DEF 14A of Intuitive Surgical Inc, Mar 9, 2022

DEF 14A of Intuitive Surgical Inc

Filed Mar 9, 2022 · FY20210001035267-22-000074

Open on EDGAR

  1. Nominees for Director

    Nominees for Director The names of the directors being nominated for election and their ages, as of February 11, 2022, are set forth below. The following biographies describe the principal occupations, positions, and directorships for at least the past five years of the nominees for director, as well as certain information regarding their individual experiences, qualifications, attributes, and skills that led the Board to conclude that they should serve on the Board. There are no family relationships among any of our director nominees or executive officers.

  2. Board Diversity

    Board Diversity Among our eleven nominees for election to the Board, four nominees self-identify as women, and three nominees self-identify as African American, Hispanic, or Middle Eastern and Asian.

  3. Board Diversity

    | | Board Diversity Matrix as of 12/31/2021 | | | | | Total Number of Directors | 11 | | | | | | Female | Male | Non-Binary | Did Not Disclose Gender | | Part I: Gender Identity | | | | | | Directors | 4 | 7 | — | — | | Part II: Demographic Background | | | | | | African American or Black | 1 | — | — | — | | Alaskan Native or Native American | — | — | — | — | | Asian | 1 | — | — | — | | Hispanic or Latinx | — | 1 | — | — | | Native Hawaiian or Pacific Islander | — | — | — | — | | White | 3 | 6 | — | — | | Two or More Races or Ethnicities | 1 (1) | — | — | — | | LGBTQ+ | — | — | — | — | | Did Not Disclose Demographic Background | — | — | — | — |

  4. Board Diversity

    (1)Amal M. Johnson self-identifies as Middle Eastern and Asian.

  5. Board Diversity

    | Craig H. Barratt, Ph.D. Chair of the Board, Intuitive Surgical, Inc. Director since 2011 | Joseph C. Beery Former Senior Vice President and Chief Information Officer, Thermo Fisher Scientific Inc. Director since 2020 | | Craig H. Barratt, Ph.D., 58, has been a member of our Board since April 2011 and has served as Chair of our Board since April 2020. Dr. Barratt served as the independent lead director (“Lead Director”) from April 2018 to April 2020. Dr. Barratt has also served as a member and Chair of the Board of Directors of IonQ Inc. since January 2021. Dr. Barratt has previously served as the Senior Vice President and General Manager of the Connectivity Group of Intel Corporation, a semiconductor company, since its acquisition of Barefoot Networks, Inc., a computer networking company, from July 2019 until May 2020, where he previously served as President and Chief Executive Officer from April 2017 until July 2019. He held several different roles at Google, Inc., an Internet company, from June 2013 to January 2017, including Senior Vice President, Access and Energy, and Advisor. He previously served as President of Qualcomm Atheros, the networking and connectivity subsidiary of Qualcomm Inc. (“Qualcomm”), a mobile technology company, from May 2011 to February 2013. He served as President, Chief Executive Officer and a director of Atheros Communications, Inc., a fabless semiconductor company, from 2003 until its 2011 acquisition by Qualcomm. Dr. Barratt holds Ph.D. and Master of Science degrees from Stanford University, as well as a Bachelor of Engineering degree in electrical engineering and a Bachelor of Science degree in pure mathematics and physics from the University of Sydney in Australia. Dr. Barratt is a co-inventor of a number of U.S. patents in fields including wireless communications and medical imaging and has co-authored a book on linear controller design and open-source software. Dr. Barratt’s qualifications to serve on our Board and in the Chair position include his leadership roles at various high growth technology companies. | Joseph C. Beery, 58, has been a member of our Board since April 2020. Mr. Beery is an experienced leader of corporate information technology (“IT”) systems with a long history in managing IT and eCommerce services for global companies. Mr. Beery is currently the Chief Executive Officer of LunaDNA, a technology provider that supports patient-focused studies and trials for research and industry. Mr. Beery joined Thermo Fisher Scientific Inc., a life sciences company, in January 2014, through its acquisition of Life Technologies Corporation, a biotechnology company, and last held the role of Senior Vice President and Chief Information Officer until September 2019. Mr. Beery previously was the Senior Vice President and Chief Information Officer at Life Technologies Corporation from 2008 to 2014 and U.S. Airways and America West Airlines from 2000 to 2008. Mr. Beery has served as a member of the Board of Directors of several other companies and not-for-profit organizations. Mr. Beery received his B.S. in Business Administration and Business Computer Systems from the University of New Mexico. Mr. Beery self-identifies as Hispanic. Mr. Beery’s qualifications to serve on our Board include his broad experience within global organizations leading IT and digital strategy. |

  6. Board Diversity

    | Gary S. Guthart, Ph.D. President and Chief Executive Officer, Intuitive Surgical, Inc. Director since 2009 | Amal M. Johnson Former Executive Chairman of the Board, Author-IT, Inc. Director since 2010 | | Gary S. Guthart, Ph.D., 55, joined Intuitive in April 1996. In July 2007, Dr. Guthart was promoted to President and, in January 2010, he was appointed as Chief Executive Officer. Prior to that, in February 2006, Dr. Guthart assumed the role of Chief Operating Officer. Prior to joining Intuitive, Dr. Guthart was part of the core team developing foundation technology for computer enhanced-surgery at SRI International (formerly Stanford Research Institute). Dr. Guthart has served on the Board of Directors of Illumina, Inc., a sequencing- and array-based solutions company, since December 2017 and previously served on the Board of Directors of Affymetrix, Inc., a life sciences company, from May 2009 until its acquisition by Thermo Fisher Scientific Inc. in March 2016. He received a B.S. in Engineering from the University of California, Berkeley and an M.S. and a Ph.D. in Engineering Science from the California Institute of Technology. Dr. Guthart brings to the Board business, operating, financial, and scientific experience. His service as the Chief Executive Officer of Intuitive enables the Board to perform its oversight function with the benefits of management’s perspectives on the business. | Amal M. Johnson, 68, has been a member of our Board since April 2010. Ms. Johnson has served on the Board of Directors of CalAmp since December 2013 and as Chairman since July 2020. She has also served on the board of Essex Property Trust, Inc. since February 2018. From March 2012 to December 2017, Ms. Johnson was a member of the Board of Directors of Author-IT, Inc. (“Author-IT”), a Software as a Service (“SaaS”) private company that provides a platform for creating, maintaining, and distributing single-sourced technical content, and Executive Chairman from March 2012 to October 2016. Prior to joining Author-IT, Ms. Johnson led MarketTools, Inc., a SaaS company as Chief Executive Officer from 2005 to 2008, and then as Chairman of the Board until the company was acquired in January 2012. Ms. Johnson holds a Bachelor of Arts in Mathematics from Montclair State University and studied Computer Science at Stevens Institute of Technology Graduate School of Engineering. Ms. Johnson self-identifies as Middle Eastern and Asian. Ms. Johnson brings to our Board her leadership and operational experience, including from her service as Chairman of the Board of Directors and Chief Executive Officer of a technology company. |

  7. Board Diversity

    | Don R. Kania, Ph.D. Former President and Chief Executive Officer of FEI Company Director since 2018 | Amy L. Ladd, M.D. Orthopaedic Surgeon, Stanford University Medical Center Director since 2019 | | Don R. Kania, Ph.D., 66, has been a member of our Board since July 2018. Dr. Kania has more than 25 years of experience that includes scientific research and development, global operations, and manufacturing. From August 2006 to September 2016, Dr. Kania served as Chief Executive Officer and President, as well as a director, of FEI Company, a high-performance electron microscopy company, until its acquisition by Thermo Fisher Scientific Inc. Dr. Kania has served as a member on the Board of Directors and Audit Committee of NanoString Technologies, Inc., a life sciences company, since October 2019. Additionally, Dr. Kania served as a member of the Board of Directors of American Science and Engineering, a manufacturer of x-ray inspection technology, from 2010 to 2016. He also serves as a member of the Board of Directors or advisor to multiple other privately held life sciences companies. Dr. Kania received his Ph.D. in Engineering and Bachelor and Master’s degrees in physics from the University of Michigan. Dr. Kania’s qualifications to serve on our Board include his deep scientific and leadership expertise. | Amy L. Ladd, M.D., 63, has been a member of our Board since August 2019. Dr. Ladd has spent three decades practicing orthopaedic surgery at Stanford University. Dr. Ladd has served as the Elsbach-Richards Professor of Surgery since December 2017 and as Professor of Orthopaedic Surgery as well as Professor of Medicine (Immunology & Rheumatology), by courtesy, at the Stanford Universal Medical Center since 2003. Dr. Ladd has served on the Board of the Perry Initiative since September 2013. Dr. Ladd also served as the chair of the American Academy of Orthopaedic Surgeons (AAOS) Board of Specialties Society from March 2018 to March 2019 and previously served as a member of the Board of the AAOS from March 2016 to March 2019. Dr. Ladd received her M.D. from SUNY Upstate Medical University, completed her Orthopaedic Residency at the University of Rochester, and completed the Harvard Combined Hand Surgery Fellowship. Dr. Ladd was a fellow at L’Institut de la Main in Paris, France prior to joining the Stanford University faculty in 1990. She earned her A.B. in History from Dartmouth College. Dr. Ladd’s qualifications to serve on our Board include her deep surgical and medical expertise. |

