DEF 14A of Align Technology Inc
Filed Apr 8, 2025 · FY20240001097149-25-000021
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| Pay Versus Performance | 91 | | AUDIT COMMITTEE | 97 | | Our Auditor | 98 | | Report of the Audit Committee | 99 | | SECURITY OWNERSHIP AND RELATED PARTY TRANSACTIONS | 100 | | Security Ownership of Certain Beneficial Owners and Management | 101 | | Certain Relationships and Related Party Transactions | 102 | | PROPOSALS | 103 | | Proposal 1: Election of Directors | 104 | | Proposal 2: Advisory Vote to Approve the Compensation of our Named Executive Officers | 105 | | Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm | 106 | | Proposal 4: Replacement of Supermajority Provisions in our Charter with a Simple Majority Vote | 107 | | Proposal 5: Approval of an Amendment to the Align Technology, Inc. 2005 Incentive Plan | 109 | | Equity Compensation Plan Information | 120 | | Proposal 6: Advisory Vote to Allow Stockholders Owning 25% of our Stock to Call a Special Meeting | 121 | | Proposal 7: Support for Shareholder Ability to Call for a Special Shareholder Meeting | 124 | | GENERAL INFORMATION | 127 | | VIRTUAL ANNUAL MEETING INFORMATION | 129 | | VOTING INFORMATION | 130 | | ADDITIONAL INFORMATION | 136 | | OTHER MATTERS | 137 | | Appendix A (Amended and Restated Certificate of Incorporation) | 138 | | Appendix B (Amendment to 2005 Incentive Plan) | 143 |
Directors
Directors Board Composition and Refreshment Director Nominees Summary of Director Experience, Skills and Attributes
Directors
| Directors |
Directors
Our Board consists of a unique and varied group of highly qualified leaders in their respective fields, all of whom have senior leadership experience at large domestic and multinational companies. In these positions, they have gained significant and extensive management experience, including strategic and financial planning, public company financial reporting, compliance, enterprise risk management, leadership development, technology and innovation, and consumer marketing and brand management. Our directors also have in-depth public company experience serving as executive officers, or on boards of directors and board committees, and have a robust understanding of corporate governance practices and trends. Our Board and Nominating and Governance Committee believes the skills, qualities, attributes, and experiences of our directors provide us with business acumen and a diverse range of perspectives to effectively address our evolving needs and represent the best interests of our stockholders.
Directors
| Board Composition and Refreshment | | Our Board considers its composition and refreshment annually and our Nominating and Governance Committee is tasked with managing succession planning and recruitment. Identifying Nominees Our Nominating and Governance Committee considers candidates for Board membership suggested by our Board, executive management and stockholders. The Committee also periodically retains third-party executive search firms to identify independent director candidates. In 2023, the Committee retained a third-party executive search firm to assist with the identification and evaluation of potential independent director candidates following the end of the terms of two Board members not standing for re-election at the 2023 Annual Meeting. In considering candidates for director nominees, the Committee generally assembles information regarding candidates’ backgrounds and qualifications. The Committee, in its discretion, may designate one or more of its members to interview any candidate. In addition, the Committee may seek input from executive management and other members of our Board, who may interview any candidate. The Committee recommends nominees on its assessment of the backgrounds, experiences and overall suitability to serve on our Board in accordance with our policy regarding nominations and qualifications of directors. Under our Guidelines, our Nominating and Governance Committee considers candidate recommendations from stockholders holding at least 1% of the total outstanding shares of our common stock continuously for at least 12 months prior to the date they submit a recommendation. The Committee will consider persons recommended by our stockholders in the same manner as nominees recommended by our Board, individual board members and executive management. A stockholder may also nominate a person directly for election to our Board at an annual meeting of our stockholders provided their proposal meets the requirements set forth in our Bylaws and the rules and regulations of the SEC related to stockholder proposals. Pursuant to our proxy access provisions, a stockholder (or a group of not more than 20 stockholders) holding at least 3% of our outstanding common stock continuously for at least three years is entitled to nominate and include in our proxy materials director nominees constituting up to the greater of two individuals or 20% of our Board, provided that the nominating stockholder(s) and the nominee(s) satisfy the requirements specified in our Bylaws, including providing us with advance notice of the nomination and other ownership requirements. The required notice must include the information and documents set forth in our Bylaws and, with respect to our 2026 annual meeting of stockholders, must be provided to the Corporate Secretary between November 9, 2025 and December 9, 2025 at the following address: Align Technology, Inc., 410 N. Scottsdale Rd., Suite 1300, Tempe, AZ 85288, Attn: Investor Relations or investorinfo@aligntech.com. Any notice of director nomination submitted to Align other than as described above must include the additional information required by Rule 14a-19(b) under the Exchange Act. The process for properly submitting a stockholder proposal, including a proposal to nominate a person for election to our Board at an annual meeting, is described below in the answer to the question, “Is there any information that I should know regarding future annual meetings?” |
Directors
| Board Skills & Qualifications | | | | | | | | Qualifications and Backgrounds Our Nominating and Governance Committee has the following minimum qualifications it believes should be met by a nominee for a position on our Board: •the highest personal and professional ethics and integrity; •proven achievement and competence in the nominee's field and the ability to exercise sound business judgment; •skills and experience that are complementary to those of the existing directors; •the ability to assist and support management and make significant contributions to our success; and •an understanding of the fiduciary responsibilities required of a member of our Board, including care, loyalty, and good faith along, with the commitment of time and energy necessary to diligently seek out, oversee and make decisions consistent with those responsibilities. Our Board seeks directors who represent a mix of backgrounds, skills, and experiences that will enhance the quality of deliberations and decisions. Moreover, our directors have diverse business and professional backgrounds, including experience in finance and accounting, venture capital, medical device, consumer products, technology, cybersecurity, brand management and international sales, marketing and operations. Such diversity considerations are discussed by our Nominating and Governance Committee in connection with the general qualifications of each potential nominee. | | 5 Directors Appointed Since 2017 | Diverse Skills and Backgrounds | | | | 4 Female Directors | | | | | Professional Integrity | | Strong Personal Ethics | | | Proven Achievement | | | | | | | Field Expertise | | | Sound Business Judgement | | | |
Directors
| 2024 | | | | | | | | | | | | | Board Refreshment In 2023, our Board added two new independent directors, and since 2017 it has added five new independent directors (50% of the Board), each of whom has brought valuable and diverse backgrounds and perspectives to our Board overall. Moreover, since 2021, three longer-tenured directors have rotated off the Board. As an innovative technology company in the highly regulated medical device industry, our directors bring considerable experience overseeing sales and marketing, operations, finance and accounting, research and development, legal, regulatory and compliance and corporate governance, all practices essential to our success. Our refreshment process reflects a balanced approach that allows us to benefit from our valued tenured members who know and understand our company, while also seeking new members with experiences that add future value. We are committed to maintaining a Board that blends a breadth of backgrounds with strategic expertise in varying fields and who offer perspectives in areas key to our mission, vision and strategic growth and expansion of our business into key domestic and international markets, including technology and innovation, cybersecurity, healthcare, life sciences, medical devices, e-commerce, consumer products, 3D printing and materials science, and manufacturing. | | 2023 | | | | | 2022 | Mojdeh Poul | Kevin T. Conroy | | | 2021 | | | | | 2020 | | | | | | | | | | 2019 | | | | | | Anne M. Myong | | | | | | | | | 2018 | | | | | | Kevin J. Dallas | | | | | | | | | 2017 | | | | | 2016 | Susan E. Siegel | | | | | | | | | 2015 | | | | | 2014 | Joseph M. Hogan | | | | | | | | | 2013 | | | | | | Andrea L. Saia | | | | Pre-2010 | | | | | | C. Raymond Larkin, Jr. | George J. Morrow | Joseph Lacob |
Directors
| Director Nominees | | | | Kevin T. Conroy Age: 59 Director Since: 2023 Roles: Independent Director; Committees: Compensation and Human Capital Committee | | | | | Experience: | | | | 2009 - Present | CEO and Chairman of the Board (2014), Exact Sciences Corp. (molecular diagnostics company) | | | 2005 - 2008 | President and CEO, Third Wave Technologies, Inc. (molecular diagnostics company) | | | 2004 - 2005 | General Counsel, Third Wave Technologies, Inc. (molecular diagnostics company) | | | Prior | Various Leadership Positions at GE Healthcare (medical technology company) | | | Other Board Positions Exact Sciences Corp. (2014-present) LetsGetChecked Inc. (2024) Adaptive Biotechnologies Corporation (2019-2023) Epizyme, Inc. (2017-2022) CM Life Sciences II Inc. (2021) SomaLogic, Inc. (2021) Arya Sciences Acquisition Corp. (2018-2020) Notable Experience and Key Board Contributions •Mr. Conroy has extensive experience creating stockholder value as a business, legal, corporate strategy, and executive leader and has significant experience in the healthcare and the molecular diagnostics industries. •At Exact Sciences, Mr. Conroy has developed Cologuard and the company has grown to $2.76B in revenue while serving 4.5 million patients. •At Third Wave, Mr. Conroy developed and brought a novel cervical cancer screening test, Cervista, to patients. Education B.S. in Electrical Engineering from Michigan State University J.D. from the University of Michigan Law School | |
Directors
| Kevin J. Dallas Age: 61 Director Since: 2018 Roles: Independent Director; Chair of Technology Committee Committees: Technology Committee; Audit Committee | | | | | Experience: | | | | 2023 - Present | CEO, EnterpriseDB Corporation (software company) | | | 2020 - 2022 | CEO, Wind River Systems, Inc. (software company) | | | 1996 - 2020 | Corporate Vice President, Cloud & AI Business Development, Microsoft (software company) | | | Prior | Various Positions, NVIDIA Corporation and National Semiconductor, now Texas Instruments Inc. (technology company) | | | Notable Experience and Key Board Contributions •Mr. Dallas brings more than 25 years of experience driving digital innovation and growth at technology companies and expertise in the digital transformation of customers and partners. •At Microsoft, Mr. Dallas enabled the digital transformation of customers and partners across a range of industries including: connected/autonomous vehicles, industrial IoT, discrete manufacturing, retail, financial services, media and entertainment, and healthcare. •Mr. Dallas has deep expertise in cybersecurity, artificial intelligence, machine learning and information technology. Education B.S.c. in Electrical and Electronic Engineering from Staffordshire University | |
Directors
| Joseph M. Hogan Age: 67 Director Since: 2015 Roles: Director, President and CEO of Align Technology, Inc. | | | | | Experience: | | | | 2015 - Present | President and CEO, Align Technology Inc. (dental technology company) | | | Prior | CEO, ABB (technology company) Various Positions including CEO of GE Healthcare, General Electric (a medical technology company) | | | Other Board Positions Supervisory Board of avateramedical N.V. (2019-2021) Notable Experience and Key Board Contributions •At Align, Mr. Hogan has overseen significant financial and operating performance. •Mr. Hogan is a proven leader serving as an integral connection between our board of directors and management. He brings to Align significant leadership experience from large public companies, with strategic business, market development and sales acumen, and expertise in strategic and operational aspects of complex, international organizations. •During his five years at ABB, Mr. Hogan oversaw a 25% increase in revenues. •As CEO of GE Healthcare, Mr. Hogan drove significant geographic and market portfolio expansion and more than doubled revenues from $7 billion to $16 billion. Education B.S. in Business and Economics from Geneva College M.B.A. from Robert Morris University | |
