DEF 14A of Intuitive Surgical Inc, Mar 8, 2024

DEF 14A of Intuitive Surgical Inc

Filed Mar 8, 2024 · FY20230001035267-24-000116

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 29, 2024, 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. Nominees for Director

    | Craig H. Barratt, Ph.D. Chair of the Board, Intuitive Surgical, Inc. Director since 2011 | Joseph C. Beery Chief Executive Officer of LunaDNA Director since 2020 | | Craig H. Barratt, Ph.D., 61, 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 also serves or has served as a member of the Board of Directors of several private companies. 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, 61, 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 1999 to 2008. Mr. Beery also serves as a member of the Board of Directors of several private 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. |

  3. Nominees for Director

    | Lewis Chew Audit Committee Chair, Arista Networks and Cadence Design Systems Director nominee | Gary S. Guthart, Ph.D. Chief Executive Officer, Intuitive Surgical, Inc. Director since 2009 | | Lewis Chew, 61, is a nominee for our Board of Directors. Mr. Chew is a retired Chief Financial Officer who served at Dolby Labs, Inc. from June 2012 to October 2021. Prior to that, he was the Chief Financial Officer at National Semiconductor Corporation from April 2001 to September 2011 and a Partner at KPMG from 1995 until 1997. From September 2009 to April 2019, Mr. Chew served on the Board of Directors of PG&E Company, chairing the Public Policy Committee and then the Audit Committee. Mr. Chew is currently serving as Chair of the Audit Committee of the Boards of Directors of Cadence Design Systems, Inc. and Arista Networks, Inc., positions he has held since March 2020 and July 2021, respectively. Mr. Chew also continues to serve on the Accounting Advisory Board of Santa Clara University, a position that he has held since 1995. He received a BSC in Accounting from Santa Clara University. Mr. Chew’s qualifications to serve on our Board include his various leadership roles and financial and controls experience. | Gary S. Guthart, Ph.D., 58, joined Intuitive in April 1996. In January 2010, Dr. Guthart was appointed as Chief Executive Officer. In July 2007, Dr. Guthart was promoted to President, a role he held concurrently until May 2023. 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. |

  4. Nominees for Director

    | Amal M. Johnson Former Executive Chairman of the Board, Author-IT, Inc. Director since 2010 | Sreelakshmi Kolli Executive Vice President and Chief Digital Officer, Align Technology Director since 2023 | | Amal M. Johnson, 71, has been a member of our Board since April 2010. Ms. Johnson has served on the Board of Directors of Essex Property Trust, Inc. since February 2018. Ms. Johnson served on the Board of Directors of CalAmp from December 2013 and as Chairman from July 2020 until her service ended in July 2022. She also served on the Board of Directors of Mellanox Technologies, Ltd. from October 2006 through April 2020, until its acquisition by NVIDIA Corporation. 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. | Sreelakshmi Kolli, 49, has been a member of our Board of Directors since October 2023. She is currently chief digital officer of Align Technology, Inc. (“Align”), a global medical device company. Ms. Kolli joined Align in June 2003 and has held positions of increasing responsibility leading business operations and engineering for customer-facing applications during her tenure. She was promoted to vice president, information technology, in December 2012, to senior vice president, global information technology, in February 2018, and to senior vice president, chief digital officer, in April 2020. Ms. Kolli is also a member of the Board of Directors of Zimmer Biomet Holdings, Inc. She is a member of the Executive Advisory Board at Salesforce.com and an external advisor on the Board of Trustees Committee on Information Technology at the University of San Francisco. Ms. Kolli earned a B.S. in physics at Bharathidasan University and an M.S. in computer applications at the National Institute of Technology, both in Trichy, India. She is also a graduate of the Stanford Executive Program offered by the Stanford Graduate School of Business in California. Ms. Kolli’s qualifications to serve on our Board include her digital technology and business transformation experience. |

  5. Nominees for Director

    | Amy L. Ladd, M.D. Orthopaedic Surgeon, Stanford University Medical Center Director since 2019 | Keith R. Leonard, Jr. Chairman of the Board, Unity Biotechnology, Inc. Director since 2016 | | Amy L. Ladd, M.D., 66, 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 is vice president of the Association of Bone and Joint Surgeons. Dr. Ladd was appointed to serve on the Board of Directors of Allakos, Inc., a biotechnology company, in August 2022. Dr. Ladd also currently serves on the Boards of Directors of several not-for-profit organizations and a private company. 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. | Keith R. Leonard, Jr., 62, 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 has served on the Board of Directors of Arcutis Biotherapeutics, Inc. since September 2021 along with several private companies. Mr. Leonard 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 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’s qualifications to serve on our Board include his operational and leadership experience with public companies in the pharmaceutical industry. |

  6. Nominees for Director

    | 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, 65, 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 Telesis Bio Inc., a biology company, since June 2021. Ms. Nachtsheim has served as a member of the Board of Directors of several other public and private companies. Ms. Nachtsheim holds a B.S. in Business Management from Arizona State University. 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., 61, 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. From 2021 to 2022, Dr. Reed 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 also serves or has served as a member of the Board of Directors of several other private and not-for-profit organizations. 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. |

  7. Nominees for Director

    | Mark J. Rubash Former Chief Financial Officer Emeritus - Strategic Advisor, Eventbrite, Inc. Director since 2007 | | Mark J. Rubash, 66, 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 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, iRhythm Technologies, Inc. since March 2016, and Minted, Inc. from June 2022 to October 2023. Mr. Rubash received his B.S. in Accounting from California State University Sacramento. Mr. Rubash’s qualifications to serve on our Board include his experience with public company financial accounting matters and risk management. |

  8. Director Skills and Experience Matrix

    Director Skills and Experience Matrix Each of the Board’s nominees for Director possesses core competencies that contribute to their service on the Board. In addition to those qualifications, our nominees for Director collectively possess skill sets that are directly relevant to the Company’s business and strategic objectives. The following table summarizes the key skills and significant experience of each Director nominee that the Board considered important in its decision to nominate or re-nominate that individual to the Board. Further details about each Director nominee’s qualifications are set forth in their individual biographies.

  9. Director Skills and Experience Matrix

    | | | | | Skills Central to Intuitive’s Strategy | | | Board Member | Core Competencies (1) | Information Services and Technology | Cybersecurity | Healthcare Experience | Robotics Experience | | Craig H. Barratt | ü | ü | ü | | | | Joseph C. Beery | ü | ü | ü | ü | | | Lewis Chew | ü | ü | | | | | Gary S. Guthart, Ph.D. | ü | ü | ü | ü | ü | | Amal M. Johnson | ü | ü | ü | | | | Sreelakshmi Kolli | ü | ü | ü | ü | | | Amy L. Ladd, M.D. | ü | ü | | ü | | | Keith R. Leonard, Jr. | ü | ü | ü | ü | | | Jami Dover Nachtsheim | ü | ü | | ü | | | Monica P. Reed, M.D. | ü | | | ü | ü | | Mark J. Rubash | ü | ü | ü | | |

  10. Director Skills and Experience Matrix

    (1)Core Competencies include each of the following: public company, international, corporate governance, strategic planning, marketing, sales, and business development, and senior leadership experience.

  11. Board Responsibilities and Corporate Governance Guidelines

    Board Responsibilities and Corporate Governance Guidelines The Board’s primary responsibility is to exercise their business judgment in the best interests of the Company and its stockholders. The Board selects the Chief Executive Officer (“CEO”) of the Company, monitors management’s and the Company’s performance, and provides advice and counsel to management. Among other things, the Board at least annually reviews the Company’s long-term strategy, long-term business plan, and annual budget for the Company. The Board also reviews and approves transactions in accordance with guidelines that the Board may adopt from time to time. In fulfilling the Board’s responsibilities, directors have full access to the Company’s management, external auditors, and outside advisors. With respect to the Board’s role in risk oversight of the Company, the Board discusses the Company’s risk exposures and risk management of various parts of the business, including appropriate guidelines and policies to minimize business risks and major financial risks and the steps management has undertaken to control them. The Board has also adopted Corporate Governance Guidelines to assist the Board in the exercise of its responsibilities and to serve the interests of the Company and its stockholders. These guidelines serve as a framework for, among other things, the composition and selection of members of the Board, director orientation and continuing education, responsibilities of directors, conduct of Board meetings, structure and conduct of Board committees, succession planning, and oversight of risk management. The Company’s Corporate Governance Guidelines are available on its website at www.intuitive.com.