  8. Board Diversity

    | Keith R. Leonard, Jr. Chairman of the Board, Unity Biotechnology, Inc. Director since 2016 | Alan J. Levy, Ph.D. Former Chief Executive Officer of Chrono Therapeutics Inc. Director since 2000 | | Keith R. Leonard, Jr., 59, has been a member of our Board since January 2016. Mr. Leonard has more than 20 years of experience in the pharmaceutical industry and has served as the Chairman of the Board of Unity Biotechnology, Inc., a biotechnology company, since October 2016 and was CEO from January 2016 to March 2020. Previously, Mr. Leonard was President, Chief Executive Officer, and a member of the Board of Directors of Kythera Biopharmaceuticals, Inc., a biopharmaceutical company that he co-founded, which focused on discovering, developing, and commercializing drugs for the aesthetic medicine market, from 2005 until its acquisition by Allergan plc in October 2015. Mr. Leonard worked across numerous areas at Amgen Inc. from 1991 to 2004, leading various functions including engineering, IT, and ultimately as General Manager of Amgen Europe. Mr. Leonard received a B.S. in Engineering from the University of California, Los Angeles, a B.A. in History from the University of Maryland, an M.S. in Engineering from the University of California, Berkeley, and an M.B.A. from the Anderson School of Management at the University of California, Los Angeles. Mr. Leonard has served on the Boards of Directors of Anacor Pharmaceuticals, Inc. from June 2014 to June 2016 and Sienna Biopharmaceuticals, Inc. from February 2016 to December 2019. Mr. Leonard has also served on the Board of Directors of Arcutis Biotherapeutics, Inc. since September 2021 along with several private companies. Mr. Leonard’s qualifications to serve on our Board include his operational and leadership experience with public companies in the pharmaceutical industry. | Alan J. Levy, Ph.D., 83, has been a member of our Board since February 2000 and served as the Lead Director from April 2013 to April 2018. Dr. Levy was the Founder, Chairman, and Chief Executive Officer of Chrono Therapeutics, a privately-held digital medicine company, from February 2014 to February 2018. From 2012 to 2017, he was a Senior Advisor at Frazier Healthcare Ventures and also a Venture Partner from 2007 to 2012. Dr. Levy previously was the Chief Executive Officer at Incline Therapeutics, Inc., Northstar Neuroscience, and Heartstream, Inc. Dr. Levy holds a B.S. in Chemistry from City University of New York and a Ph.D. in Organic Chemistry from Purdue University. Dr. Levy currently serves as a director of several private companies and not-for-profit organizations. Dr. Levy’s qualifications to serve on our Board include his executive leadership experience with several companies and an understanding of physicians and other health care providers who are central to the use and development of our products. |

  9. Board Diversity

    | Jami Dover Nachtsheim Former Corporate Vice President of the Sales and Market Group and Director of Worldwide Marketing, Intel Corporation Director since 2017 | Monica P. Reed, M.D. Former Chief Learning Officer and Chief Medical Officer of AdventHealth Director since 2021 | | Jami Dover Nachtsheim, 62, has been a member of our Board since April 2017. Ms. Nachtsheim served in a variety of positions with Intel Corporation, a semiconductor company, from 1980 until her retirement in 2000, most recently as the Corporate Vice President of the Sales and Marketing Group and Director of Worldwide Marketing. Ms. Nachtsheim served on the Board of Directors of FEI Company, a high-performance electron microscopy company, from February 2012 until its acquisition by Thermo Fisher Scientific Inc. in September 2016. Ms. Nachtsheim also served on the Board of Directors of Affymetrix, Inc., a life sciences company, from March 2010, and as Chairman starting January 2015, until its acquisition by Thermo Fisher Scientific Inc. in March 2016. Ms. Nachtsheim has served on the Board of Directors of Cerus Corp., a biomedical products company, since March 2019 and Codex DNA, a biology company, since June 2021. Ms. Nachtsheim holds a B.S. in Business Management from Arizona State University. Ms. Nachtsheim has served as a member of the Board of Directors of several other public and private companies. Ms. Nachtsheim’s qualifications to serve on our Board include her extensive experience in bringing high technology products to market and her long service as a board member of several public and private organizations. Her international experience provides useful insight to the Board’s deliberations on a wide range of global business matters. | Monica P. Reed, M.D., 58, has been a member of our Board since April 2021. Dr. Reed is an experienced leader of large regional health systems and community hospitals promoting the delivery of top-quality healthcare services. Since 2021, Dr. Reed has also served on the Board of Isleworth Healthcare Acquisition Corp. Previously, Dr. Reed served AdventHealth, a non-profit health care system, as the Chief Medical Officer from 2001 to 2006. From 2006 to 2016, Dr. Reed was the Senior Executive Officer and CEO of AdventHealth Celebration and then served as SVP for the Care Continuum and Chief Learning Officer for the Central Florida region of the corporation until March 2018. Dr. Reed founded the Reed Consulting Group in May 2018, where she currently consults with companies to address evolving clinical and healthcare needs. Dr. Reed received her M.D. from Loma Linda University, School of Medicine, and completed her Obstetrics and Gynecology Residency at the White Memorial Medical Center. She earned her M.S. in Consulting and Coaching for Change from Saïd Business School at the University of Oxford. Monica self-identifies as African American. Dr. Reed’s qualifications to serve on our Board include her deep medical and leadership expertise as well as her extensive experience working in and with healthcare systems and community hospitals. |

  10. Board Diversity

    | Mark J. Rubash Former Chief Financial Officer Emeritus - Strategic Advisor, Eventbrite, Inc. Director since 2007 | | Mark J. Rubash, 63, has been a member of our Board since October 2007. Most recently, Mr. Rubash served as a Strategic Advisor from December 2016 to September 2018 at Eventbrite, Inc. (“Eventbrite”), an e-commerce company, where he previously was the Chief Financial Officer from June 2013 to November 2016. Prior to Eventbrite, he was the Chief Financial Officer at Heartflow, Inc., Shutterfly, Inc., and Deem, Inc. (formerly, Rearden Commerce), and held finance executive positions at Yahoo! Inc. and eBay Inc. Prior to that, Mr. Rubash was also an audit partner at PwC, where he was most recently the Global Leader for their Internet Industry Practice and Practice Leader for their Silicon Valley Software Industry Practice. Mr. Rubash received his B.S. in Accounting from California State University Sacramento. Mr. Rubash has served as a member of the Boards of Directors and Chairman of the Audit Committees of Line 6 Corporation from April 2007 to January 2014, IronPlanet, Inc. from March 2010 to May 2017, and iRhythm Technologies, Inc. since March 2016. Mr. Rubash’s qualifications to serve on our Board include his experience with public company financial accounting matters and risk management. |

  11. Director Compensation Table

    Director Compensation Table The following Director Compensation Table sets forth summary information concerning the compensation paid to the Company's non-employee directors for the year ended December 31, 2021, for services to the Company.