Directors
| Joseph Lacob Age: 69 Director Since: 1997 Roles: Independent Director; Chair of Nominating and Governance Committee Committees: Nominating and Governance Committee; Technology Committee | | | | | Experience: | | | | 2010 - Present | Governor, Co-Executive Chairman and CEO, Golden State Warriors (basketball team) and Golden State WNBA (basketball team) | | | 1987 - 2010 | Partner, Kleiner Perkins Caufield & Byers (venture capital firm) | | | Prior | Various Positions, Cetus Corporation, now Chiron Corporation (biotechnology company) Various Positions, FHP International (health maintenance organization) Various Positions, Booz, Allen & Hamilton (consulting firm) | | | Other Board Positions Golden State Warriors (2010-present) NeuroPace, Inc. (1997-present) Orexigen Therapeutics, Inc. (2004-2012) Notable Experience and Key Board Contributions •Mr. Lacob brings expertise in evaluating and developing strategic opportunities, specifically in the technology, healthcare and life sciences industries. •Mr. Lacob also has significant consumer marketing, financial, strategic investment and mergers and acquisition experience. •Mr. Lacob was closely involved with KPCB’s investments in more than 50 life science companies, including the startup or incubation of a dozen ventures, and with KPCB’s medical technology practice, which includes more than 30 therapeutic and diagnostic medical device companies. Education B.S. in Biological Sciences from the University of California at Irvine Masters in Public Health from the University of California at Los Angeles M.B.A. from Stanford University | |
Directors
| C. Raymond Larkin, Jr. Age: 76 Director Since: 2004 Roles: Independent Director; Chairman of the Board Committees: Nominating and Governance Committee | | | | | Experience: | | | | 1999 - 2010 | Principal, Group Outcome L.L.C. (merchant banking) | | | 2003 - 2007 | CEO, Eunoe, Inc. (medical device company) | | | Prior | Venture Partner, Cutlass Capital (venture capital firm) President and CEO, Nellcor Puritan Bennett, Inc. (respiratory products companies) | | | Other Board Positions Shockwave Medical, Inc., Chair (2019-2024) Neuropace (2008-2019) Heartware, Inc., Chair (2008-2018) Reva Medical, Inc., Chair (2008-2018) Notable Experience and Key Board Contributions •Mr. Larkin brings significant leadership experience at large public companies, a deep knowledge and authority in the medical device and healthcare fields, extensive public and private company board experience, and strong strategic business development and tactical implementation skills. •Mr. Larkin has unique experience with the growth and maturation of a medical device company. He grew Nellcor to nearly $1 billion in revenues through the development and introduction of pulse oximetry into worldwide use for patient safety monitoring, setting the standard of care for the respiratory-impaired patient. •Mr. Larkin served in the United States Marine Corps, rising to the level of Captain. Education B.S. in Industrial Management from LaSalle University | |
Directors
| George J. Morrow Age: 73 Director Since: 2006 Roles: Independent Director; Chair of Compensation and Human Capital Committee Committees: Nominating and Governance Committee; Compensation and Human Capital Committee | | | | | Experience: | | | | 2003 - 2011 | Executive Vice President, Global Commercial Operations, Amgen Inc. (biotechnology company) | | | 2001 - 2003 | Executive Vice President of Worldwide Sales and Marketing, Amgen Inc. (biotechnology company) | | | Prior | Various Positions including President and Chief Executive Officer of Glaxo Wellcome Inc., GlaxoSmithKline Inc. (biopharma company) | | | Other Board Positions Neurocrine Biosciences, Inc. (2015-present) Vical, Inc. (2012-2019) Otonomy, Inc. (2015-2018) Human Genome Sciences, Inc. Glaxo Wellcome, Inc. Safeway, Inc. National Commerce Bank Notable Experience and Key Board Contributions •Mr. Morrow brings significant leadership experience in sales, marketing and operational global ownership, a valuable understanding of medical device regulatory and compliance, financial, and corporate governance, and expertise in growth driven sales compensation strategies and risk mitigation controls. •As Executive Vice President of Amgen, Mr. Morrow oversaw all commercial functions for Amgen's broad spectrum of products in more than 50 countries. Education B.S. in Chemistry from Southampton College, Long Island University M.B.A. from Duke University M.S. in Biochemistry from Bryn Mawr College | |
Directors
| Anne M. Myong Age: 57 Director Since: 2019 Roles: Independent Director; Chair of Audit Committee Committees: Audit Committee; Compensation and Human Capital Committee | | | | | Experience: | | | | 2021 - 2023 | President, Amyris, Inc. (biotechnology company) | | | 2020 - 2021 | Chief Executive Officer and Chief Financial Officer, Aura Financial (financial services company) | | | 2014 - 2017 | Senior Vice President and Chief Financial Officer, Walmart Global eCommerce (eCommerce segment of retail corporation) | | | 2011 - 2014 | Senior Vice President, Chief Financial and Administrative Officer, Walmart China Retail (retail corporation) | | | Prior | Vice President and Chief Financial Officer, Agilent Technologies China (life science software and supplies company) | | | Other Board Positions Goodwill Industries International, Inc. (2016-2022) Notable Experience and Key Board Contributions •Ms. Myong brings extensive experience in global operations, finance and accounting with a unique knowledge of international markets, a deep understanding of financial reporting and organizational risks, controls and monitoring, and expertise in consumer products, omnichannel retailing, digital marketing, and scaling industry-transforming innovations. •As Senior Vice President and Chief Financial Officer of Walmart Global eCommerce, Ms. Myong accelerated the growth, profitability, and digital transformation of Walmart’s retail and e-commerce operations in the United States, China, and Brazil. Education B.B.A. in Computer Information Systems from James Madison University M.B.A. from Harvard Business School | |
Directors
| Mojdeh Poul Age: 62 Director Since: 2023 Roles: Independent Director Committees: Audit Committee | | | | | Experience: | | | | 2025 - Present | Director, President and Chief Executive Officer, Integra LifeSciences Holdings Corporation (global medical technology company) | | | 2019 - 2022 | Executive Vice President and Group President, 3M Healthcare Business Group (global healthcare products company) | | | 2011 - 2018 | Various Global Executive Leadership Positions, 3M Healthcare Business Group (global healthcare solutions company) and 3M (diversified global company) | | | 2005 - 2011 | Various Global Business Leadership Positions, Medtronic (global medical technology company) | | | Prior | Various Marketing Leadership Positions, ev3 (medical device company) Various Global Marketing Leadership Positions, Boston Scientific (global medical technology company) Various Management Positions, Teleflex Medical (global medical device company) Various Engineering Positions, GE Plastics (global engineering plastics company) | | | Other Board Positions Integra LifeSciences Holdings Corporation (2025-Present) iRhythm Technologies (2023-2025)1 CeramTec Advisory Committee (2022-Present) Stanley Black and Decker (2021-2025)2 Notable Experience and Key Board Contributions •Ms. Poul has 30 years of experience in various segments of the healthcare industry. She has a proven track record of delivering business growth and performance though portfolio transformation, value-creating innovation, and impactful capital allocation. •Ms. Poul has deep expertise in corporate strategy, mergers and acquisitions, global profit and loss and operations management, and commercial excellence. Education M.B.A. from the University of North Carolina, Chapel Hill Masters in Mechanical Engineering from the University of Louisville B.S. in Mechanical Engineering from the University of Louisville (1) Ms. Poul will not stand for re-election as a director of iRhythm at their 2025 annual meeting of shareholders. (2) Ms. Poul will not stand for re-election as a director of Stanley Black and Decker at their 2025 annual meeting of shareholders. | |
Directors
| Andrea L. Saia Age: 67 Director Since: 2013 Roles: Independent Director Committees: Compensation and Human Capital Committee; Audit Committee; Technology Committee | | | | | Experience: | | | | 2011 - 2012 | Global Head of Alcon Vision Care, Novartis AG (pharmaceutical company) | | | 2008 - 2011 | President and CEO, CibaVision Corporation, (contact lens company) | | | 2002 - 2008 | Various Positions including President of Europe, Middle East, and Africa, President of the Global Lens Business and Global Head of Marketing, CibaVision Corporation (contact lens company) | | | Prior | Various Positions, Unilever (consumer goods company) Various Positions, Procter & Gamble (consumer goods company) Various Positions, Revlon (beauty supply company) | | | Other Board Positions Outset Medical, Inc. (2021-present) LivaNova PLC (2016-2023) Coca-Cola Enterprises, Inc. (2012-2016) Notable Experience and Key Board Contributions •Ms. Saia brings 40 years of global experience within the healthcare, medical device and consumer products industries and expertise in global sales and marketing and strategic business development. •Ms. Saia has worked with technologically driven companies dedicated to developing new solutions that significantly improve the health and well-being of consumers. Education B.S. in Business Administration from Miami University M.B.A. from Northwestern University | |
Directors
| Susan E. Siegel Age: 64 Director since: 2017 Roles: Independent Director Committees: Nominating and Governance Committee, Technology Committee | | | | | Experience: 2017 - 2019 2012 - 2017 Prior | Chief Innovation Officer, GE (conglomerate company) CEO, GE Ventures and Licensing (conglomerate company) General Partner, Mohr Davidow Ventures (multidisciplinary investment firm; Ms. Siegel focused investments in personalized medicine, life sciences and digital health) Director and President, Affymetrix (genomics company) | | | 2017 - 2019 | Chief Innovation Officer, GE (conglomerate company) | | | 2012 - 2017 | CEO, GE Ventures and Licensing (conglomerate company) | | | Prior | General Partner, Mohr Davidow Ventures (multidisciplinary investment firm; Ms. Siegel focused investments in personalized medicine, life sciences and digital health) Director and President, Affymetrix (genomics company) | | | Other Board Positions Illumina, Inc. (2019-present) Nevro Corporation (2020-present) The Engine (2016- 2020), Chair (2020-present) KFF (formerly Kaiser Family Foundation) (2019-present) National Venture Capital Association (2012-2016) Pacific Biosciences, Inc. (2006-2013) Tech Interactive (2003-2007) Affymetrix (2000-2006) Notable Experience and Key Board Contributions •Ms. Siegel brings extensive experience in identifying, funding, pioneering, and implementing industry-shifting innovations in the life sciences, biomedical research, and healthcare industries. •Ms. Siegel led Affymetrix, one of the fastest growing genomics companies of its time. She led it from a pre-revenue startup to a multi-billion dollar publicly listed company that helped shape the emerging genomics industry, including addressing the bioethical issues of its day. •Ms. Siegel has been recognized in Fortune’s “34 Leaders Who Are Changing Health Care,” as one of “The 100 Most Influential Women in Silicon Valley,” “Fierce Biotech’s Top 10 Women in Medical Devices,” and was awarded the “Lifetime Achievement Award” by Global Corporate Venture in 2020. She is an Aspen Institute Henry Crown Fellow and is a featured “Multiplier” in the bestselling book: “Multipliers: How the Best Leaders Make Everyone Smarter.” Education B.S. in Biology from the University of Puerto Rico M.S. in Biochemistry and Molecular Biology from Boston University Medical School | |
Directors
| Summary of Director Experience, Skills and Attributes |
Directors
Our Board members have a balanced mix of skills, qualifications and experience and we believe their different backgrounds contribute to an effective and well-balanced Board. Listed below is a summary of the skills and attributes of the existing members of our Board.