  12. Board Leadership

    Board Leadership The Company is focused on its corporate governance practices and values independent board oversight as an essential component of strong corporate performance to enhance stockholder value. Its commitment to independent oversight is demonstrated by the fact that all of its directors, except the CEO, are independent under the listing standards of the Nasdaq Stock Market. In addition, all of the members of the Board’s committees are independent under such standards. The Board acts independently of management and regularly holds independent director sessions of the Board without members of management present. Currently, Dr. Barratt is the Chair of the Board, and Dr. Guthart is the CEO as well as a member of the Board. The Board has determined that the separation of the roles of Chair of the Board and CEO is appropriate, as it allows the CEO to focus primarily on management responsibilities and corporate strategy, while allowing the Chair to focus on leadership of the Board, providing feedback and advice to the CEO, and providing a channel of communication between the Board members and the CEO. The Chair of the Board presides over all Board meetings and works with the CEO to develop agendas for Board meetings. The Chair advises the CEO and other members of senior management on business strategy and leadership development. He also works with the Board to drive decisions about particular strategies and policies and, in concert with the independent Board committees, facilitates a performance evaluation process of the Board.

  13. Board Committees

    Board Committees The Board has established an Audit Committee, a Compensation Committee, and a Governance and Nominating Committee. The Board and its committees set schedules to meet throughout the year and also can hold special meetings and act by written consent from time to time, as appropriate. The Board has delegated various responsibilities and authority to the Audit Committee, Compensation Committee, and Governance and Nominating Committee as described below. These committees regularly report on their activities and actions to the full Board. Each of these committees of the Board has a written charter approved by the Board, which is available on our website at www.intuitive.com. The Board from time to time establishes additional committees to address specific needs. During 2023, the Board held five meetings. Each incumbent director attended at least 75% of the aggregate of the total number of meetings of the Board held during the period for which he or she has been a director and the total number of meetings held by all committees of the Board on which he or she served during the periods that he or she served. The following table reflects the current membership of each Board committee:

  14. Board Committees

    | | | | Committee Membership | | | | Name | Independent | Other Public Company Directorships (#) | Audit Committee | Governance and Nominating Committee | Compensation Committee | | Craig H. Barratt, Ph.D. | ü | 1 | | ü | | | Joseph C. Beery | ü | — | ü | | | | Gary S. Guthart, Ph.D. | | 1 | | | | | Amal M. Johnson | ü | 1 | | | Chair | | Don R. Kania, Ph.D. | ü | — | ü | ü | | | Sreelakshmi Kolli | ü | 1 | | | | | Amy L. Ladd, M.D. | ü | 1 | | | ü | | Keith R. Leonard, Jr. | ü | 2 | ü | | | | Alan J. Levy, Ph.D. | ü | — | | Chair | | | Jami Dover Nachtsheim | ü | 2 | | ü | ü | | Monica P. Reed, M.D. | ü | — | | | ü | | Mark J. Rubash | ü | 1 | Chair | | |

  15. 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, 2023, for services to the Company.

  16. Director Compensation Table

    | Name | Fees earned or paid in cash ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Total ($) | | Craig H. Barratt, Ph.D. | 73,000 | 237,920 | 187,820 | 498,740 | | Joseph C. Beery | 78,333 | 168,378 | 133,078 | 379,789 | | Amal M. Johnson | 86,667 | 168,378 | 133,078 | 388,123 | | Don R. Kania, Ph.D. | 84,667 | 168,378 | 133,078 | 386,123 | | Sreelakshmi Kolli (2) | 11,667 | 66,598 | 64,578 | 142,843 | | Amy L. Ladd, M.D. | 75,333 | 168,378 | 133,078 | 376,789 | | Keith R. Leonard, Jr. | 78,333 | 168,378 | 133,078 | 379,789 | | Alan J. Levy, Ph.D. | 81,000 | 168,378 | 133,078 | 382,456 | | Jami Dover Nachtsheim | 81,667 | 168,378 | 133,078 | 383,123 | | Monica P. Reed, M.D. | 75,333 | 168,378 | 133,078 | 376,789 | | Mark J. Rubash | 91,000 | 168,378 | 133,078 | 392,456 |

  17. Director Compensation Table

    (1)While the number of award shares granted to directors pursuant to 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 RSUs and stock options granted to non-employee directors in 2023, 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 RSUs and one grant of stock options in 2023, 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 January 31, 2024, for a discussion of all assumptions made by the Company in the valuation of the equity awards. (2)Sreelakshmi Kolli was appointed to the Board effective October 27, 2023. On November 10, 2023, Ms. Kolli was granted (i) 240 RSUs and (ii) 722 stock options, all of which vest in full on the earlier of (i) the first anniversary of the grant date or (ii) the next annual meeting of stockholders following the grant date, subject to continued service through such vesting date. The table below sets forth the aggregate number of shares of the Company’s common stock subject to options outstanding and exercisable as well as the number of outstanding RSUs held by non-employee directors as of December 31, 2023.

  18. 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. | 30,336 | 27,924 | 804 | | Joseph C. Beery | 7,126 | 5,417 | 569 | | Amal M. Johnson | 26,746 | 25,037 | 569 | | Don R. Kania, Ph.D. | 11,425 | 9,716 | 569 | | Sreelakshmi Kolli | 722 | — | 240 | | Amy L. Ladd, M.D. | 8,776 | 7,067 | 569 | | Keith R. Leonard, Jr. | 9,484 | 7,775 | 569 | | Alan J. Levy, Ph.D. | 14,400 | 12,691 | 569 | | Jami Dover Nachtsheim | 17,107 | 15,398 | 569 | | Monica P. Reed, M.D. | 4,828 | 3,119 | 569 | | Mark J. Rubash | 1,709 | — | 569 |

  19. 2023 Executive Compensation Highlights

    2023 Executive Compensation Highlights Consistent with our business results, the Compensation Committee took the following actions with respect to the 2023 compensation of our NEOs: •Base Salary. Base salaries were increased in the range of approximately 3% to 11% for our NEOs. These base salary increases took into consideration the changes in responsibilities for each NEO, including promotions, 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 2023 Corporate Incentive Program (the “CIP”), our annual performance-based cash incentive program, for our NEOs was funded at 107.1% and will be paid out in March 2024. 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 Company maintains a performance equity award program to reward the creation of long-term value for the Company and more closely align executives with shareholder interests. Under the performance award program in 2023, executives, including the NEOs, were granted performance share units (“PSUs”) as one-half of their equity mix. For 2023, the Compensation Committee granted equity awards in the form of RSUs, stock options, and PSUs. 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. Beginning in 2024, the Compensation Committee no longer intends to grant equity awards in the form of stock options. RSUs are predominantly used by our peer companies for employee equity programs and have become the equity award preferred among the majority of our current employee population. In addition, not granting equity awards in the form of stock options allows the Company to better manage overhang in the long run while maintaining our corporate compensation philosophies. Accordingly, executives, including the NEOs, were generally granted PSUs as one-half of their equity mix for 2024, with the remainder of their equity award value granted in the form of RSUs.

  20. 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 were typically subject to either a 4-year or 3.5-year vesting requirement and a 7-year or 10-year term when granted prior to 2024, RSUs, which are typically subject to a 4-year vesting requirement, and 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 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 RSUs, stock options (through 2023), 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 CEO and the changes in stockholder value as reflected by the percentage change in value of the market price of our common stock. Our CEO’s annual total direct compensation consists of base salary paid, annual performance-based cash bonus earned, the grant date fair value of his equity awards (including RSUs, stock options, and PSUs) granted during the year, and all other compensation, as shown in the “2023 Summary Compensation Table” below. 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 2019, such that it represents the stock price percentage change over the 2019 year-end price of $197.05 per share, and our CEO’s annual total direct compensation is similarly indexed to his 2019 annual total direct compensation.