  12. Director Compensation Table

    | Name | Fees earned or paid in cash ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Total ($) | | Craig H. Barratt, Ph.D. | 64,000 | 215,775 | 143,322 | 423,097 | | Joseph C. Beery | 68,667 | 159,037 | 105,735 | 333,439 | | Amal M. Johnson | 80,000 | 159,037 | 105,735 | 344,772 | | Don R. Kania, Ph.D. | 72,667 | 159,037 | 105,735 | 337,439 | | Amy L. Ladd, M.D. | 66,000 | 159,037 | 105,735 | 330,772 | | Keith R. Leonard, Jr. | 70,000 | 159,037 | 105,735 | 334,772 | | Alan J. Levy, Ph.D. | 73,000 | 159,037 | 105,735 | 337,772 | | Jami Dover Nachtsheim | 70,000 | 159,037 | 105,735 | 334,772 | | Monica P. Reed, M.D.(2) | 44,000 | 159,037 | 105,735 | 308,772 | | Mark J. Rubash | 83,000 | 159,037 | 105,735 | 347,772 |

  13. Director Compensation Table

    (1)While the target equity compensation values are based on 60-day trading-day average closing prices, as noted above, the amounts in these columns represent the grant date fair value of stock options and restricted stock units (“RSUs”) granted to non-employee directors in 2021, determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”) and, accordingly, will not equal the target equity compensation values. Each non-employee director received one grant of stock options and one grant of RSUs in 2021, and the aggregate grant date fair value of each award is reflected in the table above. See Note 10 of the Notes to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K filed on February 3, 2022, for a discussion of all assumptions made by the Company in the valuation of the equity awards. (2)Monica P. Reed, M.D., was elected to our Board at the 2021 Annual Meeting of Stockholders. The table below sets forth the aggregate number of shares of the Company’s common stock subject to options outstanding as well as the number of outstanding RSUs held by non-employee directors as of December 31, 2021.

  14. Director Compensation Table

    | Name | Number of Shares of Common Stock Underlying Options Outstanding | Number of Shares of Common Stock Underlying Options Exercisable | Number of Shares of Common Stock Subject to Outstanding RSUs | | Craig H. Barratt, Ph.D. | 35,526 | 33,261 | 753 | | Joseph C. Beery | 3,969 | 2,298 | 555 | | Amal M. Johnson | 52,281 | 50,610 | 555 | | Don R. Kania, Ph.D. | 8,268 | 6,597 | 555 | | Amy L. Ladd, M.D. | 5,619 | 3,948 | 555 | | Keith R. Leonard, Jr. | 6,327 | 4,656 | 555 | | Alan J. Levy, Ph.D. | 15,243 | 13,572 | 555 | | Jami Dover Nachtsheim | 13,950 | 12,279 | 555 | | Monica P. Reed, M.D. | 1,671 | — | 555 | | Mark J. Rubash | 15,693 | 14,022 | 555 |

  15. 2021 Executive Compensation Highlights

    2021 Executive Compensation Highlights Consistent with our business results, the Compensation Committee took the following actions with respect to the 2021 compensation of our NEOs: •Base Salary. Base salaries were increased in the range of 2.9% to 10% for our NEOs. These base salary increases took into consideration the changes in responsibilities for each NEO, the competitive market for executive talent, Company performance, and the other factors described in the section entitled “Executive Compensation Elements” below. •Annual Performance-Based Cash Bonuses. The 2021 Corporate Incentive Program (the “CIP”), our annual performance-based cash incentive program, for our NEOs was funded at 114.2% and will be paid out in March 2022. The CIP was funded based on our actual level of achievement as measured against a pre-established adjusted operating income goal and pre-established strategic Company performance goals. See the section entitled “Annual Performance Based Cash Bonuses” below for a detailed discussion of the CIP. •Equity Awards. The Compensation Committee granted equity awards in the form of stock options and RSUs. The amount of each award was based on several factors, including managing the Company’s burn rate, reducing our equity overhang in the long run, maintaining our ability to compete for outstanding talent, maintaining our corporate compensation philosophies, and the NEO’s experience and performance.

  16. Pay for Performance

    Pay for Performance We believe our executive compensation program is closely aligned with stockholders’ interests. While base salary and an annual performance-based cash bonus opportunity incentivize the achievement of short-term goals, our equity awards in the form of stock options, which are typically subject to either a 4-year or 3.5-year vesting requirement and a 7-year or 10-year term, RSUs, which are typically subject to a 4-year vesting requirement, and performance share units (“PSUs”), which are typically subject to a 3-year cliff-vesting requirement and satisfaction of performance or market conditions, represent a long-term compensation structure that promotes retention and continuous commitment to the excellent operating results of the Company. We further believe this compensation mix rewards each executive officer for their individual contributions to the success of the Company, both present and future. At this phase in our growth cycle, a majority of the annual total direct compensation of our executive officers is directly tied, through the use of stock options, RSUs, and PSUs, to the growth in the value of our common stock. To illustrate this point, the following chart displays the historical relationship between the annual total direct compensation of our Chief Executive Officer and the changes in stockholder value as reflected by the percentage change in value of the market price of our common stock. For illustration purposes, our Chief Executive Officer’s annual total direct compensation consists of base salary paid, annual performance-based cash bonus earned, and either the actual or an estimate of the grant date fair value of his equity awards (including stock options, RSUs, and PSUs) granted in the following year. As described below under “Equity Award Grant Policies,” we grant stock options bi-annually in February and August. For purposes of the chart, the value of the stock options to be granted on August 29, 2022, is estimated using the Black-Scholes fair value as of February 28, 2022. Our stock return is calculated based on the closing market price of our common stock on the date of the fiscal year end. The stock return is indexed to 2017, such that it represents the stock price percentage change over the 2017 year-end price of $121.65 per share, and our Chief Executive Officer’s annual total direct compensation is similarly indexed to his 2017 annual total direct compensation.

  17. Compensation Mix

    Compensation Mix We are focused on a total compensation program that directly links to performance. We provide competitive cash compensation through base salary, which is fixed pay, cash performance incentives, and equity. Our equity program provides for awards in stock options, RSUs, and PSUs. We rely on these long-term equity awards to attract, motivate, and retain an outstanding executive team and to ensure a strong connection between our executive compensation program and the long-term interests of our stockholders. We believe stock options, RSUs, and PSUs are effective compensation elements for attracting innovative and passionate executive officers that reward stockholder value creation and for providing critical retention value for our executive officers. By ensuring that our executive officers have a significant portion of their potential compensation tied to long-term stock price performance, we are able to closely align the interest of our executive officers with the interests of our stockholders. In 2021, the majority of Dr. Guthart’s and our other NEOs’ total target direct compensation (base salary, target annual bonus, and the grant date fair value of equity awards) is long-term equity-based compensation. Linking most of our NEOs total compensation to long-term equity emphasizes variable pay, which is consistent with the Company’s pay-for-performance philosophy. The charts below illustrate the mix of our NEOs’ total target direct compensation.

  18. Role of Compensation Consultant

    Role of Compensation Consultant In 2021, the Compensation Committee directly retained the services of Aon, an independent national executive compensation consulting firm, to assist it in fulfilling its duties and responsibilities. Aon does not provide services to the Company or its management outside of the services provided to the Compensation Committee unless directed by the Compensation Committee. The Compensation Committee annually reviews the performance of Aon. As part of this annual review, the Compensation Committee considers the independence of the consultant in accordance with SEC and Nasdaq rules and has concluded that the work that Aon has performed for the Compensation Committee has not raised any conflict of interest.