Directors
| Skills and Experience | Description | | Finance | An understanding of accounting, financial reporting and financial markets, and effective oversight of our financial resources, risks and processes, which generates valuable advice and insights with respect to establishing a successful capital strategy critical to our success. | | Health Care Industry | An understanding of the health care industry and markets as we continue transforming oral health standards of care and the practice of dentistry with doctors and lab technicians by providing digital solutions that increase operational speed and efficiency and provide solutions that allow them to deliver exceptional treatment outcomes and experiences to millions of people around the world. | | Medical Device | Global experience and expertise in medical device companies and markets, including sales, marketing, healthcare, healthcare coverage and reimbursement, operations, and regulatory requirements. | | Technology and Innovation | Experience innovating across digital platforms and transforming markets to drive digital innovations. | | Global Company | International or global markets experience bring valuable knowledge and perspective of global industry dynamics to our international operations. | | Enterprise Risk Management | Supervisory experience involving global operational risk assessment, mitigation and management covering digital and manufacturing operations beyond financial and accounting risk, that also encompasses supply chain and other related risk management. | | Consumer Marketing/Brand Management | Experience effectively engaging doctor customers and consumers to promote medical devices, industry transformation or otherwise create a world class brand and experience. | | Business Strategy and Operations | Practical understanding of developing, implementing, and assessing large scale operating plans and business strategies. | | Cybersecurity/IT/AI | A history of technological innovation, cybersecurity and data security awareness, and artificial intelligence knowledge critical to achieving strategic objectives while maintaining the security of customers’ and companies’ information and data. | | 3D Printing and Materials Science | Experience with 3D printing and materials science properties and how each relate to strategic principles of engineering and manufacturing. | | Mass Manufacturing | Knowledge of mass-customized treatment planning and manufacturing processes, including related risks and opportunities. | | Dentistry/Orthodontics | An understanding of dentistry and orthodontics. | | Sustainability and Corporate Governance | An understanding of operations predictability, resiliency and risk mitigation along with corporate governance experience gained from service on company boards that provides insight into the dynamics and operations of public company boards and the impact that governance and compensation decisions have on employees and stockholders. |
Director Compensation
Director Compensation Cash Compensation Equity Compensation Total Compensation
Director Compensation
| Director Compensation |
Director Compensation
Our director compensation program is designed both to attract and fairly compensate highly qualified, non-employee directors to represent and act in the best interests of our stockholders, employees, and the communities we serve. For the purpose of determining non-employee director compensation for 2024, our Compensation and Human Capital Committee engaged Compensia, an independent third-party consulting firm that specializes in analyzing compensation practices and trends, to evaluate the competitiveness of our program. As part of its analysis for 2024, our Compensation and Human Capital Committee considered the following: •the corporate governance environment as well as recent trends and developments relating to director compensation; •amounts payable under, and the various components of, our director compensation program; and •the aggregate director compensation cost, in comparison to boards of directors of the same group of peer companies used in determining executive management compensation(1). Following its review, our Compensation and Human Capital Committee determined that our non-employee director compensation practices continued to be, in aggregate, generally aligned with market norms and emerging best practices and, as such, no changes were necessary for our 2024 non-employee director compensation program. (1) For further details on our peer group, see the discussion of our “How We Determine Compensation” in the Compensation Discussion and Analysis section below).
Director Compensation
| Cash Compensation |
Director Compensation
Our 2024 non-employee directors cash compensation program was as follows and paid in quarterly installments:
Director Compensation
| Description | Current Fee | | Annual Retainer for Board membership (1) | $50,000 | | Annual Retainer for membership on our Compensation and Human Capital Committee and our Audit Committee(2) | $13,500 | | Annual Retainer for Chairs of our Compensation and Human Capital Committee and our Audit Committee | $27,000 | | Annual Retainer for membership on our Nominating and Governance Committee and our Technology Committee(2) | $5,000 | | Annual Retainer for the Chairs of our Nominating and Governance Committee and our Technology Committee | $15,000 | | Annual Retainer for the Chair of our Board (1) | $100,000 |
Director Compensation
(1)The Chair of our Board is only compensated in the form of an Annual Retainer for the Chair of our Board. (2)The Chairs of each of our committees and the Chair of our Board are not additionally compensated as members of any committee.
Director Compensation
| Equity Compensation |
Director Compensation
In March 2024, our Compensation and Human Capital Committee approved an annual equity grant of RSUs to our non-employee directors (other than the Chair of our Board, Mr. Larkin) having a long-term incentive value equivalent to $300,000. For Mr. Larkin's additional responsibilities as Chair of our Board, the Committee approved an annual RSU grant of $400,000. The actual number of shares under the RSU awards was calculated using the closing price of our common stock on the date of our 2024 annual meeting of stockholders. Accordingly, on May 22, 2024, each non-employee director other than Mr. Larkin was granted 1,148 RSUs and Mr. Larkin was granted 1,531 RSUs based on the closing per share price of our common stock on that date of $261.12. Each of these RSU awards vests 100% upon the earlier of (i) the one-year anniversary of the grant date or (ii) the date of the next annual meeting of stockholders following the grant date, subject to the continued service on the non-employee director through such date. Assuming the continued service of each non-employee director, each of these equity awards are expected to fully vest on May 21, 2025.
Director Compensation
| Total Compensation |
Director Compensation
The table below summarizes the compensation paid to our non-employee directors for the year ended December 31, 2024. The compensation of our President and CEO, Mr. Hogan, is shown in the Summary Compensation Table of this proxy statement.
Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Kevin T. Conroy | 61,250 | 299,766 | 361,016 | | Kevin J. Dallas | 76,833 | 299,766 | 376,599 | | Joseph Lacob | 69,167 | 299,766 | 368,933 | | C. Raymond Larkin, Jr. | 100,000 | 399,775 | 499,775 | | George J. Morrow | 82,000 | 299,766 | 381,766 | | Anne M. Myong | 90,500 | 299,766 | 390,266 | | Mojdeh Poul | 61,250 | 299,766 | 361,016 | | Andrea L. Saia | 82,000 | 299,766 | 381,766 | | Susan E. Siegel | 60,000 | 299,766 | 359,766 |
Director Compensation
(1)The amounts reflect the aggregate grant date fair value of RSU awards computed in accordance with FASB ASC Topic 718. There is no assurance the grant date fair value amounts will be realized. The RSUs are time-based awards not subject to performance or market conditions. The aggregate number of shares underlying the stock awards granted to each non-employee director during the fiscal year ended December 31, 2024, were as follows:
Director Compensation
| Name | Stock Awards | | Kevin T. Conroy | 1,148 | | Kevin J. Dallas | 1,148 | | Joseph Lacob | 1,148 | | C. Raymond Larkin, Jr. | 1,531 | | George J. Morrow | 1,148 | | Anne M. Myong | 1,148 | | Mojdeh Poul | 1,148 | | Andrea L. Saia | 1,148 | | Susan E. Siegel | 1,148 |
Executive Compensation — Compensation Discussion And Analysis
Executive Compensation — Compensation Discussion And Analysis Named Executive Officers Executive Summary Our Executive Compensation Program How We Implement and Manage Our Executive Compensation Program Principal Elements of Executive Compensation Severance and Change of Control Arrangements 2024 Stockholder Say-on-Pay Vote Results Compensation and Human Capital Committee Report
Key Executive Compensation Design Changes and Results
| 2024 Executive Compensation Design | Our Compensation and Human Capital Committee believes the rigorous objectives underpinning our performance-based programs incentivized positive operational and financial performance and value creation for our stockholders. In fiscal year 2024, we: | | | | | _ | decreased our CEO’s target TDC by $0.9 million compared to 2023 | | | | _ | maintained our incentive mix, which includes a predominance of at-risk target TDC and a clear emphasis on long-term MSUs, which pay out based on relative stock performance | | | 2024 Executive Compensation Results | Our financial performance improved in 2024 relative to 2023, resulting in near target attainment in our cash bonus plan and below target attainment under our most recently completed long-term incentive performance period | | | | | Cash Bonus (98% of Target) | | The cash bonus portion of our 2024 executive compensation plan paid out at 98% of target. Specifically, our net revenue results, which account for 60% of the plan, exceeded 2023 actual results but were slightly below our target attainment range and our adjusted operating income results, which account for 40% of the plan, were earned at target | | | MSUs (72.4% of Target) | | MSUs for our CEO and our other NEOs awarded in February 2022 vested at 72.4% of target due to our stock underperformance relative to the Nasdaq Composite Index over the three-year period ending February 2025 | | | Reported Compensation (6% decline) | | Our CEO’s reported pay declined in 2024 from $28.95 million in 2023 to $27.32 million in 2024 | | 2025 Executive Compensation Preview | In 2025, to better align with stockholder expectations, we again reduced our CEO’s long-term incentive grant target value by $1 million, for a total reduction in CEO target compensation of $2 million or approximately 15% over the two-year period Our 2025 cash-based Bonus Plan will only pay out to the degree 2025 revenue or operating income exceed the attainments under the 2024 Bonus Plan | | |
Target Pay Versus Reported Value
Target Pay Versus Reported Value The target value of the MSUs and RSUs granted to our CEO in 2024 was $12.5 million. However, the value reported in the Summary Compensation Table is $23.8 million, due primarily to a 190% premium placed on the value of our TSR-linked equity awards as assessed under the applicable accounting and SEC rules. This value premium is largely the result of a large run-up in our stock price immediately pre-grant which correspondingly inflated the reported value of equity granted to all NEOs. Notwithstanding this reported value, our MSUs, which make up the vast majority of the 2024 long-term incentive for our NEOs, vest only after positive performance over three years. As a result, realizable pay is dependent on generating positive stockholder outcomes over three years and is not tied to the point-in-time value assessed by applicable accounting rules. As shown in the following section, realizable TDC has averaged 48% of reported TDC over the past three years, and 3-year cumulative realizable TDC has been 49% of 3-year cumulative reported TDC.
Realizable Pay
Realizable Pay Realizable pay reflects a closer approximation for the market value of equity awards to the executive as of year-end, which value increases or decreases with fluctuations in market value. We believe it is important to consider the effect of the year-end value of our stock on those awards over time in addition to the grant date fair values included in the Summary Compensation Table. Considering approximately 80% of our CEO’s and 68% of our other NEOs’ target TDC for 2024 was equity-based, we consider realizable pay an essential component of evaluating the effectiveness of our pay for performance philosophy. As shown below, for 2024, our CEO’s cumulative 3-year realizable TDC was 77% of his cumulative 3-year target TDC and 49% of his cumulative 3-year reported TDC, which is heavily driven by the reported grant date values of our equity-based long-term incentives. Further, as shown below, in the comparisons of target pay, realizable pay, and our TSR, positive real pay delivery for our executives is heavily dependent on the creation of stockholder value. Just as positive returns and the generation of stockholder value can increase pay above target, depressions in stock price can drive realizable TDC below target. Our Compensation and Human Capital Committee believes that this correlation between real pay delivery and stock price, visible in the following charts, demonstrates that our equity compensation programs are working as intended, providing meaningful incentives for our executive officers to drive strong stockholder returns relative to our peer group over the long-term.
CEO Realizable TDC vs. Target TDC and Reported TDC
(1) Target TDC: Target TDC is the sum of our CEO’s base salary as disclosed in the Compensation Discussion and Analysis sections of this and prior proxy statements, the target annual incentive amount (which is the target bonus percentage multiplied by the respective base salary) and the target value of the CEO’s long-term incentive awards (which is the amount used to determine the number of shares underlying such awards). No other amounts are included. (2) Realizable TDC: Realizable TDC is the sum of our CEO’s actual earned base salary, non-equity incentive plan compensation, equity award values of RSUs and performance shares granted (calculated for performance shares as described in the following sentence) The Realizable TDC for 2022 and 2023 are the amounts that were provided in our 2024 proxy statement, as amended, that was filed on April 16, 2024. The 2024 equity award values for performance shares are based on target amounts under the relative TSR Goal multiplied by the closing stock price per share on the last day of fiscal year 2024 of $208.51. (3) Indexed TSR: Indexed TSR is calculated by taking the stock price per share on the last day of fiscal years 2022 to 2024 of $210.90, $274.00, and $208.51, respectively, and dividing each by the stock price per share on the last day of fiscal year 2021 of $657.18. (4) Represents the total compensation figures reported in the Summary Compensation Table with respect to each year. As described in the Target Pay and Reported Value section, above, these figures are heavily impacted by the reportable valuation of our TSR-linked awards, which is often more than the price of our stock on the date of grant.
Executive Compensation Philosophy and Core Objectives
| Offer competitive compensation | We seek to provide competitive compensation opportunities to attract, retain and incentivize superior talent | | Reward performance | A significant portion of the target total direct compensation of our NEOs is tied to the achievement of financial and strategic objectives, directly linking rewards to achievement of measurable results | | Link the interests of executive management with our stockholders | A significant portion of the target total direct compensation of our NEOs is in the form of long-term equity-based compensation. This structure is designed to focus decision-making and behavior on goals consistent with our overall strategy over a period of years | | Solely Independent Directors | Our Compensation and Human Capital Committee is composed solely of independent directors, and retains an independent compensation consultant | | Annual Say-on-Pay Votes | We submit annual proposals on the compensation of our NEOs (“say-on-pay”) to stockholders for advisory votes, with approximately 84% of votes cast in favor of our compensation plan in 2024. Our Compensation and Human Capital Committee considers the outcome of the vote each year in making future compensation decisions | | Stock Ownership Guidelines(1) | We maintain meaningful stock ownership guidelines for executive management and non-employee directors as a matter of good corporate governance and to demonstrate that the interests of executive management and non-employee directors are consistent with those of our stockholders. In 2024, our CEO was subject to a stock ownership guideline equal to 6x his annual base salary. He has purchased approximately $7 million of our common stock with his personal funds since his last sale in 2021.(2) Each member of executive management other than our CEO was subject to a stock ownership guideline in 2024 equal to 3x their annual base salary | | No “single-trigger” on Cash or Equity Compensation | All of our post-employment cash compensation arrangements in the event of a change in control of the Company are "double-trigger" arrangements requiring both a change in control and a qualifying termination of employment before any cash payments are made. In addition, the employment agreements entered into by our CEO and CFO, as well as others who join or are promoted to an executive management role after September 2016, provide that such individuals will only receive accelerated vesting of their outstanding and unvested equity awards if they are terminated without cause or for convenience within 18 months of a change of control (double trigger) | | Annual Compensation-Related Risk Assessment | Our compensation policies are structured to discourage inappropriate risk-taking. There are no guarantees that bonuses will be paid or paid in the amounts anticipated under our annual cash bonus incentive program (none were paid in 2022, the payouts in 2023 and 2024 were 66% and 98% of target, respectively) and we cap the maximum bonus awards in part to discourage excessive risk-taking. The Compensation Risk Assessment located below in this proxy statement describes our Compensation and Human Capital Committee’s assessment that the risks arising from our company-wide compensation programs are reasonable, in the best interest of our stockholders, and unlikely to have a material adverse effect on us | | No Hedging or Pledging of Our Stock | Employees (including officers) and directors may not directly or indirectly engage in transactions intended to hedge or offset the market value of our common stock they own. In addition, our Insider Trading Policy prohibits employees (including officers) and directors from directly or indirectly pledging our common stock as collateral for any obligation |
Executive Compensation Philosophy and Core Objectives
| Careful Management of Equity Burn Rates | We are committed to carefully managing the dilutive impact of equity compensation awards. Management and the Compensation and Human Capital Committee regularly evaluate share utilization levels by reviewing the dilutive impact of stock compensation. For 2024, our overall equity-award-based gross burn rate for our 2005 Incentive Plan was 1.0%. Gross burn rate is defined as the number of equity awards granted in the year divided by shares outstanding. While we no longer issue stock options and do not have any vested or unvested stock options outstanding, if we were to do so, we have pledged to not reprice, buyout or exchange underwater stock options and there is no liberal counting or recycling of shares. We believe this gross burn rate reflects our judicious and responsible approach to equity grant practices. Despite our stock repurchases during this period, our gross burn rate percentage is significantly below the benchmark published by a leading proxy advisory service for our index classification. We believe that our stock repurchase program has mitigated dilution attributable to our compensation program while modestly raising our burn rate percentage. In particular, over the course of fiscal 2022, 2023 and 2024, we have repurchased approximately 5,750,826 shares of our common stock | | Insider Trading Arrangements and Policies | We have adopted an Insider Trading Policy governing the purchase, sale and other dispositions of our securities by our directors, officers, employees, consultants, contractors and our agents that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations and Nasdaq listing standards. In addition, it is our policy that any trades by us will comply with applicable law, including laws with respect to insider trading | | Clawback Policy | We have a clawback policy that provides for the recoupment of executive compensation in certain circumstances as required by the SEC’s rules that implement the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and corresponding Nasdaq listing standards | | Regular Stockholder Outreach | We have an extensive and continuous stockholder outreach program through which we regularly connect members of our Board, executive management and other senior leaders with our stockholders for input and suggestions on a wide variety of topics, including our pay practices and governance. See section entitled “Stockholder Outreach and Engagement” for more information | | Policies and Practices Related to the Grant of Certain Equity Awards | We do not grant stock options, stock appreciation rights, or similar option-like instruments and, as such, do not have any policy or practice in place on the timing of awards of options, stock appreciation rights, or similar option-like instruments in relation to the disclosure of material nonpublic information |
