in control severance agreements with the NEOs. The agreements provide the NEOs with certain severance benefits following a change in control of us and qualifying termination of their employment. The agreements are intended to encourage executives to remain employed with us during a time when their prospects for continued employment following a transaction may be uncertain (since many transactions result in significant organizational changes at the executive level). We choose to provide these agreements to promote a stable executive team and so that executives will remain focused on shareholders’ and customers’ interests during the transition process. To receive the severance benefits provided under the agreements, an executive must sign a general release of any claims against us. We do not believe NEOs should receive severance benefits merely because a change in control transaction occurs. Therefore, our agreements have a “double trigger.” This means that severance benefits are provided only upon the occurrence of both a change in control of us and either (1) an involuntary termination of employment without “cause” (as defined in the agreement) or (2) a voluntary termination of employment with “good reason” (as defined in the agreement). If both triggers occur, the NEO would be provided with severance benefits that would include a lump sum payment equal to three times (in the case of Mr. Tornos) or two times (in the case of each of Messrs. Upadhyay, Bezjak, Yi, and van Zuilen) the sum of the NEO’s base salary and target annual incentive award. In addition, the NEO would receive a payout of any unpaid incentive compensation allocated or awarded to the NEO for the completed calendar year preceding the date of termination and a pro rata portion to the date of termination of the aggregate value of all contingent incentive compensation awards to the NEO for the current calendar year. If prior to a change in control, the NEO’s employment is terminated without cause at the direction of a person who has entered into an agreement with us, the consummation of which would constitute a change in control, or by the NEO for good reason, the NEO would be entitled to a lump-sum severance payment equal to three times (in the case of Mr. Tornos) or two times (in the case of each of Messrs. Upadhyay, Bezjak, Yi, and van Zuilen) the sum of the NEO’s base salary and the amount of the largest aggregate annual bonus paid to the NEO during the three years immediately prior to the year in which the termination occurred. In addition, the NEO would receive a payout of any unpaid incentive compensation allocated or awarded to the NEO for the completed calendar year preceding the date of termination, provided that the performance conditions applicable to such incentive compensation are met, and an amount equal to a pro rata portion to the date of termination of the average annual award paid to the NEO under our incentive compensation plans during the three years immediately prior to the year in which the notice of termination was given. Further, unless otherwise provided for under a written award agreement, (1) all outstanding stock options granted to the NEO would become immediately vested and exercisable, (2) all time-based restrictions on RSUs would immediately lapse, and (3) with respect to PRSUs, the number of units that would be earned would be the greater of (a) the target number, or (b) the number that would have been earned based on actual performance through the date of the change in control. Each U.S.-based NEO would receive a cash amount equal to the unvested portion, if any, of our matching contributions (and attributable earnings) credited to him under the 401(k) plan and the DCP, as well as a lump-sum payment equal to two times the annual value for life and health (including medical and dental) insurance benefits and any applicable perquisites prior to termination. Given that none of our U.S.-based NEOs has an employment agreement with us, we have concluded that a constructive termination severance trigger is appropriate to prevent potential acquirers from causing the constructive termination of an NEO’s employment to avoid paying any severance benefits at all. Without a constructive termination trigger, following a change in control, an acquirer could materially demote an NEO, materially reduce his or her salary and reduce or eliminate his or her annual bonus opportunity in order to encourage the NEO to resign voluntarily and thereby avoid paying severance. Thus, our agreements provide certain benefits for NEOs in the event of a voluntary termination for “good reason” (as defined in the agreements). None of the change in control severance agreements with the NEOs includes any tax gross-up provisions. Prior to 2024, all payments and benefits under the change in control severance agreements for our U.S.-based NEOs were limited to less than the amount which would subject such payments and benefits to the excise tax under Section 280G of the Internal Revenue Code. However, in February 2024, we amended our change in control severance agreements with our executive officers so that, if amounts payable to an executive under the change in control severance agreement or otherwise in connection with a change in control would be subject to such excise tax, then the value of those payments will either (i) be reduced to the extent necessary so that the payments will not trigger that excise tax, or (ii) be paid in full, depending on which course of action would result in the better net after-tax result for the executive, taking into account the excise tax and any other applicable tax.