  21. Executive Compensation Policies and Practices

    | Independence | The Compensation Committee is comprised solely of independent directors. | | Independent Adviser | The Compensation Committee engages an independent compensation consultant, Aon, to provide analysis, advice, and guidance on compensation matters. | | Annual Executive Compensation Review | The Compensation Committee reviews an annual compensation analysis prepared by Aon, which includes approval of our executive compensation strategy and philosophy and our compensation peer group. | | Succession Planning | We review the risks associated with key executive officer positions and endeavor to ensure adequate succession plans are in place. | | Stock Ownership Guidelines | We maintain stock ownership guidelines for our executive officers and the non-employee members of our Board. | | Policy for Recovery of Erroneously Awarded Compensation | We have a policy for Recovery of Erroneously Awarded Compensation that complies with the new SEC and Nasdaq listing standards and provides that the Company shall recover certain erroneously paid incentive-based compensation, including cash incentive or performance-vesting equity compensation of our current and former executive officers in the event that the Company is required to prepare an accounting restatement. The policy provides that such erroneously paid incentive-based compensation may also be recovered from other compensation payable by the Company (including any awards, whether time- or performance-vesting). In addition, our 2010 Plan provides for the ability of the administrator to provide for recovery of any awards (whether time- or performance-vesting) granted thereunder, including any proceeds or gains received in respect thereof, in the event of certain terminations of the holder for “cause” or to otherwise comply with any clawback policy adopted by the Company. | | Compensation At-Risk | Our executive compensation program is designed such that a significant portion of compensation is “at risk” based on corporate performance, including equity-based compensation, to align the interests of our executive officers and stockholders. | | Performance-Based Awards | Performance-based stock awards are not earned unless the Company attains specified performance objectives over a multi-year period, tying executive pay to the achievement of critical objectives and to sustained value creation for our stakeholders. | | No Employment Agreements | We do not have employment agreements with any of our executive officers. All executive officers are employed “at will.” | | No Executive Retirement Plans | We do not provide executive pensions or other supplemental executive retirement health or insurance benefits. | | No Executive Perquisites | We do not provide any perquisites or other personal benefits to our executive officers that are not otherwise available on the same basis to our other full-time employees. | | No Special Health or Welfare Benefits | Our executive officers participate in broad-based, company-sponsored health and welfare benefits programs on the same scaled basis as our other full-time, salaried employees. | | No Tax Reimbursements | We do not provide any tax reimbursement payments (including “gross-ups”) on any element of executive compensation. | | “Double-Trigger” Change-in-Control Arrangements | The change-in-control payments and benefits pursuant to the Company’s Change-in-Control Plan are based on a “double-trigger” arrangement (i.e., they require both a change in control of the Company plus a qualifying termination of employment before payments and benefits are paid). | | No Repricing | All of the Company’s equity plans expressly prohibit stock option repricing without stockholder approval. | | No Buyout of Underwater Options | All of the Company’s active equity plans expressly prohibit the Company from buying out stock options whose exercise price exceeds the fair market value of our common stock, often referred to as underwater options, for cash. | | No Liberal Recycling of Shares | All of the Company’s active equity plans prohibit the liberal recycling of shares or underlying awards granted under these plans. | | No Automatic “Single Trigger” Vesting of Equity Awards | None of the Company’s outstanding equity awards provide for automatic acceleration of vesting of equity awards upon a change in control of the Company. |

  22. 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, and cash performance incentives. Our equity compensation program historically provided for awards in RSUs, stock options, and PSUs. However, beginning in 2024, the Compensation Committee determined that it will no longer plan to grant equity awards in the form of stock options. 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 long-term equity awards are effective compensation elements for attracting innovative and passionate executives that reward stockholder value creation and for providing critical retention value for our executives. By ensuring that our executives 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 executives with the interests of our stockholders. In 2023, 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 target direct 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. The target compensation mix for the other NEOs above reflects the annual target direct compensation as of April 1, 2023. For comparability purposes, the impact of Mr. Rosa’s promotion to President of the Company in May 2023 (that title was previously held by our CEO, Dr. Guthart, prior to Mr. Rosa’s promotion), which included a base salary increase, a target cash bonus increase, and the grant of additional equity awards, has not been included in the table above.

  23. Role of Compensation Consultant

    Role of Compensation Consultant In 2023, the Compensation Committee directly retained the services of Aon 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 performed for the Compensation Committee in 2023 has not raised any conflict of interest.

  24. 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 executives. 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 year. 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 targets the total direct compensation values, which includes base salary, target annual bonus, and the estimated grant date fair value of equity awards, between the 50th and 75th percentiles of our peers, based on the compensation peer group established by the Compensation Committee in consultation with Aon. The Compensation Committee engaged Aon to assist with reviewing our compensation peer group and assessing the competitiveness of our executive compensation program in 2023. 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 1/4 to 4x 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 2023 (which was unchanged from 2022):

  25. Competitive Positioning

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

  26. 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 respective contribution to the achievement of our performance goals.

  27. Target Annual Cash Bonus Opportunities

    Target Annual Cash Bonus Opportunities Given our emphasis on long-term stockholder value creation over annual operating results, while the target annual cash bonus opportunities for which our executive officers are eligible under the CIP are aligned with the competitive market, the maximum annual cash bonus opportunities are relatively low compared to the competitive market. In April 2023, the target and maximum annual cash bonus opportunities (expressed as a percentage of base salary) under the CIP for our NEOs were as follows:

  28. 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% | | Jamie E. Samath | 65% | 81.25% | | David J. Rosa (2) | 100% | 125% | | Bob DeSantis | 100% | 125% | | Henry L. Charlton | 65% | 81.25% |

  29. Target Annual Cash Bonus Opportunities

    (1)The maximum annual cash bonus opportunity (as a percentage of base salary) is calculated at 125% of the percentages of the target annual cash bonus opportunity set forth above; however, the Compensation Committee may award higher amounts based on individual performance. (2)Mr. Rosa’s target and maximum annual cash bonus opportunity (as a percentage of base salary) increased to 120% and 150%, respectively, on May 16, 2023, in connection with his promotion to President. His annual cash bonus will be prorated between his previous target percentage set forth above and his new target percentage. For 2024, the target and maximum annual cash bonus opportunities (expressed as a percentage of base salary) for these individuals under the CIP were not increased.

  30. Annual Cash Bonus Plan Formula and Funding

    Annual Cash Bonus Plan Formula and Funding For 2023, 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, facilities asset abandonment charges, litigation charges, contributions to the Intuitive Foundation, and other adjustments, primarily related to inventory cost accounting and operating expense hedging. For 2023, the CIP incentive pool was funded based on the threshold, target, and maximum AOI achievement levels of $2.198 billion, $2.381 billion, and $2.775 billion, 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%, respectively. 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 2023, the Company Performance Goals fell into four categories: Support Our Customers; Innovation & Operational Excellence; Quality and Regulatory; 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.

  31. 2023 Bonus Decisions

    2023 Bonus Decisions For 2023, the target funding for AOI was set at $2.381 billion and maximum funding of 125% of the pool was set at AOI of $2.775 billion, with funding at intermediate levels determined based on linear interpolation. Based on our actual achievement of AOI of $2.484 billion, or 106.5% achievement, weighted at 50%, and actual achievement of the Company Performance Goals of 107.6%, weighted at 50%, the CIP was funded at 107.1% of the target level for our NEOs. Based on our 2023 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 2023 annual cash bonus payment amounts for our NEOs are set forth in the “2023 Summary Compensation Table” below.

  32. Long-Term Incentive Compensation

    Long-Term Incentive Compensation Our long-term incentive compensation consists of equity awards in the form of RSUs, stock options, 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 stock options awarded through 2023, 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. RSUs and PSUs are generally granted once per year in February, other than in connection with new hires and promotions (including, for 2023, the promotion grants made to Mr. Rosa in June 2023). The RSUs vest 25% annually over a four-year period, while 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. Stock option awards were generally granted bi-annually in February and August, other than in connection with new hires and promotions (including, for 2023, the promotion grants made to Mr. Rosa in June 2023). The February stock option grants vest 1/8 upon completion of six months of service and 1/48 per month thereafter, through a four-year period, while the August stock option grants vest 7/48 upon completion of one month of service and 1/48 per month thereafter, through a 3.5-year period. In 2022, the Compensation Committee determined to implement a performance equity award program in the form of PSUs to reward the creation of long-term value for the Company and more closely align executives with shareholder interests. The PSUs are eligible to be earned over an approximately three-year performance period based on actual performance as determined by the Compensation Committee and continued service. The PSUs generally vest on the three-year anniversary of the grant date (with the exception of the June 2023 PSU grant to Mr. Rosa, which will vest on the same date as the February 2023 PSU grants), subject to continued service through such date. The PSUs have an overall payout range of 75% of target to 125% of target, as determined by the Compensation Committee. For the 2022 PSU program, the Company attained year-over-year da Vinci procedure growth for 2023 versus 2022 of 21.9%, which was above the maximum attainment level, resulting in one-third of the 2022 PSUs being attained at maximum level. For the 2023 PSU program, one-third of the PSUs are eligible to be earned based on the Company’s total shareholder return (“TSR”) relative to the Standard & Poor’s Healthcare Equipment Select Index (the “Peer Group Index”) over the performance period, while the remaining two-thirds of the PSUs are eligible to be earned based on the achievement of specified da Vinci and Ion procedure growth targets based on multi-year periods within the overall performance period. For each metric, no shares will be earned if the actual performance is below the threshold attainment level. We believe that the design of our PSU programs provides a strong long-term focus on both operational and stock-based performance of the Company. The below table outlines the metrics by which the 2023 PSUs are eligible to be earned as well as the earned/vested PSU payout achievement factor for the achievement of threshold, target, or maximum performance.