Compensation Program Evaluation and Risk Management
| Responsible Party | Roles and Responsibilities | | Compensation and Human Capital Committee | Sets our overall compensation philosophy, which our Board reviews and approves | | | Reviews and approves our compensation programs; designs and monitors the execution of these programs | | | Reviews and approves all forms of compensation for executive management (other than our CEO) | | | Reviews and recommends to our Board all forms of compensation for our CEO | | | No member of the Committee is a former or current officer of Align or any of our subsidiaries. No member of executive management serves as a member of the board of directors or the compensation committee of any entity that has any members of executive management serving on our Board or the Committee | | | The Committee may delegate such portions of its authority as the Committee may deem appropriate, to one or more members of the Committee to the extent permitted by applicable law, our bylaws and any applicable resolutions of our Board | | Consultant to the Compensation and Human Capital Committee (Compensia, Inc., an independent executive compensation consulting firm retained directly by the Compensation and Human Capital Committee to assist it in performing its responsibilities) | Compensia attends meetings of our Compensation and Human Capital Committee and communicates outside of meetings with its members and management with respect to the design and assessment of compensation packages for executive management. In 2024, Compensia provided the services below for, or at the request of, the Committee, according to the instructions provided by the Committee: •Analyzed whether the elements of compensation and target TDC of executive management were consistent with our compensation philosophy and the competitive market (as defined by our compensation peer group companies); •Assisted in defining the appropriate peer group of comparable companies; •Assisted in the design of our incentive compensation programs for executive management and compensation arrangements for Board members, including discussing evolving compensation trends; •Provided advice on stock ownership guidelines for executive management and non-employee directors; •Compiled and provided competitive market data to assist in our compensation philosophy, establishment of plan parameters and selection of corporate performance measures; •Conducted a comprehensive review of Board compensation and provided recommendations to the Committee and Board regarding non-employee director pay structure; •Provided updates on Nasdaq listing standards, say-on-pay results, and regulatory developments; and, •Assisted with the strategy for developing disclosure in support of our say-on-pay proposal. In addition, the Committee conducted a formal review of Compensia’s independence and is satisfied with the qualifications, performance and independence of Compensia. Compensia performed no other work for us |
Competitive Positioning
Competitive Positioning Our Compensation and Human Capital Committee takes into consideration the unique roles played by each member of executive management and seeks to individually tailor their compensation to align their pay based on various factors, including: •market compensation data (peer group data and survey data); •the scope of the individual's role; •the individual's experience, qualifications, skills, and performance during the fiscal year (see discussion below under “Role of Individual Performance”); •internal equity; and •our operational and financial performance. After reviewing these various competitive positioning factors (none of which is determinative or weighted in any predetermined manner), the Committee relies upon the judgment of its members to make appropriate adjustments and recommendations to the compensation of executive management to meet our corporate objectives.
The Use of Market Comparison Data
The Use of Market Comparison Data In connection with our Compensation and Human Capital Committee’s continuing assessment of the competitiveness of executive management’s pay levels and practices relative to its peers, the Committee considers compensation data gathered from: (i) a selected peer group of companies, and (ii) published surveys with data from a broader mix of technology and life science companies. Peer Group. Our Compensation and Human Capital Committee reviews our peer group at least annually and makes adjustments to its composition, taking into account changes in both our business and the businesses of the companies in the peer group. For compensation decisions applicable to 2024, the Committee, with the assistance of Compensia, reviewed and approved a peer group chosen based on the following selection criteria: •Industry - medical device companies and technology companies, which are the industries which we primarily recruit from and compete with for executive talent; •Market Capitalization - companies with a market capitalization between approximately $6.3 billion and $100.9 billion based upon the companies’ trading ranges at the time of selection which approximated 0.25 to 4.0 times our market capitalization at that time; and •Revenue - companies with revenue between approximately $1.2 billion to $11.1 billion based upon the last four quarters of revenue at the time of selection which approximated 0.3 to 3.0 times our rolling four quarters of revenues at that time. As a result of its review of the foregoing criteria, the Committee elected to make no changes to the peer group for 2024. At the time of the Committee's assessment of potential peers performed in the second quarter of 2023, we compared to the 2024 peer group as follows:
The Use of Market Comparison Data
| | Revenue ($B) | Market Capitalization ($B) | Market Capitalization as a Multiple of Revenue | | Peer Group 50th Percentile | $3.9 | $21.3 | 5.4 | | Align | $3.7 | $25.2 | 6.8 | | Percentile Rank | 45th | 56th | 60th |
The Use of Market Comparison Data
Based on its analysis and review of our existing peer group relative to the foregoing criteria and on the recommendation of our independent compensation consultant, our Compensation and Human Capital Committee elected to make no changes to the peer group. As a result, the Compensation and Human Capital Committee determined that the following peer group continued to constitute an appropriate comparative reference for determining executive management compensation for 2024:
The Use of Market Comparison Data
| Performance Peers | | | | | | Agilent Technologies | IDEXX Laboratories | Revvity | | | Avantor | Illumina | STERIS | | | Bio-Rad Laboratories | Insulet | Teleflex | | | Dentsply Sirona | Intuitive Surgical | The Cooper Companies | | | DexCom | Masimo | Waters | | | Edwards Lifesciences | Mettler-Toledo | Zimmer Biomet Holdings | | | Hologic | ResMed | |
The Use of Market Comparison Data
Reference Peers. Our Compensation and Human Capital Committee also considers the compensation data of other companies as reference peers, which are companies identified by management as key business or labor market comparators. The compensation data of these companies was used for informational purposes only and was not used in setting executive management compensation levels because the financial profiles of these companies are outside the peer group development parameters. Survey Data. When peer data is unavailable, our Compensation and Human Capital Committee reviews various pay surveys, including the Radford Technology Survey. In addition, the Committee may review the data separately to understand pay differences, if any, by industry or business segment and to assess whether any changes in pay data from year to year reflect true market trends. Role of Competitive Data and our Compensation and Human Capital Committee’s Discretion. Our Compensation and Human Capital Committee uses the following percentiles of peer group and survey data as reference points for assessing appropriate base salary, target total cash compensation and equity compensation for our executive officers:
The Use of Market Comparison Data
| Element of Compensation | Percentile | | Base salary | 50th percentile | | Target total cash compensation | 65th to 75th percentile | | Equity compensation | 50th to 75th percentile |
The Use of Market Comparison Data
While we believe that comparisons to market data are useful, the Committee does not believe it appropriate to establish executive management compensation levels based solely on a comparison to market data. Due to the variations between companies reporting and the roles for which compensation for these companies is ultimately disclosed, directly comparable information is not always available from each peer group company with respect to each of our NEOs. In considering market compensation data, the Committee recognizes that executive management roles at different companies can vary significantly, with different responsibilities and scopes of work, even though they may hold similar titles or nominal positions. The Committee therefore uses the market data only as a reference point and incorporates flexibility into our compensation programs and in the assessment process to respond to and adjust for the evolving business environment and other subjective elements described in the competitive positioning factors above. After reviewing these various factors, the Committee relies upon the judgment of its members to adjust executive management compensation below or above these percentile ranges as it deems appropriate and to make recommendations to the independent members of our Board about the compensation of our CEO.
Annual Cash Incentive Compensation
Annual Cash Incentive Compensation We use an annual cash incentive compensation plan (the “Bonus Plan”) to reward executive management, including our NEOs for performance against pre-established financial goals intended to reward short term strategic benefits. In February 2024, our Compensation and Human Capital Committee conducted its annual review of our Bonus Plan. Based on its review, the Committee determined that the pool of funds available to pay awards to executive management for performance in 2024 would continue to be based on predetermined goals under the two following financial metrics, weighted as in prior years and identified below, for purposes of funding the overall Bonus Plan pool for 2024: •Net Revenue - 60% •Operating Income - 40% Considered in the aggregate, the Committee believes these metrics are strong indicators of our overall performance and our ability to create stockholder value. These measures balance propelling growth while encouraging efficiency and are aligned with our strategic priorities of international expansion, GP dentist treatment, patient demand and conversion and orthodontist utilization.
Determining Bonuses
Determining Bonuses In determining actual bonuses to be awarded to each member of executive management, bonus amounts are adjusted, either up or down, based on each individual’s overall performance and contribution to the achievement of the performance goals pre-established by our Compensation and Human Capital Committee.
Determining Bonuses
| Target Bonus Percentage | x | Company Multiplier | x | Individual Performance Factor | | | Bonus Payout | | Base Salaryx | Target Bonus Percentage | Net Revenues - 60% | Operating Income - 40% | | Individual Goals | = | |
Determining Bonuses
The Committee has the discretion, but not the obligation, to adjust the actual results of the cash incentive award (up or down) to eliminate the distorting effects of certain extraordinary items or events and therefore more accurately reflect the overall performance of the management team. Specifically, our 2024 Bonus plan expressly contemplated adjustment for (i) significant and/or extraordinary items not indicative of our core operating performance separately stated on our financial statements, such as restructuring costs and certain settlements; (ii) items identified as non-GAAP in our earnings announcements; and (iii) other discrete items as necessary that may result in unintended gain or loss under the Bonus Plan. The Committee believes that the items listed above are not indicative of our core operating performance and therefore, at its discretion, may adjust the cash incentive awards. For the 2024 Bonus Plan, the Committee made no adjustment to our revenue attainment, but excluded certain restructuring and settlement expenses, which are extraordinary and non-recurring items identified as non-GAAP adjustments in our earnings announcements, from the measurement of our operating income as further discussed below in “2024 Bonus Plan Financial Targets.” In addition, our Board retains authority to pay additional discretionary bonuses outside the Bonus Plan if warranted by performance not measured under the Bonus Plan, although it did not authorize any such discretionary bonus payments to our NEOs in 2024.