NONQUALIFIED DEFERRED COMPENSATION IN 2024
| Executive severance plan |
NONQUALIFIED DEFERRED COMPENSATION IN 2024
The Zimmer Biomet Holdings, Inc. Executive Severance Plan is applicable to certain members of our executive leadership team, which includes all of the NEOs. Under the Executive Severance Plan, following a termination by the company of a participant’s employment, unless his or her employment is terminated for misconduct or any of the other reasons specified in the Executive Severance Plan, a participant will be eligible to receive a lump-sum severance amount equal to two times (for the President and CEO) or one times (for the other NEOs) the sum of (i) the participant’s annualized base salary in effect when the termination occurs and (ii) the participant’s target annual bonus amount in effect when the termination occurs. Participants eligible to receive severance benefits under the Executive Severance Plan and who are covered under COBRA will also be eligible to receive a lump-sum amount equal to the then-current monthly COBRA premium (for medical and dental insurance only) in effect the day prior to the separation date, multiplied by 24 for the President and CEO and by 12 for the other NEOs. Eligible participants will also be offered outplacement services with a value not to exceed $25,000, or an equivalent cash benefit in the plan administrator’s discretion. In addition to the foregoing benefit amounts, if a participant’s employment is terminated on or after January 1 but prior to the payment date for bonuses related to the previous calendar year under the annual cash incentive plan, and the participant was eligible to participate in the annual cash incentive plan immediately prior to the separation and is entitled to severance benefits under the Executive Severance Plan, the participant’s severance benefit under the Executive Severance Plan will be increased by the value of the bonus the participant would have received under the annual cash incentive plan, if any, had the participant remained employed on the payment date. In order to receive benefits under the Executive Severance Plan, a participant must sign a general release of claims and continue to be bound by the terms of his or her non-competition agreement with us. If a participant violates or breaches any term of the Executive Severance Plan or the general release or any restrictive covenant agreement with us, or if facts are later disclosed or discovered that could have supported the participant’s termination for cause and would have rendered the participant ineligible to receive severance benefits under the Executive Severance Plan, then the participant will forfeit any and all rights to benefits under the Executive Severance Plan and, to the extent benefits have already been paid to the participant, must repay the full amount within 15 days of written notice from us.
NONQUALIFIED DEFERRED COMPENSATION IN 2024
| NON-COMPETE ARRANGEMENTS |
NONQUALIFIED DEFERRED COMPENSATION IN 2024
We have entered into Confidentiality, Non-Competition and Non-Solicitation Agreements with the NEOs. Agreements with U.S.-Based NEOs. The agreements with U.S.-based NEOs provide that the NEO is restricted from competing with us for a period of two years, in the case of Mr. Tornos, or 18 months, in the case of the other U.S.-based NEOs, following termination of employment within a specified territory, which generally includes every country in which we have significant operations. With respect to U.S.-based NEOs other than Mr. Tornos, in the event of an NEO’s involuntary separation from employment with us for a reason that renders the NEO eligible for severance benefits, then, to the extent the NEO is denied, solely because of the provisions of the non-competition agreement, a specific employment, consulting or other position that would otherwise be offered to the NEO by a competing organization, and provided the NEO satisfies all conditions of the non-competition agreement, then upon expiration of the NEO’s severance benefit period, the company will make monthly payments to the NEO for each month the NEO remains unemployed through the end of the non-competition period. These monthly payments will equal the lesser of the NEO’s monthly base pay at the time of his or her separation of employment from the company or the monthly compensation that would have been offered to the NEO from the competing organization. Agreement with Mr. Yi. Our agreement with Mr. Yi is similar to our agreements with U.S.-based NEOs except that the specified territory in which he is restricted from competing with us is defined as Australia, China, Hong Kong, India, Japan, Korea, Malaysia, New Zealand, Singapore, Taiwan, Thailand and any other country where we have, at the relevant time, established a representative office or entity. Agreement with Mr. van Zuilen. Our agreement with Mr. van Zuilen is similar to our agreements with U.S.-based NEOs except that the specified territory in which he is restricted from competing with us is defined as Switzerland, the European Community member states, the European Free Trade Association member states and any other country for which he possesses knowledge of confidential company information.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The following table reports the compensation of our Principal Executive Officers (“PEOs”) and the average compensation of the other NEOs (the “Non-PEO NEOs”) as reported in the Summary Compensation Table for the past five fiscal years, as well as their “compensation actually paid” (“CAP”) as calculated pursuant to rules adopted by the SEC. CAP amounts for purposes of the tabular disclosure and the following graphs were calculated in accordance with Item 402(v) of Regulation S-K and do not necessarily represent the actual final amount of compensation earned by or actually paid to our NEOs during the applicable years. The Compensation and Management Development Committee does not use CAP as the basis for making its compensation decisions. For information concerning the Compensation and Management Development Committee’s compensation philosophy and how the Compensation and Management Development Committee aligns executive compensation with financial performance, refer to the CD&A section of this proxy statement.