  33. Long-Term Incentive Compensation

    | | | % Earned/Vested | | | | Metrics | Weighting | Threshold | Target | Maximum | | 2022 - 2024 Procedure Count Growth (1) | 33.3% | 75% | 100% | 125% | | 2022 - 2025 Procedure Count Growth (2) | 33.3% | 75% | 100% | 125% | | Relative TSR (3) | 33.3% | 75% | 100% | 125% |

  34. Long-Term Incentive Compensation

    (1)Calculated as the combined da Vinci and Ion procedure count growth for the period commencing on January 1, 2023, and ending on December 31, 2024, relative to the total procedures performed in the fiscal year ended December 31, 2022. (2)Calculated as the combined da Vinci and Ion procedure count growth for the period commencing on January 1, 2023, and ending on December 31, 2025, relative to the total procedures performed in the fiscal year ended December 31, 2022. (3)Calculated as the Company’s TSR relative to the TSR of companies within the Peer Group Index. The relative TSR will be determined by ranking the Company and the Peer Group Index companies from highest to lowest according to their respective TSRs. The Company’s threshold, target, and maximum relative TSR performance metrics relative to the Peer Group Index companies have been set as the 25th, 50th, and greater than or equal to the 75th percentiles, respectively. Individual grant awards are determined by the Compensation Committee after considering various factors including a competitive market analysis prepared by our 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. In 2023, the Compensation Committee determined that a higher percentage of long-term incentive compensation should be allocated to PSUs. Accordingly, executives, including the named executive officers, were generally granted PSUs as one-half of their equity mix for 2023, with the remainder of their equity award value granted equally in the form of RSUs and stock options. Beginning in 2024, the Company no longer plans to grant stock options. In 2024, the Compensation Committee authorized the following equity awards for our NEOs:

  35. 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 | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | | Gary S. Guthart, Ph.D. | 19,841 | 10,534 | 10,025 | — | 31,602 | 30,076 | 19,841 | 21,069 | 10,025 | | Jamie E. Samath | 7,631 | 4,310 | 3,008 | — | 12,928 | 9,022 | 7,631 | 8,619 | 3,008 | | David J. Rosa (1) | 15,263 | 11,179 | 6,015 | — | 33,535 | 18,046 | 15,263 | 56,205 | 6,015 | | Bob DeSantis | 6,105 | 3,831 | 6,015 | — | 11,492 | 18,046 | 6,105 | 7,661 | 6,015 | | Henry L. Charlton (2) | 6,868 | 4,310 | N/A | — | 12,928 | N/A | 6,868 | 8,619 | N/A |

  36. Long-Term Incentive Compensation

    (1) The equity awards granted to Mr. Rosa in 2023 include additional equity grants of RSUs, stock options, and PSUs on June 10, 2023, in connection with his promotion to President of the Company in May 2023. (2) The equity awards granted to Mr. Charlton in 2022 are not included, as Mr. Charlton was not an NEO in 2022. The terms of the 2024 PSUs granted to our NEOs are generally consistent with the terms of the 2023 PSU Program described above. 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 2014 through 2023, the percentage of NEO equity award grants relative to total equity award grants were as follows:

  37. 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. Beginning in 2020 and prior to 2023, the Company made annual stock option grants 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. Beginning in 2023, the Company changed the timing of its bi-annual stock option grants to the last trading day of February and August 10 or, if that date is not a trading day, the next trading day. RSUs and PSUs were granted on the last trading day of February each year. Beginning in 2024, the Company no longer plans to grant stock options, and the grant date of RSUs and PSUs will change to be on February 26 of each year. We do not time the granting of stock options or other equity awards with any favorable or unfavorable news released by the Company. Initial equity award grants are consistently granted on the tenth day of the month. Proximity of any awards to an earnings announcement or other market events is coincidental.

  38. 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 NEOs, 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 executives, 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 executives may not be required by the acquiring entity. In such a situation, we believe that these protections are necessary to encourage retention of the executives 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 NEOs, 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, 2023, are set forth in “Potential Payments Upon Termination or Change in Control” below.

  39. Policy for Recovery of Erroneously Awarded Compensation

    Policy for Recovery of Erroneously Awarded Compensation Our Policy for Recovery of Erroneously Awarded Compensation (the “Policy”) is intended to comply with SEC and Nasdaq listing standards and maintain a culture of focused, diligent, and responsible management that discourages conduct detrimental to the growth of the Company. Accordingly, as set forth in the Policy, the Company is required to recover certain erroneously paid incentive-based compensation, including cash incentive or performance-vesting equity compensation, of its current and former executive officers in the event the Company is required to prepare a qualifying accounting restatement. The policy provides that such erroneously paid incentive-based compensation may also be recovered from other compensation payable by the Company (including any awards, whether time- or performance-vesting). In addition, our 2010 Plan provides for the ability of the administrator to provide, in the terms of awards or by separate agreement, for recovery of any awards (whether time- or performance-vesting) granted thereunder, including any proceeds or gains received in respect thereof, in the event of certain terminations of the holder for “cause” or to otherwise comply with any clawback policy adopted by the Company.

  40. 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.

  41. “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 2023, 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.

  42. 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 RSUs, stock options, 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.

  43. 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. Beginning in 2022, the Compensation Committee approved the implementation of a performance equity award program in which executives, including the named executive officers, were granted PSUs as a portion of their equity mix for the year. The PSUs are eligible to be earned based on the Company’s achievement of specified procedure growth targets based on multi-year periods and the Company’s TSR relative to the Peer Group Index over a three-year performance period and provide a strong long-term focus on both operational and stock-based performance of the Company without encouraging significant risk-taking in order to achieve such performance goals. 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.

  44. 2023 Summary Compensation Table

    2023 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, 2023, 2022, and 2021, for services to our Company in all capacities.

  45. 2023 Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) (3) (4) | Total ($) | | Gary S. Guthart, Ph.D. Chief Executive Officer | 2023 | 955,000 | 7,385,307 | 2,442,064 | 1,610,743 | 56,267 | 12,449,381 | | | 2022 | 873,081 | 5,911,183 | 2,203,864 | 1,355,449 | 1,500 | 10,345,077 | | | 2021 | 846,119 | 2,976,672 | 2,858,652 | 1,376,466 | 1,500 | 8,059,409 | | Jamie E. Samath Senior Vice President and Chief Financial Officer | 2023 | 555,000 | 3,021,376 | 999,019 | 386,278 | 66,692 | 5,028,365 | | | 2022 | 525,000 | 1,773,656 | 661,101 | 360,360 | 1,500 | 3,321,617 | | David J. Rosa President | 2023 | 676,676 | 8,128,162 | 2,805,960 | 860,120 | 93,038 | 12,563,956 | | | 2022 | 625,718 | 3,546,705 | 1,322,348 | 693,868 | 1,500 | 6,190,139 | | | 2021 | 607,218 | 1,680,641 | 1,613,504 | 727,866 | 1,500 | 4,630,729 | | Bob DeSantis Executive Vice President and Chief Strategy and Corporate Operations Officer | 2023 | 581,500 | 2,685,570 | 888,051 | 622,562 | 60,509 | 4,838,192 | | | 2022 | 563,500 | 3,546,705 | 1,322,348 | 547,511 | 8,054 | 5,988,118 | | | 2021 | 537,500 | 1,560,542 | 1,498,423 | 595,339 | 1,500 | 4,193,304 | | Henry L. Charlton Senior Vice President and Chief Commercial and Marketing Officer | 2023 | 580,000 | 3,021,376 | 999,019 | 423,807 | 72,389 | 5,096,591 |