Target Bonus Percentage
Target Bonus Percentage The Bonus Plan target award opportunity is the amount of cash compensation that each member of executive management can earn if we achieved our financial and strategic performance goals at target levels for the year. The incentive targets for members of executive management were set by our Compensation and Human Capital Committee based on the scope and significance of their roles as our leaders, with our CEO receiving the highest target award opportunity due to his greater responsibilities. The 2024 target award as a percentage of base salary for each member of executive management (other than our CEO) was 75% of base salary, an increase from 70% in 2023 to compete more effectively with practices observed in our peer group. Mr. Hogan’s 2024 target award opportunity remained unchanged at 150% of his base salary. In order to appropriately encourage and reward a range of acceptable performance and contributions in 2024, our awards were structured so that the actual payout to a member of executive management could be as low as 0% up to a maximum of 240% of target.
2024 Bonus Plan Financial Targets
2024 Bonus Plan Financial Targets Our Compensation and Human Capital Committee seeks to motivate executive management to continuously improve financial performance and achieve strategic objectives through a cash incentive (bonus) plan that rewards higher performance with increased incentive opportunities. This variable expense structure helps to reduce our compensation costs in challenging times such as 2022, 2023 and 2024 and reward achievements only when business conditions and results warrant. In determining the design of our targets for our Bonus Plan, we consider our annual operating plan as well as historical performance and revenue and operating profit growth rates at select comparable medical device companies. When establishing the 2024 executive compensation cash bonus targets in February of 2024, the Committee considered our 2023 results, our long-term business strategy and desire to return to historical levels of growth, continuing macroeconomic dynamics, inflation expectations and customer and consumer demand among other factors. To incentivize a return to higher long-term growth in 2024, the Committee set rigorous target goals and objectives intended to reward executive management for achieving notable growth over 2023’s actual results relative to our industry, notwithstanding the continued challenging business environment. For 2024, the Committee established at target Bonus Plan funding on revenues between $4,040 million and $4,140 million and operating income between $665 million and $709 million. * Actual Operating Income results for 2024 were adjusted pursuant to the Bonus Plan as described above and below.
2024 Bonus Plan Attainment
2024 Bonus Plan Attainment In 2024, we achieved net revenue of $4.0 billion, exceeding our 2023 results by $137 million. Our operating income was down in 2024 to $608 million compared to $643 million in 2023, based in part from $73 million in extraordinary and non-recurring expenses associated with litigation settlements, restructuring costs and settlements of value added tax claims from prior years. Adjusting for these expenses, our adjusted operating income was $681 million, which represents a $38 million improvement over the prior year. Our net revenue and adjusted operating income performance resulted in the payout levels shown below: The table below shows the net revenue and operating income metrics used in 2024, our level of performance with respect to these metrics and resulting payout achieved.
2024 Bonus Plan Attainment
| Measure/Weight | Why do we use this measure? | Threshold (2024) (in millions) | Target (2024) (in millions) | Achievement (2024) (in millions) | Impact on Company Multiplier | | Revenues (1) (60%) | Improvement in this measure aligns with our overall growth strategy | $3,862 | $4,040 - $4,140 | $3,999 | 96.6.%(1) | | Operating income (1) (40%) | Directly links incentive payments to profitability and provides incentives to employees (including management) to share in our profitability. Because profitability encompasses both revenues and expense management, our Compensation and Human Capital Committee believes this measure encourages a balanced, holistic approach to managing our business. As a pre-tax metric, operating income also focuses on core operations apart from tax impacts which management cannot control or reliably predict. | $643 | $665 - $709 | $681(2) | 100%(1)(2) | | COMPANY MULTIPLIER: | | | | | 98.0%(2) |
2024 Bonus Plan Attainment
(1) The level of performance at which the funding for the particular financial performance measure is determined is as follows: •A rating of zero if achievement for the revenues and operating income targets were lower as compared to 2023. Performance below target automatically reduces only the payout related to that goal, not the other goal, as we want executive management to have the same incentive to achieve other financial goals as well as their individual performance goals even if our performance tracks below the target during the course of the year; •A rating of 100% for the performance metrics if the performance was in the established target range shown in the table above. For 2024, the Committee continued to set the target on net revenue and operating margin at a range instead of a point estimate because of the uncertain global macroeconomic environment conditions. •A rating ranging below 100% for the performance metrics if performance was below the established range; and •A rating of 101% and above if achievement exceeds the target performance level. Each individual financial metric is uncapped; however, once the Company Multiplier reaches 240% in the aggregate the Bonus Plan is fully funded. Therefore, in the aggregate, the Bonus Plan for our NEOs will not exceed 240% funding. •For each financial performance measure, linear interpolation is applied to determine the multiplier if performance was achieved at between threshold and the low end of the target range or between the upper end of the target range and the achievement level resulting in full funding as noted above. (2) Operating Income results were adjusted pursuant to the Bonus Plan as described below. As discussed above and consistent with prior years, our 2024 Bonus Plan expressly contemplated adjustment for restructuring or litigation settlements that were not indicative of core operating performance. In 2024, pursuant to this authority, our Compensation and Human Capital Committee made the following adjustments to the measurement of attainment under the operating income component of the 2024 Bonus Plan, which are some of the same non-GAAP adjustments we make to operating income each year when reporting our adjusted earnings. Specifically, in order to align 2024 Bonus Plan payouts with the underlying performance of our business, the Committee excluded $73 million in expenses from our operating income of $608 million, resulting in an adjusted operating income of $681 million. Without these adjustments, the operating income component of the 2024 Bonus Plan would not have paid out. No adjustment was made to the net revenue component of the Bonus Plan. The thresholds for the 2025 Bonus Plan are based on our achieved results in 2024, including the as-adjusted operating income, and our 2025 Bonus Plan will not pay out unless we achieve results that are above those achieved in 2024, as-adjusted.
2024 Bonus Plan Attainment
| Operating Income Adjustments | Rationale | | –Excluded $37M in restructuring costs. | These restructuring costs are non-recurring items and meant to be margin accretive to the business by streamlining our go-forward operating expenses. | | –Excluded $36M related to certain legal and tax settlements. | These costs resulted from the conclusion of multi-year legal disputes that are non-recurring and separate from the core operations of our business. |
2024 Bonus Plan Individual Performance Factor Attainment
2024 Bonus Plan Individual Performance Factor Attainment Our Compensation and Human Capital Committee determined that, for 2024, our executives continued to perform in line with expectations in the context of a difficult macroeconomic environment, and graded all our executives’ individual performance factor at target. As a result, the 2024 individual performance factor component of our Bonus Plan did not modify payouts determined under our financial multipliers.
2024 Bonus Plan Results
2024 Bonus Plan Results The following chart shows attainment under our cash bonus plan for each of our executives. Our Compensation and Human Capital Committee did not exercise its discretion to increase or decrease the formulaic payout of our Bonus Plan.
2024 Bonus Plan Results
| Name | Target Incentive Award (as % of Base Salary) | Target Incentive Award | Company Multiplier | Individual Performance Factor | Actual Incentive Award | Actual Award as % of Target | | Joseph M. Hogan | 150% | $2,100,000 | 98% | 100% | $2,058,000 | 98% | | John F. Morici | 75% | $510,000 | 98% | 100% | $500,000 | 98% | | Emory Wright | 75% | $427,500 | 98% | 100% | $419,000 | 98% | | Julie Coletti | 75% | $450,000 | 98% | 100% | $441,000 | 98% | | Stuart Hockridge | 75% | $390,000 | 98% | 100% | $382,000 | 98% |
Long-Term Incentive Compensation
Long-Term Incentive Compensation We use equity awards to more closely align our executive management’s long-term interests with those of our stockholders and to attract and retain high-caliber executives through recognition of anticipated future performance. We determine appropriate award amounts, if any, by reviewing competitive market data, individual performance assessments and business objectives with our Compensation and Human Capital Committee at least annually.