PAY VERSUS PERFORMANCE
| | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | Company Selected Measure(6) | | Year(1) | Summary Compensation Table Total for Former PEO | Compensation Actually Paid to Former PEO(2) | Summary Compensation Table Total for Current PEO | Compensation Actually Paid to Current PEO(2) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs(3) | Total Shareholder Return | Peer Group Total Shareholder Return(4) | Net Income (Loss)($ in millions)(5) | Consolidated Constant Currency Revenue ($ in millions) | | (a) | (b) | (c) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2024 | $— | $— | $14,992,868 | $9,243,893 | $3,891,080 | $1,952,378 | $75.61 | $137.81 | $903.8 | $7,689 | | 2023 | $12,761,312 | $(19,161,122) | $10,191,476 | $10,289,429 | $5,015,400 | $5,056,791 | $86.38 | $124.22 | $1,024.0 | $7,353 | | 2022 | $16,449,105 | $20,502,180 | $— | $— | $4,689,197 | $5,650,800 | $89.80 | $113.92 | $231.4 | $7,160 | | 2021 | $14,983,532 | $(1,094,956) | $— | $— | $4,235,857 | $1,320,366 | $86.09 | $140.40 | $401.6 | $7,809 | | 2020 | $13,031,701 | $7,354,725 | $— | $— | $3,437,316 | $3,191,439 | $103.76 | $117.63 | $(138.9) | $6,964 |
PAY VERSUS PERFORMANCE
(1) The current PEO is Mr. Tornos, who began serving as PEO on August 22, 2023, and the former PEO is Bryan Hanson, who served as PEO for each of 2020, 2021 and 2022, and for 2023 until August 22, 2023. The Non-PEO NEOs for the applicable years were as follows: 2024: Messrs. Upadhyay, Bezjak, Yi and van Zuilen. 2023: Messrs. Upadhyay, Yi, van Zuilen and Phipps. 2022: Messrs. Upadhyay, Tornos, Yi and Phipps. 2021: Messrs. Upadhyay, Tornos, Yi and van Zuilen. 2020: Messrs. Upadhyay, Tornos and Yi and Didier Deltort, former President, EMEA. (2) The Summary Compensation Table total reported for the PEO for 2024 was subject to the following adjustments per Item 402(v)(2)(iii) of Regulation S-K to calculate CAP:
PAY VERSUS PERFORMANCE
| Year | 2024 | | Summary Compensation Table Total | $14,992,868 | | Summary Compensation Table Stock Awards and Option Awards | $(11,750,148) | | Summary Compensation Table Change in Pension Value | $— | | Year End Fair Value of Equity Awards Granted in the Covered Year | $8,643,796 | | Change in Fair Value at End of Covered Year from End of Prior Year of Equity Awards Granted in Prior Yeats that were Unvested at End of Covered Year | $(2,808,232) | | Change in Fair Value at Vesting Date from End of Prior Year of Equity Awards Granted in Prior Years that Vested in the Covered Year | $165,610 | | Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Covered Year | $— | | Pension Service Costs | $— | | Compensation Actually Paid | $9,243,893 |
PAY VERSUS PERFORMANCE
The Average Summary Compensation Table total reported for the Non-PEO NEOs for 2024 was subject to the following adjustments per Item 402(v)(2)(iii) of Regulation S-K to calculate Average CAP:
PAY VERSUS PERFORMANCE
| Year | 2024 | | Summary Compensation Table Total | $3,891,080 | | Summary Compensation Table Stock Awards and Option Awards | $(2,350,117) | | Summary Compensation Table Change in Pension Value | $(52,268) | | Year End Fair Value of Equity Awards Granted in the Covered Year | $1,728,828 | | Change in Fair Value at End of Covered Year from End of Prior Year of Equity Awards Granted in Prior Yeats that were Unvested at End of Covered Year | $(1,160,424) | | Change in Fair Value at Vesting Date from End of Prior Year of Equity Awards Granted in Prior Years that Vested in the Covered Year | $(175,267) | | Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Covered Year | $— | | Pension Service Costs | $70,545 | | Compensation Actually Paid | $1,952,378 |