  46. 2023 Summary Compensation Table

    (1)The amounts reported in these columns represent the grant date fair values of the RSUs, stock options, and PSUs granted to the NEOs in the applicable fiscal year, determined in accordance with ASC 718. See Note 10 of the Notes to the Consolidated Financial Statements contained in our Annual Report on Form 10-K filed on January 31, 2024, for a discussion of all assumptions made by us in determining the grant date fair value of these equity awards. The amounts in 2022 and 2023 include the grant date fair value for PSUs, which are eligible to be earned over an approximately three-year performance period and have an overall payout range of 75% to 125% of target, as determined by the Compensation Committee. One-third of the PSUs are eligible to be earned based on the Company’s TSR relative to the Peer Group Index over the performance period (the “market condition component”) while the remaining two-thirds of the PSUs are eligible to be earned based on the achievement of specified procedure growth targets based on year-over-year or multi-year periods within the overall performance period (the “performance condition component”). The market condition component of the fair values is determined as of the date of grant using the Monte-Carlo simulation method, which utilizes multiple input variables to estimate the probability of meeting the performance objectives established for the award, including the expected volatility of our stock price relative to the S&P Health Care Equipment Select Industry Index at the end of the three-year performance period and a risk-free interest rate derived from linear interpolation of the term structure of Treasury Constant Maturities yield rates for the period; accordingly, the maximum grant date fair values are the same as their target grant date fair values. The performance condition component of the fair value of PSUs is determined based on the fair market value of our common stock on the grant date. For each metric, no shares will be earned if the actual performance is below the threshold attainment level. In 2023, there were two PSU grants, one in February to all of our NEOs and one in June to Mr. Rosa related to his promotion to President of the Company. For the 2023 PSU grants, the market condition component of the fair value of PSUs was determined using input variables that included risk-free interest rates of 4.47% and 4.24% for the February grant and the June grant, respectively. Based on the Monte-Carlo simulation method, the grant date fair values of the market condition components of the PSUs were 108% and 116% of our closing stock price on the grant dates for the February grant and the June grant, respectively, and, as a result, the grant date fair values were $1,746,901, $714,630 $952,840, $635,199, and $714,630 for Dr. Guthart, Mr. Samath, Mr. Rosa, Mr. DeSantis, and Mr. Charlton, respectively, for the February grant, and $881,304 for Mr. Rosa’s June grant. For the 2023 PSU grants, the performance condition component included the achievement of specified combined da Vinci and Ion procedure growth targets based on multi-year periods within the overall performance period. The maximum grant date fair values of the performance condition component of the PSUs were $4,027,515, $1,647,594, $2,196,792, $1,464,464 and $1,647,594 for Dr. Guthart, Mr. Samath, Mr. Rosa, Mr. DeSantis, and Mr. Charlton, respectively, for the February grant, and $1,893,079 for Mr. Rosa’s June grant. (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)In 2023, this category included matching contributions paid by us pursuant to our 401(k) plan in the amount of $1,500 for all NEOs. (4)In 2023, this category included one-time payouts, which related to any unused vacation as part of a policy change to flexible vacation time for all salaried employees in the U.S., for Dr. Guthart, Mr. Samath, Mr. Rosa, Mr. DeSantis, and Mr. Charlton in the amount of $54,767, $65,192, $91,538, $59,009, and $70,889, respectively.

  47. 2023 Grants of Plan-Based Awards Table

    2023 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 2023:

  48. 2023 Grants of Plan-Based Awards Table

    | Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: # of Shares of Stock or Units (3) | All Other Option Awards: # of Securities Underlying Options (4) | Exercise or Base Price of Options or Awards ($/Share) | Grant Date Fair Value of Options and Awards ($) (5) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Gary S. Guthart, Ph.D. | 2/28/2023 | | | | 15,802 | 21,069 | 26,336 | | | | 4,968,913 | | | 2/28/2023 | | | | | | | 10,534 | | | 2,416,394 | | | 2/28/2023 | | | | | | | | 15,801 | 229.39 | 1,137,582 | | | 8/10/2023 | | | | | | | | 15,801 | 304.67 | 1,304,482 | | | Cash Incentive | — | 1,432,500 | 1,790,625 | | | | | | | | | Jamie E. Samath | 2/28/2023 | | | | 6,464 | 8,619 | 10,774 | | | | 2,032,705 | | | 2/28/2023 | | | | | | | 4,310 | | | 988,671 | | | 2/28/2023 | | | | | | | | 6,464 | 229.39 | 465,371 | | | 8/10/2023 | | | | | | | | 6,464 | 304.67 | 533,648 | | | Cash Incentive | — | 360,750 | 450,938 | | | | | | | | | David J. Rosa | 2/28/2023 | | | | 8,619 | 11,492 | 14,365 | | | | 2,710,280 | | | 2/28/2023 | | | | | | | 5,746 | | | 1,318,075 | | | 2/28/2023 | | | | | | | | 8,619 | 229.39 | 620,519 | | | 6/12/2023 | | | | 5,432 | 7,243 | 9,054 | | | | 2,395,801 | | | 6/12/2023 | | | | | | | 5,433 | | | 1,704,006 | | | 6/12/2023 | | | | | | | | 16,297 | 313.64 | 1,473,883 | | | 8/10/2023 | | | | | | | | 8,619 | 304.67 | 711,558 | | | Cash Incentive | — | 765,113 | 956,391 | | | | | | | | | Bob DeSantis | 2/28/2023 | | | | 5,746 | 7,661 | 9,576 | | | | 1,806,777 | | | 2/28/2023 | | | | | | | 3,831 | | | 878,793 | | | 2/28/2023 | | | | | | | | 5,746 | 229.39 | 413,679 | | | 8/10/2023 | | | | | | | | 5,746 | 304.67 | 474,372 | | | Cash Incentive | — | 581,500 | 726,875 | | | | | | | | | Henry L. Charlton | 2/28/2023 | | | | 6,464 | 8,619 | 10,774 | | | | 2,032,705 | | | 2/28/2023 | | | | | | | 4,310 | | | 988,671 | | | 2/28/2023 | | | | | | | | 6,464 | 229.39 | 465,371 | | | 8/10/2023 | | | | | | | | 6,464 | 304.67 | 533,648 | | | Cash Incentive | — | 377,000 | 471,250 | | | | | | | |

  49. 2023 Grants of Plan-Based Awards Table

    (1)For 2023, Dr. Guthart had a bonus target of 150% of base salary. Mr. Rosa had a bonus target of 100% from January 1, 2023 to May 15, 2023, and 120% from May 16, 2023 to December 31, 2023, an increase that was based on his promotion to President of the Company. Mr. DeSantis had a bonus target of 100% of base salary. Messrs. Samath and Charlton each had a bonus target of 65% of base salary. At its discretion, the Compensation Committee has the authority to pay any NEO in excess of or below the targeted bonus amount. The goals for 2023 were approved by the Compensation Committee in January 2023. The payout amounts for each NEO were reviewed and approved by the Compensation Committee and the Board in January 2024 upon reviewing results for 2023. The maximum bonus or performance payout is calculated at 125% of the target. Refer to the “Compensation Discussion and Analysis” section above for detailed discussion of the CIP. (2)Amounts represent threshold, target, and maximum opportunities for the 2023 PSUs, which are eligible to be earned over an approximately three-year performance period and have an overall payout range of 75% of target to 125% of target, as determined by the Compensation Committee. One-third of the 2023 PSUs are eligible to be earned based on the Company’s TSR relative to the Peer Group Index TSR over the performance period, while the remaining two-thirds of the 2023 PSUs are eligible to be earned based on the achievement of specified combined da Vinci and Ion procedure growth targets based on multi-year periods within the overall performance period. For each metric, no shares will be earned if the actual performance is below the threshold attainment level. Both the February PSU grants and Mr. Rosa’s June PSU grant vest on the three-year anniversary of the February PSU grant date based on actual performance achievement of each metric as determined by the Compensation Committee and continued service through such date. (3)The RSUs were granted under our Amended and Restated 2010 Incentive Award Plan. The February RSU grants vest in 1/4th increments on each anniversary of February 10, 2024, over a four-year period, subject to continued employment through the applicable vesting date. Mr. Rosa’s June RSU grant vests in 1/4 increments on each anniversary of June 10, 2023, over a four-year period, subject to continued employment through the applicable vesting date. (4)The options were granted under our Amended and Restated 2010 Incentive Award Plan. The February option grants vest 6/48th on August 10, 2023, and 1/48th per month thereafter through a four-year period, subject to continued employment through the applicable vesting date. The August option grants vest 7/48th at the end of one month and 1/48th per month thereafter through a 3.5-year period, subject to continued employment through the applicable vesting date. Mr. Rosa’s June option grant vests 25% on the first anniversary of the grant date and 1/48th per month thereafter, subject to continued employment through the applicable vesting date. (5)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 January 31, 2024, for a discussion of the assumptions made by us in determining the value of the equity awards. The grant date fair value for the performance condition component of PSUs was determined based on the fair market value of our common stock on the grant date. The grant date fair value for the market condition component of PSUs was determined using the Monte-Carlo simulation method described above. For information on the inputs to the Monte-Carlo simulation method, see footnote (1) of the 2023 Summary Compensation Table.