Long-Term Incentive Compensation
| Award Type | Rationale for 2024 Portfolio | Vesting Detail | | Why RSUs? | We believe RSUs provide a measure of retention (even in the event of a decline in the price of our common stock) and an incentive to grow the value of our common stock. In addition, RSUs enable our executive management to accumulate ownership of our common stock, which reinforces the alignment of their objectives with those of our stockholders. | Typically vest over four years with 25% vesting annually | | Why MSUs? | We believe MSUs provide a consistent value delivery that also aligns the long-term interests of executive management and stockholders by rewarding executive management for our performance measured in relation to other companies over a specified period. The actual number of shares eligible to vest will be determined based on a comparison of our stock price performance relative to the performance of the constituents of the Nasdaq Composite Index over the three-year performance period, up to a maximum of 250% of the number of target shares. The number of shares that vest will be based on our relative total stockholder return compared to the stock price of the constituents of the Nasdaq Composite Index in the period beginning on the date the performance-based vesting restricted stock units were granted and ending three years after, as follows: | Three-year performance period with vesting ranging from 0% - 250% of target, with any vesting occurring entirely at the end of year three | | | Relative Total Stockholder Return Below 25th percentile 25th percentile 50th percentile 90th percentile | Shares Subject to the Award 0% 50% 100% 250% | | | Linear interpolation will be used to determine the percentage of the shares subject to the MSU awards that are earned and will vest between each threshold. The number of shares that vest may not exceed 100% of the target shares if total stockholder return is less than zero. | |
2024 Awards
2024 Awards In 2024, our Compensation and Human Capital Committee reviewed our MSU program and concluded that the program, as designed, was generally aligned with market practices. In reviewing the equity portfolio for our non-CEO NEOs for 2024 annual focal awards, the Committee determined that a mix of 67% MSUs and 33% RSUs closely aligned their compensation with the interests of our stockholders. For the mix of MSUs and RSUs for our CEO in 2024, the Committee determined that the ratio of 70% and 30%, respectively, reflected an increased correlation between our long-term growth and our CEO’s compensation. The Committee calculated the target values for equity awards to achieve this desired mix and converted this to shares using a look back price that was based on the 30-trading day average closing price of our common stock for the period ending February 15, 2024. Based on this price per share, the total number of targeted shares was determined, then split between time-based RSUs and performance-based MSUs for non-CEO executive management and our CEO in the aforementioned ratios, each rounded down to the nearest whole share. The target value of the equity awards granted to our NEOs is shown below, along with the number of shares granted, including the target number of shares under the MSUs. The realized value of the shares on vesting will deviate based on changes in our stock price on the dates of vesting over four years for our RSUs and the TSR of our stock as compared to the Nasdaq Composite Index on February 15th of the third year after the original year of grant of our MSUs. The table below sets forth the target value and number of shares of common stock awarded to the NEOs in fiscal year 2024:
2024 Awards
| Name | Target Value (RSUs) | RSU (Shares) | Target Value (MSUs) (1) | Target MSUs (1) (Shares) | | Joseph M. Hogan | $3,750,000 | 13,588 | $8,750,000 | 31,707 | | John F. Morici | $924,000 | 3,348 | $1,876,000 | 6,798 | | Emory Wright | $594,000 | 2,152 | $1,206,000 | 4,370 | | Julie Coletti | $660,000 | 2,391 | $1,340,000 | 4,855 | | Stuart Hockridge | $462,000 | 1,674 | $938,000 | 3,399 |
2024 Awards
(1) The number of MSUs set forth in this column represents the number of shares at target; however, the actual number of shares that may be earned, if any, is determined based on the formula set forth in the MSU Agreement up to a maximum of 250% of the amount of the Target Shares. The Target Value of RSUs may not reflect the realized value of those RSUs upon vesting. The Target Value and Target MSUs shares awarded may not reflect the actual number of MSUs shares that ultimately vest, if any.
Achievement of prior year MSUs were impacted by underperformance
Achievement of prior year MSUs were impacted by underperformance The actual values received by our NEOs under our annual equity awards vary based on our stock price performance. In particular, the amounts vesting under MSUs awarded to executive management are earned based on our relative stockholder return over a three-year performance period compared to the Nasdaq Composite Index, with the earned shares eligible to vest only at the end of three years. Over the three-year period including 2024, our TSR was -57.95% which was at the 36th percentile of our peer group. Accordingly, for MSUs granted in February 2022 that vested in February 2025, our NEOs vested at 72.4% of target based on stock underperformance from 2022 to 2024 against the Nasdaq Composite Index during the same period. The following graph shows our one-year and three-year total stockholder returns compared to our peers, the S&P 500 and Nasdaq composite as of December 31, 2024.
Corporate Tax Deduction on Compensation in Excess of $1 Million a Year
| Severance and Change of Control Arrangements |
Corporate Tax Deduction on Compensation in Excess of $1 Million a Year
Each NEO is eligible to receive payments and benefits under certain conditions in accordance with their respective employment agreement, RSU or MSU agreements. Each such agreement provides for payments and benefits upon: •a change of control of the Company; and •termination without cause or for convenience. In adopting the change of control provisions in these agreements, our Compensation and Human Capital Committee's primary objective was to ensure members of executive management have sufficient security such that they are not biased against a sale of the Company in the event a stockholder favorable merger and acquisition transaction is presented. If we pursue a change of control transaction beneficial to our stockholders, the Committee believes that executive management's active support of the transaction through closing would be critical to ensuring the success of such a transaction. The severance payments and benefits are intended to provide consideration for executive management's service to Align and the expected length of time until subsequent employment is secured. The severance provisions also assist in recruiting members of executive management given that their roles tend to carry higher risks. Our Compensation and Human Capital Committee periodically reviews the terms and conditions of our change of control and severance compensation practices against those of our peers. As industry trends and best practices have evolved over the years, the Committee modifies its approach to change of control and severance compensation by looking for opportunities to prospectively implement modifications for new members of executive management and for members of executive management with existing agreements when circumstances allow. For instance, in September 2016, the Committee materially changed our practices regarding change of control payments and benefits. Prior to September 2016, upon a change of control alone, agreements with members of executive management allowed for the acceleration of vesting of outstanding and unvested RSUs as if the executive had performed twelve months of additional service and pro-rata MSU awards based upon the closing of the change in control ("single trigger"). Beginning in and after September 2016, the change of control acceleration benefits for new members of executive management also requires a termination of employment after a qualifying change of control event ("double trigger"). The amounts that each of our current NEOs would have been entitled to if one of the termination or change of control events described above occurred on December 31, 2024, are set forth in “Potential Payments Upon Termination or Change of Control” below.
Change of Control Only
Change of Control Only Though the cash severance amounts payable to Messrs. Hogan, Wright and Hockridge in connection with a change of control are subject to a “double trigger” (meaning to get paid out the cash portion of their change of control severance arrangement, first there has to be a change of control and then the employment of the individual must be terminated without cause or for convenience within a specified period of time of such change of control), Mr. Hogan’s RSU and MSU agreements and Messrs. Wright’s and Hockridge’s pre-September 2016 employment agreements, RSU and MSU agreements include a “single trigger” for these individuals whereby the vesting of outstanding and unvested equity awards would be accelerated upon a change of control. Mr. Hogan’s RSUs and MSUs will vest pro rata as of the date a change of control and Messrs. Wright and Hockridge’s MSUs will vest pro rata as of the date a change of control and the vesting of their RSUs will be accelerated by one year upon a change of control. With respect to Mr. Morici and Ms. Coletti (as well as any other individual who joins us or is promoted to an executive management position after September 2016), our Compensation and Human Capital Committee eliminated all single trigger severance and equity acceleration provisions. Rather, severance payments and equity acceleration for these members of executive management are subject to “double trigger” arrangements that require both a change of control plus a qualifying termination event before any cash payments are paid or any equity award acceleration occurs.
Termination Following a Change of Control
Termination Following a Change of Control In the event any of the NEOs are terminated without cause or for convenience within 18 months (12 months in the cases of Messrs. Wright and Hockridge) of a change of control ("double trigger"), 100% of all remaining outstanding and unvested equity awards would be accelerated and a cash severance payment would be made. For termination of employment without cause or for convenience unrelated to a change of control, the vesting of equity awards held by Messrs. Wright and Hockridge, is immediately accelerated by one year and a cash severance payment will be made. Messrs. Hogan and Morici and Ms. Coletti (as well as any other individual who joins us or is promoted to an executive management position after September 2016) would receive only a cash severance payment (no equity acceleration) if their employment is terminated without cause or for convenience unrelated to a change of control.
Retirement
Retirement In 2023, we revised our RSUs and MSUs to provide for continued vesting for our executive officers upon their retirement from Align subject to the following terms: (i) the executive officer is required to provide twelve months advance written notice of their desire to retire with such notice being subject to our CEO’s written pre-approval; (ii) the executive officer must be 55 years or older and have a minimum of ten years of continuous service at the time they provide their notice to the CEO; and (iii) the executive officer must have a minimum of six months of service after an equity grant award for such grant to be eligible for continued vesting under this retirement provision (collectively, the “Retirement Eligibility Terms”). If each of the Retirement Eligibility Terms are met, (i) each outstanding RSU award belonging to an executive officer will continue to vest for twelve months after the executive officer’s date of retirement from Align; (ii) for each outstanding MSU award belonging to the executive officer will be entitled to receive a pro-rated vesting of shares at the end of the applicable MSU performance period based on the date of retirement and subject to the conditions for vesting and release of shares under the original terms of the MSU are achieved in accordance with the terms of the applicable MSU award. The pro-rated vesting shall be based on the amount of time the executive officer was employed during the performance period and any vesting of shares under a RSU award and MSU award are subject to the executive officer complying with lawful non-compete, non-solicit, confidentiality and release of claims provisions set forth in the agreement. We added the Retirement Eligibility Terms to help better ensure retention of retiring executives through the hiring of their replacements and a smoother transition upon retirement. It also recognizes the service of the retiring executive to Align. As of December 31, 2024, only Mr. Wright has attained the age of 55 and a minimum of ten years of continuous service to Align and is the sole executive eligible for this benefit. In May 2024, Mr. Wright announced his intention to retire and will be eligible for the benefits set forth in this paragraph when his retirement becomes effective.