  19. Competitive Positioning

    Competitive Positioning While the Compensation Committee does not establish compensation levels based solely on a review of competitive market data, it believes that such data is a useful tool in its deliberations, as it recognizes that our compensation policies and practices must be competitive in the marketplace for us to be able to attract, motivate, and retain qualified executive officers. Generally, the Compensation Committee reviews our executive compensation relative to our established competitive market (based on an analysis of the compensation policies and practices of a select group of peer companies) every two years. The Compensation Committee uses the competitive market data when evaluating all aspects of executive compensation. As a reference point for our NEOs, the Compensation Committee uses the market median for cash and short-term incentive values, the 75th percentile for long-term incentive values, and the market median and 75th percentile for the total direct compensation values. The Compensation Committee engaged Aon to assist with reviewing our compensation peer group and assessing the competitiveness of our executive compensation program in 2021. In evaluating and determining whether to make changes to the compensation peer group, the Compensation Committee considers the following selection criteria: •Location of the Company (U.S.-based); •Ownership structure of the company (publicly-traded); •Company’s industry (medical device, medical supplies, life sciences tools, and services and technology); •Revenues (approximately 1/3 to 3x the Company’s last four quarters’ revenue); and •Market capitalization (approximately 1/3 to 3x the Company’s market capitalization). After considering the analysis performed by Aon, the Compensation Committee selected the following direct compensation peer group for use in 2021 (which was unchanged from 2020):

  20. Competitive Positioning

    | Adobe Inc. | Edwards Lifesciences Corporation | Square, Inc. | | Agilent Technologies, Inc. | IDEXX Laboratories, Inc. | Stryker Corporation | | Align Technology, Inc. | Illumina, Inc. | VMWare, Inc. | | Arista Networks Inc. | Intuit Inc. | Workday, Inc. | | Becton, Dickinson and Company | Mettler-Toledo International Inc. | Zimmer Biomet Holdings, Inc. | | Boston Scientific Corporation | ResMed Inc. | | | DexCom, Inc. | ServiceNow, Inc. | |

  21. Annual Performance-Based Cash Bonuses

    Annual Performance-Based Cash Bonuses Under our Corporate Incentive Program (the “CIP”), we use annual performance-based cash bonuses to motivate and reward our executive officers, including our NEOs, to achieve or exceed our short-term financial and operational objectives while making progress towards our long-term growth and other goals. Consistent with our executive compensation philosophy, these annual performance-based cash bonuses constitute a smaller portion of the target total direct compensation opportunity of our executive officers than their long-term equity awards. At the end of each year, the Compensation Committee determines the amount of the bonus award to be paid to each executive officer by comparing our actual results to the performance goals established for the year. The Compensation Committee may, in its discretion, reduce or increase the amount of any individual award based on an executive officer’s overall performance and his or her contribution to the achievement of our performance goals.

  22. Target Annual Cash Bonus Opportunities

    Target Annual Cash Bonus Opportunities Given our emphasis on long-term stockholder value creation over annual operating results, the bonuses for which our executive officers are eligible under the CIP are relatively low compared to the competitive market, as reflected by their target annual cash bonus opportunities. For 2021, the target and maximum annual cash bonus opportunities (expressed as a percentage of base salary) under the CIP for our NEOs were as follows:

  23. Target Annual Cash Bonus Opportunities

    | Named Executive Officer | Target Annual Cash Bonus Opportunity (as a percentage of base salary) | Maximum Annual Cash Bonus Opportunity (as a percentage of base salary) (1) | | Gary S. Guthart, Ph.D. | 150% | 187.5% | | Myriam J. Curet, M.D., F.A.C.S. | 100% | 125% | | Marshall L. Mohr | 100% | 125% | | David J. Rosa | 100% | 125% | | Bob DeSantis | 100% | 125% |

  24. Target Annual Cash Bonus Opportunities

    (1)The maximum annual cash bonus opportunity (as a percentage of base salary) is calculated at 125% of the target annual cash bonus opportunity; however, the Compensation Committee may award higher amounts based on individual performance. These target and maximum annual cash bonus opportunities (expressed as a percentage of base salary) under the CIP were increased from their levels in 2020 of 125% and 156.25%, respectively, for Dr. Guthart and from 80% and 100%, respectively, for the other NEOs. For 2022, the target and maximum annual cash bonus opportunities (expressed as a percentage of base salary) under the CIP are the same as 2021.

  25. Annual Cash Bonus Plan Formula and Funding

    Annual Cash Bonus Plan Formula and Funding For 2021, the CIP for each NEO was planned to be funded through an incentive pool based on our achievement of an adjusted operating income (“AOI”) goal, as set forth in our annual operating plan, and paid to our executive officers based on our actual level of achievement with respect to AOI and several pre-established strategic Company performance objectives (the “Company Performance Goals”). For purposes of the CIP, “AOI” is an operational metric that is defined as operating income, excluding CIP expense, share-based compensation and long-term incentive plan expenses, non-cash amortization of intangible assets, certain acquisition-related items for the re-measurement of contingent consideration, litigation charges and recoveries, and other adjustments, primarily related to inventory cost accounting and hedging. For 2021, the CIP incentive pool was funded based on an AOI target set at the previous year’s AOI level plus a pre-established increase in AOI for the year and could be funded up to a maximum of 125% of target. For 2021, the threshold, target, and maximum AOI achievement levels were $1,552 million, $1,597 million, and $1,862 million, respectively, with achievement between any two levels determined by linear interpolation. Achievement at threshold, target, and maximum AOI levels corresponded to funding at 0%, 100%, and 125%. The amount of the incentive pool that is paid out as annual cash bonuses for each executive officer, including each NEO, is determined by an equal weighting of achievement of the AOI goal and aggregate achievement of the Company Performance Goals. In the event that the AOI threshold was not achieved, the incentive pool would not be funded, and our NEOs would not be eligible to receive any bonus under the CIP. Typically, the overall CIP payout will not exceed the amount by which the incentive pool is funded. The Company Performance Goals are established at the corporate level by the executive team and Dr. Guthart and then reviewed and approved by our Board annually at the beginning of the year. For 2021, the Company Performance Goals fell into six categories: Support Our Customers; Learning, Clinical Science, and Economics; Innovation and Continuity of Supply; Quality and Regulatory; Business at Scale; and Financial. Given their relationship to our annual operating plan and business strategy and because the Company Performance Goals and their specific target levels are highly confidential, we do not publicly disclose them. We believe their disclosure would provide our competitors, customers, and other third parties with significant insights regarding our confidential business strategies that could cause us substantial competitive harm. The Company Performance Goals are designed to focus on the short-term objectives that we believe ultimately drive the long-term success of the Company. There is a risk that payments with respect to any specific goal will not be made at all or will be made at less than 100% of the target level. The achievement of the goals may be affected by several factors including, but not limited to, the impact of changes in healthcare legislation and policy, global and regional conditions, credit markets and the related impact on healthcare spending, timing and success of product development and market acceptance of developed products, changes in trade agreements and/or tariffs imposed on cross-border commerce, and regulatory approvals, clearances, and restrictions. Because several of these factors are not entirely within the control of our NEOs and given the “stretch” nature of the goal-setting process, we believe that it would be relatively difficult to fully achieve the Company Performance Goals in any year. The challenge of the goals and uncertainty in the environment ensures that any payments under the CIP are truly performance-based, which is consistent with the plan’s objectives.

  26. 2021 Bonus Decisions

    2021 Bonus Decisions For 2021, the target funding for AOI was set at $1,597 million and maximum funding of 125% of the pool was set at AOI of $1,862 million, with funding at intermediate levels determined based on linear interpolation. Based on our actual achievement of AOI of $2,380 million, or 125.0% achievement, weighted at 50%, and actual achievement of the Company Performance Goals of 103.3%, weighted at 50%, the CIP was funded at 114.2% of the target level for our NEOs. Based on our 2021 performance, the annual cash bonus payments made to our other NEOs were approved by the Compensation Committee or, in the case of Dr. Guthart, ratified by the independent members of the Board. The 2021 annual cash bonus payment amounts for our NEOs are set forth in the “2021 Summary Compensation Table” below.