  50. Outstanding Equity Awards as of December 31, 2023

    Outstanding Equity Awards as of December 31, 2023 The following table summarizes the outstanding stock options, RSUs, and PSUs that were held by our NEOs as of December 31, 2023:

  51. Outstanding Equity Awards as of December 31, 2023

    | | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | # of Securities Underlying Unexercised Options (# Exercisable) | # of Securities Underlying Unexercised Options (# Unexercisable) (*) | Option Exercise Price ($/share) | Option Expiration Date | Shares or Units of Stock That Have Not Vested (#) (1)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | Gary S. Guthart, Ph.D. | 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 | 25,500 | — | 139.52 | 2/15/2028 | | | | | | | 8/15/2018 | 25,500 | — | 174.26 | 8/15/2028 | | | | | | | 2/15/2019 | 22,500 | — | 182.83 | 2/15/2029 | | | | | | | 8/15/2019 | 22,500 | — | 166.62 | 8/15/2029 | | | | | | | 2/28/2020 | 22,230 | 966 | 177.99 | 2/28/2030 | | | | | | | 2/28/2020 | | | | | 3,864 | 1,303,559 | | | | | 8/28/2020 | 22,227 | 966 | 242.34 | 8/28/2030 | | | | | | | 2/26/2021 | 12,879 | 5,304 | 245.60 | 2/26/2031 | | | | | | | 2/26/2021 | | | | | 6,060 | 2,044,402 | | | | | 8/26/2021 | 12,879 | 5,304 | 347.42 | 8/26/2031 | | | | | | | 2/28/2022 | 6,892 | 8,146 | 290.33 | 2/28/2029 | | | | | | | 2/28/2022 | | | | | 7,518 | 2,536,272 | | | | | 2/28/2022 | | | | | 4,177 | 1,409,153 | 6,683 | 2,254,577 | | | 8/29/2022 | 6,892 | 8,146 | 208.90 | 8/28/2029 | | | | | | | 2/28/2023 | 3,292 | 12,509 | 229.39 | 2/28/2030 | | | | | | | 2/28/2023 | | | | | 10,534 | 3,553,750 | | | | | 2/28/2023 | | | | | | | 21,069 | 7,107,838 | | | 8/10/2023 | 3,293 | 12,508 | 304.67 | 8/10/2030 | | | | | | Jamie E. Samath | 2/15/2018 | 432 | — | 139.52 | 2/15/2028 | | | | | | | 8/15/2018 | 432 | — | 174.26 | 8/15/2028 | | | | | | | 2/15/2019 | 1,449 | — | 182.83 | 2/15/2029 | | | | | | | 8/15/2019 | 1,449 | — | 166.62 | 8/15/2029 | | | | | | | 2/28/2020 | 1,416 | 105 | 177.99 | 2/28/2030 | | | | | | | 2/28/2020 | | | | | 1,254 | 423,049 | | | | | 8/28/2020 | 1,410 | 105 | 242.34 | 8/28/2030 | | | | | | | 2/26/2021 | 1,815 | 750 | 245.60 | 2/26/2031 | | | | | | | 2/26/2021 | | | | | 2,565 | 865,328 | | | | | 8/26/2021 | 1,818 | 747 | 347.42 | 8/26/2031 | | | | | | | 2/28/2022 | 2,067 | 2,444 | 290.33 | 2/28/2029 | | | | | | | 2/28/2022 | | | | | 2,256 | 761,084 | | | | | 2/28/2022 | | | | | 1,253 | 422,712 | 2,005 | 676,407 | | | 8/29/2022 | 2,068 | 2,443 | 208.90 | 8/28/2029 | | | | | | | 2/28/2023 | 1,347 | 5,117 | 229.39 | 2/28/2030 | | | | | | | 2/28/2023 | | | | | 4,310 | 1,454,022 | | | | | 2/28/2023 | | | | | | | 8,619 | 2,907,706 | | | 8/10/2023 | 1,347 | 5,117 | 304.67 | 8/10/2030 | | | | | | David J. Rosa | 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 | | | | |

  52. Outstanding Equity Awards as of December 31, 2023

    | | 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 | 18,750 | — | 139.52 | 2/15/2028 | | | | | | | 8/15/2018 | 18,750 | — | 174.26 | 8/15/2028 | | | | | | | 2/15/2019 | 13,500 | — | 182.83 | 2/15/2029 | | | | | | | 8/15/2019 | 13,500 | — | 166.62 | 8/15/2029 | | | | | | | 2/28/2020 | 12,966 | 564 | 177.99 | 2/28/2030 | | | | | | | 2/28/2020 | | | | | 2,253 | 760,072 | | | | | 8/28/2020 | 12,966 | 564 | 242.34 | 8/28/2030 | | | | | | | 2/26/2021 | 7,269 | 2,994 | 245.60 | 2/26/2031 | | | | | | | 2/26/2021 | | | | | 3,420 | 1,153,771 | | | | | 8/26/2021 | 7,269 | 2,994 | 347.42 | 8/26/2031 | | | | | | | 2/28/2022 | 4,135 | 4,888 | 290.33 | 2/28/2029 | | | | | | | 2/28/2022 | | | | | 4,511 | 1,521,831 | | | | | 2/28/2022 | | | | | 2,506 | 845,424 | 4,010 | 1,352,814 | | | 8/29/2022 | 4,136 | 4,887 | 208.90 | 8/28/2029 | | | | | | | 2/28/2023 | 1,795 | 6,824 | 229.39 | 2/28/2030 | | | | | | | 2/28/2023 | | | | | 5,746 | 1,938,471 | | | | | 2/28/2023 | | | | | | | 11,492 | 3,876,941 | | | 6/12/2023 | — | 16,297 | 313.64 | 6/12/2030 | | | | | | | 6/12/2023 | | | | | 5,433 | 1,832,877 | | | | | 6/12/2023 | | | | | | | 7,243 | 2,443,498 | | | 8/10/2023 | 1,796 | 6,823 | 304.67 | 8/10/2030 | | | | | | Bob DeSantis | 2/28/2020 | 273 | 180 | 177.99 | 2/28/2030 | | | | | | | 2/28/2020 | | | | | 2,172 | 732,746 | | | | | 5/11/2020 | 180 | 453 | 179.70 | 5/11/2030 | | | | | | | 5/11/2020 | | | | | 360 | 121,450 | | | | | 8/28/2020 | 273 | 180 | 242.34 | 8/28/2030 | | | | | | | 2/26/2021 | 594 | 2,781 | 245.60 | 2/26/2031 | | | | | | | 2/26/2021 | | | | | 3,174 | 1,070,781 | | | | | 8/26/2021 | 6,753 | 2,778 | 347.42 | 8/26/2031 | | | | | | | 2/28/2022 | 1,128 | 4,888 | 290.33 | 2/28/2029 | | | | | | | 2/28/2022 | | | | | 4,511 | 1,521,831 | | | | | 2/28/2022 | | | | | 2,506 | 845,424 | 4,010 | 1,352,814 | | | 8/29/2022 | 564 | 4,887 | 208.90 | 8/28/2029 | | | | | | | 2/28/2023 | 1,197 | 4,549 | 229.39 | 2/28/2030 | | | | | | | 2/28/2023 | | | | | 3,831 | 1,292,426 | | | | | 2/28/2023 | | | | | | | 7,661 | 2,584,515 | | | 8/10/2023 | 1,197 | 4,549 | 304.67 | 8/10/2030 | | | | | | Henry L. Charlton | 2/16/2016 | 459 | — | 59.46 | 2/16/2026 | | | | | | | 8/15/2016 | 456 | — | 77.00 | 8/15/2026 | | | | | | | 2/15/2017 | 468 | — | 79.64 | 2/15/2027 | | | | | | | 8/15/2017 | 5,625 | — | 109.49 | 8/15/2027 | | | | | | | 2/15/2018 | 3,750 | — | 139.52 | 2/15/2028 | | | | | | | 8/15/2018 | 3,750 | — | 174.26 | 8/15/2028 | | | | | | | 2/15/2019 | 2,625 | — | 182.83 | 2/15/2029 | | | | | | | 8/15/2019 | 2,625 | — | 166.62 | 8/15/2029 | | | | | | | 2/28/2020 | 2,781 | 120 | 177.99 | 2/28/2030 | | | | | | | 2/28/2020 | | | | | 1,449 | 488,835 | | | | | 8/28/2020 | 2,778 | 120 | 242.34 | 8/28/2030 | | | | | | | 2/26/2021 | 1,815 | 750 | 245.60 | 2/26/2031 | | | | |