PAY VERSUS PERFORMANCE
Pursuant to SEC rules, the TSR figures assume an initial investment of $100 on December 31, 2019. As permitted by SEC rules, the peer group referenced for purposes of the TSR comparison is the group of companies included in the S&P 500 Health Care Equipment Index, which is the industry index we used for purposes of Item 201(e) of Regulation S-K. (5) Net Income (Loss) reflects the Net Earnings (Loss) of Zimmer Biomet Holdings, Inc., inclusive of results from those discontinued operations relating to the spinoff of ZimVie Inc. on March 1, 2022. (6) The company has identified consolidated constant currency revenue from the tabular list of 2024 Most Important Measures below as the company-selected measure for the pay versus performance disclosure, as it represents the most important financial performance measure used to link CAP to the PEO and the Non-PEO NEOs in 2024 to the company’s performance. See Appendix A in this proxy statement for a reconciliation of consolidated constant currency revenue, a non-GAAP measure, to the most directly comparable GAAP measure.
Tabular Disclosure of the Most Important Measures Linking Compensation Actually Paid During 2024 to Company Performance
Tabular Disclosure of the Most Important Measures Linking Compensation Actually Paid During 2024 to Company Performance The table below reflects the most important measures used by the company to link CAP to our NEOs for 2023 to company performance. For further information regarding these performance metrics and their function in our executive compensation program, please see the CD&A.
Tabular Disclosure of the Most Important Measures Linking Compensation Actually Paid During 2024 to Company Performance
| 2024 Most Important Measures (Unranked) | | | ● Consolidated constant currency revenue | ● Consolidated free cash flow | | ● Adjusted operating profit | ● Adjusted EPS growth |
Relationship Between Compensation Actually Paid and Performance Measures
Relationship Between Compensation Actually Paid and Performance Measures The following graphs further illustrate the relationship between the pay and performance figures that are included in the pay versus performance tabular disclosure above. In addition, the first graph below further illustrates the relationship between company total shareholder return and that of the industry index peer group described above. As noted above, CAP amounts for purposes of the tabular disclosure and the following graphs were calculated in accordance with SEC rules and do not necessarily represent the actual final amount of compensation earned by or actually paid to our NEOs during the applicable years. See Appendix A in this proxy statement for a reconciliation of consolidated constant currency revenue, a non-GAAP measure, to the most directly comparable GAAP measure.
2024 CEO PAY RATIO
2024 CEO PAY RATIO As required by Item 402(u) of Regulation S-K of the Exchange Act, we are providing the following information about the relationship of the annual total compensation of our CEO and the annual total compensation of our employees for 2024.
16. What happens if a nominee for director declines the nomination or is unable to serve?
16. What happens if a nominee for director declines the nomination or is unable to serve? If that happens, the persons named as proxies may vote for a substitute nominee designated by the Board to fill the vacancy, or, if no substitute has been nominated, for the remaining nominees, leaving a vacancy, or the Board may reduce its size. The Board has no reason to believe that any of the nominees will be unable or decline to serve if elected.