  27. Long-Term Incentive Compensation

    Long-Term Incentive Compensation Our long-term incentive compensation consists of equity awards in the form of stock options, RSUs, and PSUs. We grant these equity awards to ensure that our executive officers, including our NEOs, have a continuing stake in our long-term success. The Compensation Committee believes that these types of equity awards best meet our overall goals of alignment with long-term performance, stockholder value creation, and retention of our executive officers. The Compensation Committee also believes that the granting of equity awards with multi-year performance or service vesting requirements and, with respect to options, a 7-year or 10-year term, creates a substantial retention incentive and encourages our executive officers to focus on our long-term business objectives and driving long-term stock price performance. We further believe using this equity incentive compensation mix rewards each executive officer for their contributions to the future success of the Company and incentivizes them to work towards the Company’s long-term critical performance goals, including through the use of stretch company-based goals with respect to the PSUs. Individual grant awards are determined by the Compensation Committee after considering various factors including a competitive market analysis prepared by its compensation consultant, the current value of our common stock, the overall available stock pool under our active equity plans, and the individual performance of each NEO. The Compensation Committee also considers Dr. Guthart’s recommendations for the other NEOs when approving equity awards. The Compensation Committee determines and presents its equity award recommendation for Dr. Guthart to the independent members of the Board for their ratification. As in prior years, for 2022 and 2021, the Compensation Committee targeted the stock option-to-RSU grant ratio at approximately 3:1 and authorized the following equity awards for our NEOs:

  28. Long-Term Incentive Compensation

    | | Shares of Company Common Stock Underlying RSUs Granted | | | Shares of Company Common Stock Subject to Options Granted | | | Target Shares of Company Common Stock Subject to PSUs Granted | | | | Named Executive Officer | 2022 | 2021 | 2020 | 2022 (1) | 2021 | 2020 | 2022 | 2021 | 2020 | | Gary S. Guthart, Ph.D. | 10,025 | 12,120 | 15,462 | 30,076 | 36,366 | 46,389 | 10,025 | — | — | | Myriam J. Curet, M.D., F.A.C.S. | 4,010 | 6,843 | 9,021 | 12,030 | 20,526 | 27,060 | 4,010 | — | — | | Marshall L. Mohr | 4,010 | 6,843 | 9,021 | 12,030 | 20,526 | 27,060 | 4,010 | — | — | | David J. Rosa | 6,015 | 6,843 | 9,021 | 18,046 | 20,526 | 27,060 | 6,015 | — | — | | Bob DeSantis | 6,015 | 6,354 | 10,146 (2) | 18,046 | 19,062 | 13,041 (2) | 6,015 | — | — |

  29. Long-Term Incentive Compensation

    (1) As described below under “Equity Award Grant Policies,” stock options are granted bi-annually in February and August. We have included both the February 2022 grant and the August 2022 grant in this table. The 2022 equity awards are granted based on 2021 performance, while the 2021 equity awards are granted based on 2020 performance. Please refer to the section “Equity Award Grant Policies” for more information on the vesting terms of these awards. (2) Includes additional awards made to Mr. DeSantis in May 2020 in connection with his promotion to Executive Vice President. The option to purchase 4,344 shares granted to Mr. DeSantis in May 2020 vests as to 25% of the shares subject to the option on the first anniversary of the date of grant and as to 1/48th of the shares subject to the option on each monthly anniversary thereafter. The award of 1,449 restricted stock units granted to Mr. DeSantis in May 2020 vests as to 25% of the restricted stock units annually from the date of grant. Equity is an important part of our compensation package to employees company-wide and allows us to attract and retain critical talent in a very competitive labor market. The total equity awards granted to our NEOs remains at a small percentage relative to the total equity awards granted to our employees company-wide for the last ten years. For 2012 through 2021, the percentage of NEO equity award grants relative to total equity award grants were as follows:

  30. Equity Award Grant Policies

    Equity Award Grant Policies The Compensation Committee reviews and approves annual equity award grants to our executive officers, including our NEOs, and Dr. Guthart’s equity award is ratified by the independent members of the full Board. Stock options are granted to our executive officers bi-annually on the last business day of February and on the same date in August or, if that date is not a business day, the next business day. RSUs and, starting in 2022, PSUs are granted on the last business day of February each year. The February stock option grants vest over a four-year period, while the August stock option grants vest over a 3.5-year period. The RSUs vest 25% annually over a four-year period. The PSUs are eligible to vest as 0-125% of the target number of PSUs after a three-year period based on the achievement of the applicable performance objectives. We do not time the granting of stock options with any favorable or unfavorable news released by the Company. Initial RSU grants are consistently granted on the tenth day of the month. If the tenth day of the month is not a trading day, then the grant date will be the next trading day immediately following the tenth day of the month. Proximity of any awards to an earnings announcement or other market events is coincidental.

  31. Post-Employment Compensation

    Post-Employment Compensation In December 2008, our Board approved and adopted a change-in-control plan (the “Change-in-Control Plan”). Under the Change-in-Control Plan, all eligible employees of the Company who have been employed at least six months prior to the date of their separation from service, including our executive officers, are eligible to receive certain payments and benefits in the event of a termination of employment without cause or an involuntary separation from service within 12 months after a change in control of the Company. We believe the Change-in-Control Plan is beneficial to our stockholders because it minimizes the uncertainty presented to our valuable workforce in the case of a change in control of the Company. In addition, we provide the Change-in-Control Plan to encourage our employees to work at a dynamic and rapidly growing business where their long-term compensation largely depends on future stock price appreciation. In the case of our executive officers, the Change-in-Control Plan is intended to mitigate a potential disincentive for them when they are evaluating a potential acquisition of the Company, particularly when the services of the executive officers may not be required by the acquiring entity. In such a situation, we believe that these protections are necessary to encourage retention of the executive officers through the conclusion of the transaction and to ensure a smooth management transition. The payments and benefits provided under the Change-in-Control Plan have been designed to provide our eligible employees, including our executive officers, with consistent treatment that is competitive with current market practices. A description of the terms and conditions of the Change-in-Control Plan, as well as information about the estimated payments and benefits that our NEOs would have been eligible to receive as of December 31, 2021, are set forth in “Potential Payments Upon Termination or Change in Control” below.

  32. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation The Compensation Committee takes into account whether components of the compensation for our executive officers will be adversely impacted by the penalty tax imposed by Section 409A of the Code and aims to structure these components to be compliant with or exempt from Section 409A to avoid such potential adverse tax consequences.

  33. “Golden Parachute” Payments

    “Golden Parachute” Payments Sections 280G and 4999 of the Code provide that certain executive officers and other service providers who are highly compensated or hold significant equity interests may be subject to an excise tax if they receive payments or benefits in connection with a change in control of the company that exceeds certain prescribed limits and that we, or a successor, may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officer, including any NEO, with a “gross-up” or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Sections 280G or 4999 during 2021, and we have not agreed and are not otherwise obligated to provide any executive officer, including any NEO, with such a “gross-up” or other reimbursement.

  34. Accounting for Share-Based Compensation

    Accounting for Share-Based Compensation We follow ASC 718 for our share-based compensation awards. ASC 718 requires companies to measure the compensation expense for all share-based compensation awards made to employees and directors, including stock options, RSUs, and PSUs based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive officers may never realize any value from their awards. ASC 718 also requires companies to recognize the compensation cost of their share-based compensation awards in their income statements over the period that an executive officer is required to render service in exchange for the option or other award.

  35. COMPENSATION RISK CONSIDERATIONS

    COMPENSATION RISK CONSIDERATIONS The Compensation Committee considers, in establishing and reviewing our employee compensation programs, whether each of these programs encourages unnecessary or excessive risk taking. The Company, after reviewing and discussing the compensation programs with the Compensation and Audit Committees of our Board, believes that the programs are balanced and do not motivate or encourage unnecessary or excessive risk taking because of, in part, the following: •Base salaries are fixed in amount and, thus, do not encourage risk taking. •While annual performance-based awards focus on achievement of short-term goals, and short-term goals may encourage the taking of short-term risks at the expense of long-term results, the Company’s performance-based award programs represent a reasonable portion of employees’ target total direct compensation opportunities. Performance-based awards are based on various departmental and Company-wide metrics; funding for the awards is capped at the Company level, and the distribution of the funds to executive officers and other employees is at the discretion of the Compensation Committee. •Long-term equity awards are important to help further align employees’ interests with those of our stockholders. The ultimate value of the awards is tied to the Company’s stock price and, since awards are staggered and subject to long-term vesting schedules, they help ensure our executive officers have significant value tied to our long-term stock price performance. As described above in the Compensation Discussion and Analysis, we have established procedures related to the timing and approval of equity awards. Because of the above, we believe that our employee compensation programs appropriately balance risk and the desire to focus employees on specific short-term goals important to the Company’s success.

  36. 2021 Summary Compensation Table

    2021 Summary Compensation Table The following Summary Compensation Table sets forth summary information concerning the compensation provided to our NEOs in the years ended December 31, 2021, 2020, and 2019, for services to our Company in all capacities.