  53. Outstanding Equity Awards as of December 31, 2023

    | 2/26/2021 | | | | | 2,565 | 865,328 | | | | 8/26/2021 | 1,818 | 747 | 347.42 | 8/26/2031 | | | | | | 2/28/2022 | 2,067 | 2,444 | 290.33 | 2/28/2029 | | | | | | 2/28/2022 | | | | | 2,256 | 761,084 | | | | 2/28/2022 | | | | | 1,253 | 422,712 | 2,005 | 676,407 | | 8/29/2022 | 2,068 | 2,443 | 208.90 | 8/29/2029 | | | | | | 2/28/2023 | 1,347 | 5,117 | 229.39 | 2/28/2030 | | | | | | 2/28/2023 | | | | | 4,310 | 1,454,022 | | | | 2/28/2023 | | | | | | | 8,619 | 2,907,706 | | 8/10/2023 | 1,347 | 5,117 | 304.67 | 8/10/2030 | | | | |

  54. Outstanding Equity Awards as of December 31, 2023

    (*)All of the listed unexercisable options, except the May 2020, August 2020, August 2021, August 2022, February 2023, June 2023, and August 2023 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 May 2020 and June 2023 grants vest 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. The August 2020, August 2021, August 2022, and August 2023 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 February 2023 grants vest as to 6/48ths of the underlying option shares on August 10 and 1/48th per month thereafter, contingent upon continued employment. All options granted prior to 2022 have a ten-year term. Beginning in 2022, all options granted have a seven-year term. (1) All of the listed RSUs, except the February 2023 and June 2023 grants, vest in 1/4th increments annually over a four-year period from the date of grant, subject to continued employment through the applicable vesting date. The February 2023 grants vest in 1/4th increments on each anniversary of February 10, 2023, over a four-year period, subject to continued employment through the applicable vesting date. The June 2023 grant vests in 1/4th increments on each anniversary of June 10, 2023, over a four-year period, subject to continued employment through the applicable vesting date. (2) The dollar amounts shown are determined by multiplying the number of unvested units by $337.36 (the closing price of the Company’s common stock on December 29, 2023, the last trading day of the Company’s fiscal year). (3) All of the listed PSUs vest on the three-year anniversary of the grant date (except for Mr. Rosa’s June 2023 grant, which vests on February 28, 2026) based on actual performance of the applicable performance goals as determined by the Compensation Committee and continued service through such date. As described in the CD&A above, in each case, the PSUs have an overall payout range of 75% of target to 125% of target for the number of PSUs that are eligible to be earned and vest. One-third of the PSUs are eligible to be earned based on the Company’s TSR relative to the Peer Group Index over the performance period, while the remaining two-thirds of the PSUs are eligible to be earned based on the achievement of specified procedure growth targets based on either year-over-year or multi-year periods within the overall performance period. For each metric, no shares will be earned if the actual performance is below the threshold attainment level. For the 2023 PSU grants, the target number of PSUs is shown. (4) For the 2022 PSU grants, for the number of PSUs shown that have not vested, one of the three performance period achievements was attained as of December 31, 2023, and achieved at the maximum performance level. As a result, 1/3rd of the unvested PSUs shown represents 125% of the target number of PSUs eligible to be earned and have been moved to the “Shares or Units of Stock That Have Not Vested” column, while the remaining 2/3rd of the unvested PSUs shown represents the target number of PSUs eligible to be earned and remain in the “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” column.

  55. Option Exercises and Stock Vested During Fiscal 2023

    Option Exercises and Stock Vested During Fiscal 2023 The following table summarizes the stock options exercised and vesting of RSUs during the year ended December 31, 2023, and the value realized upon exercise of stock options and vesting of stock awards by our NEOs:

  56. Option Exercises and Stock Vested During Fiscal 2023

    | | 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. | 101,250 | 26,283,978 | 13,151 | 3,079,413 | | Jamie E. Samath | — | — | 4,016 | 934,481 | | David J. Rosa | 162,000 | 37,786,007 | 7,720 | 1,808,334 | | Bob DeSantis | 14,844 | 1,014,637 | 7,756 | 1,841,346 | | Henry L. Charlton | — | — | 4,796 | 1,122,449 |

  57. Option Exercises and Stock Vested During Fiscal 2023

    (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.

  58. 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. In 2022, the Compensation Committee implemented a performance equity award program consisting of PSUs. Under the PSU award agreements, in the event of a Change in Control where the PSUs are assumed or otherwise continued by an acquirer, the PSUs will be deemed achieved at the greater of target or actual achievement (measured as of the Change in Control), and such deemed PSUs will remain outstanding and eligible to vest on the third anniversary of the grant date. In the event the participant’s employment is terminated without Cause or as a result of an Involuntary Termination within the twelve-month period following such Change in Control, each such outstanding PSU shall vest in full as of the date of such termination. In the event of a Change in Control where the PSUs are not assumed or otherwise continued by an acquirer, the PSUs will be deemed achieved at the greater of target or actual achievement (measured as of the Change in Control), and such deemed PSUs will accelerate and vest as of such Change in Control. The amounts shown for NEOs below assume that a Change in Control occurred on December 31, 2023, and that the PSUs were not assumed or otherwise continued by an acquirer and are estimates of the amounts that would be paid to the NEOs upon such a Change in Control.

  59. Potential Payments Upon Termination or Change in Control

    | Name | Total Value of PSU Acceleration ($) (1) | | Gary S. Guthart, Ph.D. | 13,112,340 | | Jamie E. Samath | 4,903,106 | | David J. Rosa | 10,437,075 | | Bob DeSantis | 5,767,169 | | Henry L. Charlton | 4,903,106 |

  60. Potential Payments Upon Termination or Change in Control

    (1)For purposes of the 2022 and 2023 PSUs, as of December 31, 2023, performance achievement (measured as if a Change in Control occurred December 31, 2023) would result in a deemed achievement of the PSUs at the maximum performance level, which represents actual achievement as of such date. As a result, the maximum number of PSUs subject to each executive’s award have been used for purposes of this calculation. The total value of PSU acceleration is determined by multiplying the maximum number of shares underlying the PSUs by the closing market price on December 29, 2023, of $337.36. The amounts shown for all NEOs below assume that a qualifying termination of employment was effective December 31, 2023, 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.

  61. 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. | 2,450,000 | 10,293 | 26,471,790 | 28,932,083 | | Jamie E. Samath | 932,250 | 14,826 | 9,650,647 | 10,597,723 | | David J. Rosa | 1,435,430 | 14,826 | 20,266,368 | 21,716,624 | | Bob DeSantis | 1,172,000 | 13,485 | 12,376,327 | 13,561,812 | | Henry L. Charlton | 965,250 | 14,826 | 9,720,249 | 10,700,325 |

  62. 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, 2023. 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 $337.36 per share for the market value, which is the closing market price of a share of our common stock on December 29, 2023, the last trading day of our 2023 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 $337.36. For purposes of the PSUs, as of December 31, 2023, performance achievement (measured as if a Change in Control occurred December 31, 2023) would result in a deemed achievement of the PSUs at the maximum performance level, which represents actual achievement as of such date. As a result, the total value of PSU acceleration was determined by multiplying the maximum number of shares underlying the PSUs by the closing market price on December 29, 2023, of $337.36. 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.