Compensation Tables
| Summary Compensation Table for Fiscal Year 2024 |
Compensation Tables
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(2) | Total ($) | | Joseph M. Hogan, | 2024 | 1,396,904 | 23,848,513 | 2,058,000 | 17,762 | 27,321,179(3) | | President and Chief Executive Officer | 2023 | 1,354,769 | 26,230,870 | 1,346,200 | 20,572 | 28,952,411 | | | 2022 | 1,290,385 | 17,375,927 | — | 17,732 | 18,684,044 | | John F. Morici, | 2024 | 675,385 | 5,249,435 | 500,000 | 11,567 | 6,436,387 | | Chief Financial Officer and Executive Vice President, Global Finance | 2023 | 618,461 | 4,581,010 | 286,000 | 77,410 | 5,562,881 | | | 2022 | 597,308 | 3,626,393 | — | 15,183 | 4,238,884 | | Emory Wright, | 2024 | 568,462 | 3,374,459 | 419,000 | 11,499 | 4,373,420 | | Executive Vice President, Direct Fabrication Platform Operations | 2023 | 548,462 | 3,435,758 | 254,000 | 10,977 | 4,249,197 | | | 2022 | 527,692 | 2,870,354 | — | 10,318 | 3,408,364 | | Julie Coletti, Executive Vice President, Chief Legal and Regulatory Officer | 2024 | 597,692 | 3,749,021 | 441,000 | 11,502 | 4,799,215 | | | 2023 | 566,154 | 3,435,758 | 263,000 | 11,016 | 4,275,928 | | | 2022 | 517,692 | 2,718,963 | — | 10,296 | 3,246,951 | | Stuart Hockridge, | 2024 | 518,462 | 2,624,717 | 382,000 | 18,398 | 3,543,577 | | Executive Vice President, Global Human Resources | 2023 | 498,462 | 2,672,150 | 231,000 | 10,879 | 3,412,491 | | | 2022 | 478,462 | 2,114,814 | — | 17,165 | 2,610,441 |
All Other Compensation
| Grants of Plan-Based Awards for Fiscal Year 2024 |
2024 Grants of Plan-Based Awards
2024 Grants of Plan-Based Awards
2024 Grants of Plan-Based Awards
| | Type of Award | Grant Date | Approval Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Non-equity Incentive | Estimated Future Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair value of Awards ($) | | Name | | | | Target ($) | Maximum ($) | Target (#) | Maximum (#) | | | | Joseph M. Hogan | Bonus Plan | | | 2,100,000 | 5,040,000 | | | | | | | RSU | 2/20/2024 | 1/23/2024 | | | | | 13,588 | 4,260,246 | | | MSU | 2/20/2024 | 1/23/2024 | | | 31,707 | 79,268 | | 19,588,268 | | John F. Morici | Bonus Plan | | | 510,000 | 1,224,000 | | | | | | | RSU | 2/20/2024 | 1/23/2024 | | | | | 3,348 | 1,049,698 | | | MSU | 2/20/2024 | 1/23/2024 | | | 6,798 | 16,995 | | 4,199,736 | | Emory Wright | Bonus Plan | | | 427,500 | 1,026,000 | | | | | | | RSU | 2/20/2024 | 1/23/2024 | | | | | 2,152 | 674,717 | | | MSU | 2/20/2024 | 1/23/2024 | | | 4,370 | 10,925 | | 2,699,742 | | Julie Coletti | Bonus Plan | | | 450,000 | 1,080,000 | | | | | | | RSU | 2/20/2024 | 1/23/2024 | | | | | 2,391 | 749,650 | | | MSU | 2/20/2024 | 1/23/2024 | | | 4,855 | 12,138 | | 2,999,370 | | Stuart Hockridge | Bonus Plan | | | 390,000 | 936,000 | | | | | | | RSU | 2/20/2024 | 1/23/2024 | | | | | 1,674 | 524,849 | | | MSU | 2/20/2024 | 1/23/2024 | | | 3,399 | 8,498 | | 2,099,868 |
Timing of Equity Grants
| Outstanding Equity Awards at Fiscal 2024 Year End |
Timing of Equity Grants
| Option Exercises and Stock Vested During Fiscal Year 2024 |
Timing of Equity Grants
| Potential Payments Upon Termination or Change of Control |
Other Termination of Employment and Change of Control Arrangements
| CEO Pay Ratio |
Pay Versus Performance
Pay Versus Performance In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEOs and Company performance for the fiscal years listed below.
Pay Versus Performance
| Year | Summary Compensation Table Total for Joseph M. Hogan (1) ($) | Compensation Actually Paid to Joseph M. Hogan (1) (2) (3) ($) | Average Summary Compensation Table Total for Non-PEO NEOs (1) ($) | Average Compensation Actually Paid to Non-PEO NEOs (1) (2) (3) ($) | Value of Initial Fixed $100 Investment based on: (4) | | Net Income ($ Millions) | Net Revenues (5) ($ Millions) | | | | | | | TSR ($) | Peer Group TSR ($) | | | | 2024 | 27,321,179 | 5,198,289 | 4,788,150 | 1,542,978 | 75 | 125 | 421 | 3,999 | | 2023 | 28,952,411 | 29,461,070 | 4,375,124 | 4,701,234 | 98 | 115 | 445 | 3,862 | | 2022 | 18,684,044 | (61,348,849) | 3,376,160 | (10,393,452) | 76 | 107 | 362 | 3,735 | | 2021 | 21,591,400 | 76,152,942 | 4,328,778 | 9,498,811 | 236 | 139 | 772 | 3,953 | | 2020 | 15,522,289 | 107,989,279 | 3,381,923 | 12,747,282 | 192 | 117 | 1,776 | 2,472 |
Pay Versus Performance
(1)Joseph Hogan was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are listed below.
Pay Versus Performance
| 2020 | 2021 | 2022 | 2023 | 2024 | | Simon Beard | Julie Coletti | Julie Coletti | Julie Coletti | Julie Coletti | | John F. Morici | Stuart Hockridge | Stuart Hockridge | Stuart Hockridge | Stuart Hockridge | | Raj Pudipeddi | John F. Morici | John F. Morici | John F. Morici | John F. Morici | | Julie Tay | Emory Wright | Emory Wright | Emory Wright | Emory Wright |
Pay Versus Performance
(2)The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized or received by the NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. (3)Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the amounts from the Stock Awards column set forth in the Summary Compensation Table.
Pay Versus Performance
| Year | Summary Compensation Table Total for PEO ($) | Exclusion of Stock Awards for PEO ($) | Inclusion of Equity Values for PEO ($) | Compensation Actually Paid to PEO ($) | | 2024 | 27,321,179 | (23,848,513) | 1,725,623 | 5,198,289 |
Pay Versus Performance
| Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Stock Awards for Non-PEO NEOs ($) | Average Inclusion of Equity Values for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2024 | 4,788,150 | (3,749,408) | 504,236 | 1,542,978 |
Pay Versus Performance
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Pay Versus Performance
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO ($) | Total - Inclusion of Equity Values for PEO ($) | | 2024 | 12,790,376 | (11,807,613) | 742,860 | 1,725,623 |
Pay Versus Performance
| Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) | | 2024 | 2,023,402 | (1,650,044) | 130,878 | 504,236 |
Pay Versus Performance
(4) The Peer Group TSR set forth in this table utilizes the S&P 1500 Composite Health Care Equipment & Supplies Index (“Index”), which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in Align and in the Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. (5) We determined Net Revenues to be the most important financial performance measure used to link Align’s performance to Compensation Actually Paid to our PEO and Non-PEO NEOs in 2024. We may determine a different financial performance measure to be the most important financial performance measure in future years. For additional information regarding Net Revenue, including how the measure was determined for purposes of our executive compensation program, see “Executive Compensation—Compensation Discussion and Analysis” above.
Relationship Between Compensation Actually Paid and Company and Peer Group TSR
Relationship Between Compensation Actually Paid and Company and Peer Group TSR The following chart sets forth the relationship between Compensation Actually Paid to our PEO, Align’s cumulative TSR over the five most recently completed fiscal years and the Index’s TSR over the same period. The following chart sets forth the relationship between the average of Compensation Actually Paid to our Non-PEO NEOs, Align’s cumulative TSR over the five most recently completed fiscal years, and the Index’s TSR over the same period.
Relationship Between Compensation Actually Paid and Net Income
Relationship Between Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO and our net income during the five most recently completed fiscal years. The following chart sets forth the relationship between the average of Compensation Actually Paid to our Non-PEO NEOs and our net income during the five most recently completed fiscal years.
Relationship Between Compensation Actually Paid and Net Revenues
Relationship Between Compensation Actually Paid and Net Revenues The following chart sets forth the relationship between Compensation Actually Paid to our PEO and our Net Revenues during the five most recently completed fiscal years. The following chart sets forth the relationship between Compensation Actually Paid to our Non-PEO NEOs and our Net Revenues during the five most recently completed fiscal years.
Election of Directors
Election of Directors Our Amended and Restated Bylaws (our “Bylaws”) provide that our Board will consist of one or more members with the number of directors determined from time to time by resolution of our Board. As of the date of this proxy statement, the number of directors is set at ten (10). Upon the recommendation of the Nominating and Governance Committee, our Board has nominated the ten (10) Nominees named below for election at the Annual Meeting, each to serve for a one-year term or until a successor is elected and qualified or appointed.
Election of Directors
| Our Board unanimously recommends that you vote “FOR” each of the Nominees named below | | | | Kevin T. Conroy | C. Raymond Larkin, Jr. | Mojdeh Poul | | Kevin J. Dallas | George J. Morrow | Andrea L. Saia | | Joseph M. Hogan | Anne M. Myong | Susan E. Siegel | | Joseph Lacob | | |
Election of Directors
Information concerning each of the Nominees can be found above in the section entitled “Director Nominees.” In the event a Nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the then current Board to fill the vacancy. As of the date of this proxy statement, we are not aware of any Nominee who is unable or will decline to serve as a director. Our Bylaws state that a Nominee is elected by the vote of the majority of the votes cast at any meeting for the election of directors at which a quorum is present. A majority of votes cast shall mean that the number of shares voted “FOR” a director’s election exceeds 50% of the number of votes cast with respect to that director’s election. In determining the total number of votes cast, votes “FOR” and “AGAINST” will be counted. Abstention votes, which are votes marked “ABSTAIN,” will not be counted toward total votes cast. The holders of a majority of the voting power of the capital stock issued and outstanding and entitled to vote as of the record date, present in person or represented by proxy, shall constitute a quorum. Each Nominee is currently serving on our Board. If a Nominee is not re-elected at the Annual Meeting, Delaware law provides that the director will continue to serve as a “holdover director.” Under our Bylaws and Guidelines, each director has submitted a contingent, irrevocable resignation that our Board may accept if the director is not re-elected. If that were to occur, our Nominating and Governance Committee would make a recommendation to our Board whether to accept or reject the resignation, or whether to take other action. Our Board would act on the Nominating and Governance Committee's recommendation, and publicly disclose its decision and the rationale behind it within 90 days following the date the election results are certified. Unless marked otherwise, proxies returned to us will be voted “FOR” each of the Nominees named above. If you hold your shares through a broker, bank or other nominee holder of record you must instruct your broker, bank or other nominee how to vote your shares so that your vote can be counted for this Proposal 1. If you do not provide voting instructions to your broker, bank or other nominee, your shares will be considered “broker non-votes” with regard to this matter. Broker non-votes are counted for the purposes of determining a quorum but will be excluded from determining the number of votes cast.