  37. 2021 Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | Other ($) (3) | Total ($) | | Gary S. Guthart, Ph.D. President and Chief Executive Officer | 2021 | 846,119 | 2,976,672 | 2,858,652 | 1,376,466 | 1,500 | 8,059,409 | | | 2020 | 821,475 | 2,752,030 | 2,468,357 | — | 1,500 | 6,043,362 | | | 2019 | 789,750 | 2,742,500 | 2,123,911 | 812,713 | 1,500 | 6,470,374 | | Myriam J. Curet, M.D., F.A.C.S. Executive Vice President and Chief Medical Officer | 2021 | 584,875 | 1,680,641 | 1,613,504 | 600,942 | 1,500 | 4,481,462 | | | 2020 | 564,875 | 1,605,618 | 1,439,878 | — | 1,500 | 3,611,871 | | | 2019 | 476,386 | 1,279,651 | 991,159 | 349,837 | 1,500 | 3,098,533 | | Marshall L. Mohr Executive Vice President, Global Business Services | 2021 | 584,000 | 1,680,641 | 1,613,504 | 666,702 | 1,500 | 4,546,347 | | | 2020 | 566,250 | 1,605,618 | 1,439,878 | — | 1,500 | 3,613,246 | | | 2019 | 535,938 | 1,279,651 | 991,159 | 397,666 | 1,500 | 3,205,914 | | David J. Rosa Executive Vice President and Chief Strategy and Growth Officer | 2021 | 607,218 | 1,680,641 | 1,613,504 | 727,866 | 1,500 | 4,630,729 | | | 2020 | 589,968 | 1,605,618 | 1,439,878 | — | 1,500 | 3,636,964 | | | 2019 | 573,965 | 1,645,500 | 1,274,347 | 427,428 | 1,500 | 3,922,740 | | Bob DeSantis Executive Vice President and Chief Product Officer | 2021 | 537,500 | 1,560,542 | 1,498,423 | 595,339 | 1,500 | 4,193,304 | | | 2020 | 489,955 | 1,808,335 | 705,369 | 41,097 | 1,500 | 3,046,256 |

  38. 2021 Summary Compensation Table

    (1)The amounts reported in these columns represent the grant date fair values of the stock options granted to the NEOs and the RSUs granted to the NEOs in the applicable fiscal year, determined in accordance with ASC 718. The grant date fair value for RSUs is measured based on the closing fair market value of the Company’s common stock on the date of grant. See Note 10 of the Notes to the Consolidated Financial Statements contained in our Annual Report on Form 10-K filed on February 3, 2022, for a discussion of all assumptions made by us in determining the grant date fair value of these equity awards. (2)Represents the annual bonus earned in the designated fiscal year under the CIP paid in March of the following year. See the “Compensation Discussion and Analysis” section above for a more detailed discussion. (3)Represents matching contributions paid by us pursuant to our 401(k) plan for all NEOs.

  39. 2021 Grants of Plan-Based Awards Table

    2021 Grants of Plan-Based Awards Table The following table summarizes information about the non-equity incentive awards and equity-based awards granted to our NEOs in 2021:

  40. 2021 Grants of Plan-Based Awards Table

    | Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | All Other Stock Awards: # of Shares of Stock or Units (2) | All Other Option Awards: # of Securities Underlying Options (2) | Exercise or Base Price of Options or Awards ($/Share) | Grant Date Fair Value of Options and Awards ($) (3) | | | | Threshold ($) | Target ($) | Maximum ($) | | | | | | Gary S. Guthart, Ph.D. | 2/26/2021 | | | | 12,120 | | | 2,976,672 | | | 2/26/2021 | | | | | 18,183 | 245.60 | 1,270,114 | | | 8/26/2021 | | | | | 18,183 | 347.42 | 1,588,538 | | | Cash Incentive | — | 1,269,306 | 1,586,633 | | | | | | Myriam J. Curet, M.D., F.A.C.S. | 2/26/2021 | | | | 6,843 | | | 1,680,641 | | | 2/26/2021 | | | | | 10,263 | 245.60 | 716,888 | | | 8/26/2021 | | | | | 10,263 | 347.42 | 896,616 | | | Cash Incentive | — | 584,943 | 731,179 | | | | | | Marshall L. Mohr | 2/26/2021 | | | | 6,843 | | | 1,680,641 | | | 2/26/2021 | | | | | 10,263 | 245.60 | 716,888 | | | 8/26/2021 | | | | | 10,263 | 347.42 | 896,616 | | | Cash Incentive | — | 584,058 | 730,073 | | | | | | David J. Rosa | 2/26/2021 | | | | 6,843 | | | 1,680,641 | | | 2/26/2021 | | | | | 10,263 | 245.60 | 716,888 | | | 8/26/2021 | | | | | 10,263 | 347.42 | 896,616 | | | Cash Incentive | — | 607,276 | 759,095 | | | | | | Bob DeSantis | 2/26/2021 | | | | 6,354 | | | 1,560,542 | | | 2/26/2021 | | | | | 9,531 | 245.60 | 665,757 | | | 8/26/2021 | | | | | 9,531 | 347.42 | 832,666 | | | Cash Incentive | — | 537,671 | 672,089 | | | | |

  41. 2021 Grants of Plan-Based Awards Table

    (1)For 2021, Dr. Guthart had a bonus target of 150% of base salary, and Dr. Curet and Messrs. Mohr, Rosa, and DeSantis had a bonus target of 100% of base salary. At its discretion, the Compensation Committee has the authority to pay any NEO in excess of or below his or her targeted bonus amount. The goals for 2021 were approved by the Compensation Committee in January 2021. The payout amounts for each NEO were reviewed and approved by the Compensation Committee and the Board in January 2022 upon reviewing results for 2021. The maximum bonus or performance payout is calculated at 125% of the target. Please refer to the “Compensation Discussion and Analysis” section above for detailed discussion of the CIP. (2)The options were granted under our Amended and Restated 2010 Incentive Award Plan. The February 28 option grants vest 6/48 at the end of six months and 1/48 per month thereafter through a four-year period, subject to continued employment through the applicable vesting date. The August 28 option grants vest 7/48 at the end of one month and 1/48 per month thereafter through a 3.5-year period, subject to continued employment through the applicable vesting date. The February 28 RSU grants vest in 1/4 increments annually over a four-year period, subject to continued employment through the applicable vesting date. (3)The amounts shown represent the fair value per share as of the grant date of such award determined pursuant to ASC 718, multiplied by the number of shares. See Note 10 of the Notes to the Consolidated Financial Statements contained in our Annual Report on Form 10-K filed on February 3, 2022, for a discussion of all assumptions made by us in determining the value of the equity awards.

  42. Outstanding Equity Awards as of December 31, 2021

    Outstanding Equity Awards as of December 31, 2021 The following table summarizes the outstanding stock options and RSUs that were held by our NEOs as of December 31, 2021:

  43. Outstanding Equity Awards as of December 31, 2021

    | | | Option Awards | | | | Stock Awards | | | Name | Grant Date | # of Securities Underlying Unexercised Options (# Exercisable) | # of Securities Underlying Unexercised Options (# Unexercisable) (*) | Option Exercise Price ($/share) | Option Expiration Date | Shares or units of stock that have not vested (#) (1) | Market value of shares or units of stock that have not vested ($) (2) | | Gary S. Guthart, Ph.D. | 8/15/2012 | 126,000 | — | 57.48 | 8/15/2022 | | | | | 2/15/2013 | 67,500 | — | 63.25 | 2/15/2023 | | | | | 8/15/2013 | 67,500 | — | 42.64 | 8/15/2023 | | | | | 2/18/2014 | 33,750 | — | 49.34 | 2/18/2024 | | | | | 8/15/2014 | 33,750 | — | 51.02 | 8/15/2024 | | | | | 2/17/2015 | 25,200 | — | 57.11 | 2/17/2025 | | | | | 8/17/2015 | 25,200 | — | 59.23 | 8/17/2025 | | | | | 2/16/2016 | 7,893 | — | 59.46 | 2/16/2026 | | | | | 2/15/2017 | 36,000 | — | 79.64 | 2/15/2027 | | | | | 8/15/2017 | 36,000 | — | 109.49 | 8/15/2027 | | | | | 2/15/2018 | 24,438 | 1,062 | 139.52 | 2/15/2028 | | | | | 2/15/2018 | | | | | 4,248 | 1,526,306 | | | 8/15/2018 | 24,438 | 1,062 | 174.26 | 8/15/2028 | | | | | 2/15/2019 | 15,936 | 6,564 | 182.83 | 2/15/2029 | | | | | 2/15/2019 | | | | | 7,500 | 2,694,750 | | | 8/15/2019 | 15,939 | 6,561 | 166.62 | 8/15/2029 | | | | | 2/28/2020 | 10,632 | 12,564 | 177.99 | 2/28/2030 | | | | | 2/28/2020 | | | | | 11,595 | 4,166,084 | | | 8/28/2020 | 10,632 | 12,561 | 242.34 | 8/28/2030 | | | | | 2/26/2021 | 3,786 | 14,397 | 245.60 | 2/26/2031 | | | | | 2/26/2021 | | | | | 12,120 | 4,354,716 | | | 8/26/2021 | 3,789 | 14,394 | 347.42 | 8/26/2031 | | | | Myriam J. Curet, M.D., F.A.C.S. | 8/15/2017 | 3,000 | — | 109.49 | 8/15/2027 | | | | | 2/15/2018 | 17,250 | 750 | 139.52 | 2/15/2028 | | | | | 2/15/2018 | | | | | 3,000 | 1,077,900 | | | 8/15/2018 | 17,250 | 750 | 174.26 | 8/15/2028 | | | | | 2/15/2019 | 7,437 | 3,063 | 182.83 | 2/15/2029 | | | | | 2/15/2019 | | | | | 3,498 | 1,256,831 | | | 8/15/2019 | 7,437 | 3,063 | 166.62 | 8/15/2029 | | | | | 2/28/2020 | 6,201 | 7,329 | 177.99 | 2/28/2030 | | | | | 2/28/2020 | | | | | 6,765 | 2,430,665 | | | 8/28/2020 | 6,201 | 7,329 | 242.34 | 8/28/2030 | | | | | 2/26/2021 | 2,136 | 8,127 | 245.60 | 2/26/2031 | | | | | 2/26/2021 | | | | | 6,843 | 2,458,690 | | | 8/26/2021 | 2,139 | 8,124 | 347.42 | 8/26/2031 | | | | Marshall L. Mohr | 2/15/2013 | 54,000 | — | 63.25 | 2/15/2023 | | | | | 2/16/2016 | 11,250 | — | 59.46 | 2/16/2026 | | | | | 8/15/2016 | 11,250 | — | 77.00 | 8/15/2026 | | | | | 2/15/2017 | 22,500 | — | 79.64 | 2/15/2027 | | | | | 8/15/2017 | 22,500 | — | 109.49 | 8/15/2027 | | | | | 2/15/2018 | 12,219 | 531 | 139.52 | 2/15/2028 | | | | | 2/15/2018 | | | | | 2,124 | 763,153 | | | 8/15/2018 | 12,219 | 531 | 174.26 | 8/15/2028 | | | | | 2/15/2019 | 7,437 | 3,063 | 182.83 | 2/15/2029 | | | | | 2/15/2019 | | | | | 3,498 | 1,256,831 | | | 8/15/2019 | 7,437 | 3,063 | 166.62 | 8/15/2029 | | |

  44. Outstanding Equity Awards as of December 31, 2021

    | | 2/28/2020 | 6,201 | 7,329 | 177.99 | 2/28/2030 | | | | | 2/28/2020 | | | | | 6,765 | 2,430,665 | | | 8/28/2020 | 6,201 | 7,329 | 242.34 | 8/28/2030 | | | | | 2/26/2021 | 2,136 | 8,127 | 245.60 | 2/26/2031 | | | | | 2/26/2021 | | | | | 6,843 | 2,458,690 | | | 8/26/2021 | 2,139 | 8,124 | 347.42 | 8/26/2031 | | | | David J. Rosa | 2/15/2013 | 54,000 | — | 63.25 | 2/15/2023 | | | | | 8/15/2013 | 108,000 | — | 42.64 | 8/15/2023 | | | | | 2/18/2014 | 28,125 | — | 49.34 | 2/18/2024 | | | | | 8/7/2014 | 40,500 | — | 49.09 | 8/7/2024 | | | | | 8/15/2014 | 28,125 | — | 51.02 | 8/15/2024 | | | | | 2/17/2015 | 22,050 | — | 57.11 | 2/17/2025 | | | | | 8/17/2015 | 22,050 | — | 59.23 | 8/17/2025 | | | | | 2/16/2016 | 14,625 | — | 59.46 | 2/16/2026 | | | | | 8/15/2016 | 14,625 | — | 77.00 | 8/15/2026 | | | | | 2/15/2017 | 27,000 | — | 79.64 | 2/15/2027 | | | | | 8/15/2017 | 27,000 | — | 109.49 | 8/15/2027 | | | | | 2/15/2018 | 17,970 | 780 | 139.52 | 2/15/2028 | | | | | 2/15/2018 | | | | | 3,123 | 1,122,094 | | | 8/15/2018 | 17,970 | 780 | 174.26 | 8/15/2028 | | | | | 2/15/2019 | 9,561 | 3,939 | 182.83 | 2/15/2029 | | | | | 2/15/2019 | | | | | 4,500 | 1,616,850 | | | 8/15/2019 | 9,564 | 3,936 | 166.62 | 8/15/2029 | | | | | 2/28/2020 | 6,201 | 7,329 | 177.99 | 2/28/2030 | | | | | 2/28/2020 | | | | | 6,765 | 2,430,665 | | | 8/28/2020 | 6,201 | 7,329 | 242.34 | 8/28/2030 | | | | | 2/26/2021 | 2,136 | 8,127 | 245.60 | 2/26/2031 | | | | | 2/26/2021 | | | | | 6,843 | 2,458,690 | | | 8/26/2021 | 2,139 | 8,124 | 347.42 | 8/26/2031 | | | | Bob DeSantis | 2/15/2018 | | | | | 2,874 | 1,032,628 | | | 2/15/2019 | | | | | 4,248 | 1,526,306 | | | 2/28/2020 | 270 | 2,358 | 177.99 | 2/28/2030 | | | | | 2/28/2020 | | | | | 6,522 | 2,343,355 | | | 5/11/2020 | 180 | 2,625 | 179.70 | 5/11/2030 | | | | | 5/11/2020 | | | | | 1,086 | 390,200 | | | 8/28/2020 | 273 | 2,352 | 242.34 | 8/28/2030 | | | | | 2/26/2021 | 597 | 7,545 | 245.60 | 2/26/2031 | | | | | 2/26/2021 | | | | | 6,354 | 2,282,992 | | | 8/26/2021 | 1,989 | 7,542 | 347.42 | 8/26/2031 | | |

  45. Outstanding Equity Awards as of December 31, 2021

    (*)All of the listed options, except the August 2015, 2016, 2017, 2018, 2019, 2020, 2021, August 15, 2014, and May 11, 2020 grants vest as to 6/48ths of the underlying option shares upon completion of six months of service following the date of grant and 1/48th per month thereafter, contingent upon continued employment. The August 2015, 2016, 2017, 2018, 2019, 2020, 2021, and August 15, 2014 options vest as to 7/48ths of the underlying option shares upon completion of one month of service following the date of the grant and 1/48th per month thereafter, contingent upon continued employment. The May 11, 2020 grant vests as to 25% of the underlying option shares on the completion of one year of service following the date of grant and 1/48 per month thereafter, contingent upon continued employment. All of these options have a ten-year term. (1) All of the listed RSUs vest in 1/4 increments annually over a four-year period from the date of grant, subject to continued employment through the applicable vesting date. (2) The dollar amounts shown are determined by multiplying the number of unvested units by $359.30 (the closing price of the Company’s common stock on December 31, 2021, the last trading day of the Company’s fiscal year).