  63. Pay Ratio

    Pay Ratio

  64. Pay Ratio

    | Annual total compensation of the CEO for 2023 | $12,449,381 | | Annual total compensation of the median employee for 2023 | $112,071 | | Ratio of annual total compensation of the CEO to the annual total compensation of the median employee for 2023 | 111:1 |

  65. 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 2023 and permanent employees who were on leave during 2023 were assumed to have worked for the entire year. All U.S. and non-U.S. employees employed as of December 31, 2023, 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.

  66. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE

  67. Pay Versus Performance Table

    Pay Versus Performance Table The following table sets forth information concerning the compensation provided to our NEOs and certain measures of Company performance in the years ended December 31, 2023, 2022, 2021, and 2020, for services to our Company in all capacities. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the fiscal years shown.

  68. Pay Versus Performance Table

    | Year | Summary Compensation Table Total for PEO ($) | Compensation Actually Paid to PEO ($) (1) | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) (1) | Value of Initial Fixed $100 Investment Based on: | | Net Income ($ Millions) | Adjusted Operating Income ($ Millions) (3) | | | | | | | Total Shareholder Return ($) | Peer Group Index Total Shareholder Return ($) (2) | | | | 2023 | 12,449,380 | 22,725,057 | 6,881,776 | 11,584,663 | 171.21 | 98.62 | 1,817.3 | 2,483.8 | | 2022 | 10,345,077 | 1,606,523 | 4,985,938 | 1,158,257 | 134.66 | 104.87 | 1,344.4 | 2,198.1 | | 2021 | 8,059,409 | 17,458,020 | 4,462,961 | 9,386,652 | 182.34 | 137.16 | 1,728.1 | 2,380.1 | | 2020 | 6,043,362 | 15,011,356 | 3,477,084 | 8,127,959 | 138.39 | 132.76 | 1,066.8 | 1,551.8 |

  69. Pay Versus Performance Table

    (1)Amounts represent compensation actually paid (“CAP”) to our CEO, who was our Principal Executive Officer or “PEO” for each of the years shown, and the average CAP to our remaining NEOs or “Non-PEO NEOs” for the relevant fiscal year, as determined under SEC rules, which includes the individuals indicated below for each fiscal year:

  70. Pay Versus Performance Table

    | Year | PEO | Non-PEO NEOs | | 2023 | Gary S. Guthart, Ph.D. | Jamie E. Samath, David J. Rosa, Bob DeSantis, and Henry L. Charlton | | 2022 | Gary S. Guthart, Ph.D. | Jamie E. Samath, David J. Rosa, Bob DeSantis, and Marshall L. Mohr | | 2021 | Gary S. Guthart, Ph.D. | Marshall L. Mohr, David J. Rosa, Bob DeSantis, and Myriam J. Curet, M.D., F.A.C.S. | | 2020 | Gary S. Guthart, Ph.D. | Marshall L. Mohr, David J. Rosa, Bob DeSantis, and Myriam J. Curet, M.D., F.A.C.S. |

  71. Pay Versus Performance Table

    Amounts represent the Summary Compensation Table Total Compensation for the applicable fiscal year adjusted as follows:

  72. Pay Versus Performance Table

    | Applicable Fiscal Year (“FY”) | 2023 | | | | PEO | Average non-PEO NEOs | | Deduction for ASC 718 Fair Value as of Grant Date Reported under the Stock Awards and Option Awards Columns in the Summary Compensation Table | (9,827,371) | (5,637,133) | | Increase based on ASC 718 Fair Value of Awards Granted during the FY that Remain Unvested as of FY End (“FYE”) | 15,563,207 | 8,377,935 | | Increase based on ASC 718 Fair Value of Awards Granted during the FY that Vested during the FY as of Vesting Date | 677,346 | 292,474 | | Increase/deduction based on ASC 718 Fair Value of Outstanding Unvested Prior FYs Awards as of FYE Compared to Valuation as of Prior FYE | 3,938,847 | 1,739,997 | | Increase/deduction based on ASC 718 Fair Value of Prior FYs Awards that Vested during the FY as of Vesting Date Compared to Valuation as of Prior FYE | (76,352) | (70,386) | | Deduction of ASC 718 Fair Value of Prior FY Awards as of Prior FYE that were Forfeited during the FY | — | — | | Total Adjustments | 10,275,677 | 4,702,887 |

  73. Pay Versus Performance Table

    The fair values of RSUs, PSUs, and stock options included in the CAP to our PEO and the Average CAP to our NEOs are calculated at the required measurement dates, consistent with the approach used to value the awards at the grant date as described in our Annual Report on Form 10-K for the year ended December 31, 2023. Any changes to the RSU and PSU fair values from the grant date (for current year grants) and from prior year-end (for prior year RSU grants) are based on our updated stock price at the respective measurement dates and updated performance metric projections (for PSUs). Changes to the stock option fair values are based on the updated stock price at the respective measurement dates, in addition to updated expected option term, implied volatility of our stock over the updated expected option term, and risk-free rate assumptions. For all years presented, the meaningful increases or decreases in the year-end stock option fair value from the fair value on the grant date were primarily driven by changes in the stock price. (2)For the relevant fiscal year, represents the cumulative TSR of the S&P Health Care Equipment Select Industry Index. (3)AOI is an operating metric defined in the “Annual Cash Bonus Plan Formula and Funding” subsection of the “Executive Compensation” section. AOI is calculated 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, facilities asset abandonment charges, litigation charges and recoveries, contributions to the Intuitive Foundation, and other adjustments, primarily related to inventory cost accounting and operating expense hedging. The Company selected AOI as the Company-Selected Measure due to it being an important financial performance measure that helps link CAP to the Company’s NEOs to the Company’s performance for the most recently completed fiscal year. Specifically, AOI is used to evaluate NEO performance under the CIP, a short-term cash incentive plan that is funded based on the Company’s achievement of an AOI goal as well as several other Company Performance Goals.

  74. 2023 Pay Versus Performance Graphs

    2023 Pay Versus Performance Graphs The graphs below compare (i) the relationship between PEO and average NEO CAP with our TSR, (ii) the relationship between PEO and average NEO CAP and net income, (iii) the relationship between PEO and average NEO CAP and AOI, and (iv) the relationship between our TSR and the Peer Group Index TSR, in each case, for the fiscal years ended December 31, 2023, 2022, 2021, and 2020. TSR amounts reported in the graph assume an initial fixed investment of $100. Description of Relationship Between PEO and Average NEO Compensation Actually Paid and Our TSR The following chart sets forth the relationship between CAP to our PEO, the average of CAP to our other NEOs, each as set forth in the Table above, and our cumulative TSR over the period from 2020 through 2023. Description of Relationship Between PEO and Average NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between CAP to our PEO, the average of CAP to our other NEOs, and our net income during years 2020 through 2023, each as set forth in the table above. Description of Relationship Between PEO and Average NEO Compensation Actually Paid and AOI The following chart sets forth the relationship between CAP to our PEO, the average of CAP to our other NEOs, and the AOI during years 2020 through 2023, each as set forth in the table above. Description of Relationship Between Our TSR and Peer Group Index TSR The following chart compares our cumulative TSR over the period from 2020 through 2023 to that of the Peer Group Index over the same time period.

  75. 2023 Pay Versus Performance Tabular List

    2023 Pay Versus Performance Tabular List As required by Item 402(v) of Regulation S-K, we are providing the following information regarding the performance measures that we believe represent the most important financial performance measures used by us to link CAP to our NEOs for the fiscal year ended December 31, 2023. The measures in this table are not ranked.

  76. 2023 Pay Versus Performance Tabular List

    | Performance measure | Performance measure description | | AOI | Refer to the “Annual Cash Bonus Plan Formula and Funding” subsection of the “Executive Compensation” section for a definition of this measure. | | Relative TSR | Refer to the “Long-Term Incentive Compensation” subsection of the “Executive Compensation” section for a definition of this measure. | | Da Vinci and Ion procedure growth | Refer to the “Long-Term Incentive Compensation” subsection of the “Executive Compensation” section for a description of this measure. |

  77. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS The Board of Directors (the “Board”) has twelve authorized seats and, immediately following the 2025 Annual Meeting of Stockholders, the Board intends to reduce the size of the Board to eleven members. Craig H. Barratt, Ph.D., Joseph C. Beery, Lewis Chew, Gary S. Guthart, Ph.D., Amal M. Johnson, Sreelakshmi Kolli, Amy L. Ladd, M.D., Keith R. Leonard, Jr., 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 2025 Annual Meeting of Stockholders or until a successor has been duly elected and qualified. Refer to the “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.