  46. Option Exercises and Stock Vested During Fiscal 2021

    Option Exercises and Stock Vested During Fiscal 2021 The following table summarizes the stock options exercised and vesting of RSUs during the year ended December 31, 2021, and the value realized upon exercise of stock options and vesting of stock awards by our NEOs:

  47. Option Exercises and Stock Vested During Fiscal 2021

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized Upon Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized Upon Vesting ($) (2) | | Gary S. Guthart, Ph.D. | 84,000 | 17,859,366 | 17,868 | 4,674,652 | | Myriam J. Curet, M.D., F.A.C.S. | 21,375 | 5,246,773 | 10,002 | 2,615,741 | | Marshall L. Mohr | 223,200 | 51,292,198 | 9,879 | 2,583,271 | | David J. Rosa | 126,000 | 32,449,584 | 12,132 | 3,178,025 | | Bob DeSantis | 6,372 | 762,589 | 12,036 | 3,158,987 |

  48. Option Exercises and Stock Vested During Fiscal 2021

    (1)The value realized equals the excess of the fair market value of our common stock at exercise over the option exercise price, multiplied by the number of shares for which the option was exercised. (2)The dollar amounts shown above for stock awards are determined by multiplying the number of shares that vested by the per-share closing price of the Company’s common stock on the vesting date.

  49. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control The following table shows potential payments to the NEOs upon a change in control of the Company and subsequent involuntary separation from service within 12 months after the change in control, in accordance with the Change-in-Control Plan. Under this plan, all eligible employees of the Company who have been employed at least six months prior to the separation from service date, including executive officers, are entitled to the following severance payments and benefits in the event of a termination of employment without cause or an involuntary separation from service within 12 months after a change in control of the Company: •a lump-sum cash payment in the amount equal to the sum of six months of such eligible employee’s base compensation (defined in the Change-in-Control Plan as base salary and target bonus) plus an additional one month of base compensation for every year of such eligible employee’s service with the Company, such severance not to exceed 12 months; •six months of COBRA premiums, provided that such eligible employee elects continued coverage under COBRA; and •100% vesting of all outstanding unvested equity awards that the eligible employee then holds. The amounts shown for all NEOs assume that a qualifying termination of employment was effective December 31, 2021, the last business day of the year, under the Change-in-Control Plan and are estimates of the amounts that would be paid to the NEOs upon such a termination of employment. The terms and conditions of the Change-in-Control Plan (including the definitions of the key plan terms) are set forth in the plan document.

  50. Potential Payments Upon Termination or Change in Control

    | Name | Base Compensation and Target Bonus ($) (1) | COBRA Premiums ($) | Total Value of Equity Acceleration ($) (2) | Total Potential Payment ($) | | Gary S. Guthart, Ph.D. | 2,130,812 | 9,346 | 21,149,441 | 23,289,599 | | Myriam J. Curet, M.D., F.A.C.S. | 1,179,750 | 4,381 | 11,865,039 | 13,049,170 | | Marshall L. Mohr | 1,176,500 | 9,346 | 11,461,635 | 12,647,481 | | David J. Rosa | 1,222,936 | 13,472 | 12,604,187 | 13,840,595 | | Bob DeSantis | 1,100,000 | 12,263 | 9,697,056 | 10,809,319 |

  51. Potential Payments Upon Termination or Change in Control

    (1)Amounts shown are the target payments the executive officers would have received as of December 31, 2021. Amounts of the parachute payment cut-back, as described below, if any, would be calculated upon actual termination of employment. (2)Amounts shown assume that all stock options would be exercised immediately upon termination of employment. Stock option values represent the excess of the market value of the option shares for which vesting is accelerated over the exercise price for those option shares, using $359.30 per share for the market value, which is the closing market price of a share of our common stock on December 31, 2021, the last trading day of our 2021 fiscal year. The dollar amounts of RSUs are determined by multiplying the number of shares subject to the RSUs for which vesting is accelerated by $359.30. For purposes of the Change-in-Control Plan, an involuntary separation from service of a NEO generally means, (i) without the executive’s express written consent, the assignment to the executive of any duties or the significant reduction of the executive’s duties, authority, or responsibilities, which is inconsistent with the executive’s duties, authority, or responsibilities in effect immediately prior to such assignment, or the removal of the executive from such duties, authority, or responsibilities; (ii) a reduction by the Company in the base compensation of the executive as in effect immediately prior to such reduction; (iii) a material reduction by the Company in the kind or level of employee benefits to which the executive is entitled immediately prior to such reduction with the result that the executive’s overall benefits package is significantly reduced; (iv) the relocation of the executive to a facility or a location more than 25 miles from the executive’s then present location without the executive’s express written consent; (v) any purported termination of the executive by the Company, which is not effected for disability or for cause, or any purported termination for which the grounds relied upon are not valid; (vi) the failure of the Company to obtain the assumption of the agreement by any successors contemplated in the Change-in-Control Plan; or (vii) any act or set of facts or circumstances which would, under California case law or statute, constitute a constructive termination of the executive. In order for an executive to terminate employment in an involuntary separation from service, he or she must provide notice to the Company of the existence of a condition listed above, within 30 days of the initial existence of the condition, and the Company shall have 30 days following receipt of such notice to remedy such condition and not make any payments hereunder in connection with such termination of employment. The payments and benefits pursuant to the Change-in-Control Plan are subject to a NEO’s timely execution and non-revocation of a release of claims. Further, the Change-in-Control Plan specifically includes a so-called parachute payment “best pay” provision, where payments and benefits will either be made to the executive in full or as to such lesser amount as which would result in no portion of the payments and benefits being subject to an excise tax under Section 280G of the Internal Revenue Code, whichever of the foregoing amounts is greater on an after-tax basis.

  52. Pay Ratio

    Pay Ratio

  53. Pay Ratio

    | Annual total compensation of the CEO for 2021 | $8,059,409 | | Annual total compensation of the median employee for 2021 | $140,163 | | Ratio of annual total compensation of the CEO to the annual total compensation of the median employee for 2021 | 58:1 |

  54. Pay Ratio

    The Company identified the median employee using a consistently applied compensation measure that consists of annual base salary or wages, target annual performance-based cash bonuses, target commissions, and long-term equity awards based on their grant date fair values. Permanent employees who joined in 2021 and permanent employees who were on leave during 2021 were assumed to have worked for the entire year. All U.S. and non-U.S. employees employed as of December 31, 2021, were captured. No cost-of-living adjustments were made. The annual total compensation of the CEO and the annual total compensation of the median employee were calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.

  55. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS The Board of Directors (the “Board”) has eleven authorized seats. Craig H. Barratt, Ph.D., Joseph C. Beery, Gary S. Guthart, Ph.D., Amal M. Johnson, Don R. Kania, Ph.D., Amy L. Ladd, M.D., Keith R. Leonard, Jr., Alan J. Levy, Ph.D., Jami Dover Nachtsheim, Monica P. Reed, M.D., and Mark J. Rubash have been nominated by the Board for election at the Annual Meeting to serve a one-year term expiring at the 2023 Annual Meeting of Stockholders or until a successor has been duly elected and qualified. Please refer to “Directors and Corporate Governance” section above for the nominees’ biographies. The Company’s Bylaws provide for a majority voting standard in uncontested elections of directors. As such, in an election where the number of nominees for director does not exceed the number of directors to be elected, a nominee for director will be elected to the Board if the number of shares voted for the nominee exceeds the number of shares voted against the nominee. However, the majority voting standard would not apply if the number of nominees for director exceeds the number of directors to be elected. In that case, the nominees receiving the highest number of affirmative votes of the shares entitled to vote at the Annual Meeting would be elected. The majority voting standard will apply to the election taking place at the Annual Meeting. Consequently, in order to be elected, a nominee must receive more “for” votes than “against” votes. Proxies may not be voted for more than the eleven nominees, and stockholders may not cumulate votes in the election of directors. In the event any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for the nominee, if any, who may be designated by the Board to fill the vacancy. Shares represented by the accompanying proxy will be voted for the election of the nominees recommended by the Board unless the proxy is marked in such a manner so as to withhold authority to vote. In the event that any nominee should be unavailable for election as a result of an unexpected occurrence, such shares will be voted for the election of such substitute nominee as management may propose. Each person nominated for election has agreed to serve if elected, and the Board has no reason to believe that any nominee will be unable to serve.