DEF 14A of Nu Skin Enterprises, Inc.
Filed Apr 12, 2024 · FY20230001140361-24-019638
SCHEDULE 14A INFORMATION
SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. )
SCHEDULE 14A INFORMATION
| Filed by the Registrant ☑ | | | Filed by a Party other than the Registrant ☐ | | | Check the appropriate box: | | | ☐ | Preliminary Proxy Statement | | ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | | ☒ | Definitive Proxy Statement | | ☐ | Definitive Additional Materials | | ☐ | Soliciting Material Pursuant to §240.14a-12 | | NU SKIN ENTERPRISES, INC. | | | (Name of Registrant as Specified In Its Charter) | | | (Name of Person(s) Filing Proxy Statement, if other than the Registrant) | | | Payment of Filing Fee (Check all boxes that apply): | | | ☒ | No fee required | | ☐ | Fee paid previously with preliminary materials | | ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11 |
SCHEDULE 14A INFORMATION
| NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF NU SKIN ENTERPRISES, INC. |
SCHEDULE 14A INFORMATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the “Annual Meeting”) of Nu Skin Enterprises, Inc., a Delaware corporation, will be held at 11:00 a.m., Mountain Daylight Time, on June 5, 2024, at our corporate offices, 75 West Center Street, Provo, Utah 84601. At the Annual Meeting, you will be asked to consider and vote on the following matters, which are more fully described in the proxy statement:
SCHEDULE 14A INFORMATION
| 1. | To elect the eight directors named in the attached proxy statement; |
SCHEDULE 14A INFORMATION
| 2. | To hold an advisory vote to approve our executive compensation; |
SCHEDULE 14A INFORMATION
| 3. | To approve our 2024 Omnibus Incentive Plan; |
SCHEDULE 14A INFORMATION
| 4. | To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024; and |
SCHEDULE 14A INFORMATION
| 5. | To transact such other business as may properly come before the Annual Meeting. |
SCHEDULE 14A INFORMATION
The Board of Directors has fixed the close of business on April 8, 2024 as the record date for determining the stockholders entitled to receive notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. You are cordially invited to attend the Annual Meeting in person. However, to ensure your representation at the Annual Meeting, please mark, sign, date and return the accompanying proxy card as promptly as possible in the enclosed postage-paid envelope, or use the internet or telephone methods that are described on the proxy card. If you attend the Annual Meeting, you may, if you wish, withdraw your proxy and vote at the meeting. Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on June 5, 2024: The proxy statement and annual report to stockholders are available at materials.proxyvote.com/67018T.
SCHEDULE 14A INFORMATION
| By Order of the Board of Directors, | | | | STEVEN J. LUND | | Chairman of the Board | | Provo, Utah April 12, 2024 |
SCHEDULE 14A INFORMATION
| PROXY SUMMARY |
SCHEDULE 14A INFORMATION
The following summary provides quick information for purposes of Nu Skin’s 2024 Annual Meeting. It does not contain all of the information provided elsewhere in the proxy statement; therefore, you should read the entire proxy statement carefully before voting. This proxy statement and form of proxy are first being sent or given to our stockholders on or about April 25, 2024. annual meeting information
SCHEDULE 14A INFORMATION
| Date: | June 5, 2024 |
SCHEDULE 14A INFORMATION
| Time: | 11:00 a.m., Mountain Daylight Time |
SCHEDULE 14A INFORMATION
| Location: | Nu Skin Corporate Offices, 75 West Center Street, Provo, Utah 84601 |
SCHEDULE 14A INFORMATION
| Record date: | April 8, 2024 |
SCHEDULE 14A INFORMATION
proposals
SCHEDULE 14A INFORMATION
| Proposal | | Board Recommendation | More Information | | 1. | Election of the eight directors named in this proxy statement | For each director nominee | Page 3 | | 2. | Approval of our executive compensation* | For | Page 53 | | 3. | Approval of our 2024 Omnibus Incentive Plan | For | Page 55 | | 4. | Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024* | For | Page 65 |
SCHEDULE 14A INFORMATION
* Advisory vote Corporate Governance and Compensation Highlights See pages 7 and 23, respectively. Board Composition
SCHEDULE 14A INFORMATION
| | | | | | | | | | | | Skills and Experience | | | | | | | | | | | Other public company board/exec. experience | • | • | • | | | | • | • | • | | Corporate finance/transactions | | • | • | | | | • | • | • | | International experience/global operations | | • | • | • | • | | • | • | • | | Government relations | | | • | | | | | | | | Regulatory | | | • | • | | | | | | | Risk management | | • | • | | | | • | | • | | Sales/marketing | • | | | • | • | • | • | | | | Online or digital marketing | • | | | | • | • | | | | | Strategic planning | • | • | | • | • | • | • | | • | | Current Nu Skin Committee Service (C = Chair) | | | | | | | | | | | Audit Committee | | • | • | | | | • | | C | | Compensation and Human Capital Committee | C | • | | | | • | • | | | | Nominating and Corp. Governance Committee | • | | • | | | C | | • | • | | Demographics | | | | | | | | | | | Race/Ethnicity – 22% diverse | | | | | | | | | | | Asian | | | | | | | | • | | | Black or African American | • | | | | | | | | | | White/Caucasian | | • | • | | • | • | • | | • | | Gender – 33% diverse | | | | | | | | | | | Female | • | | | | | • | | | • | | Male | | • | • | | • | | • | • | | | Age | 63 | 69 | 72 | 70 | 50 | 66 | 79 | 44 | 72 | | Other Characteristics | | | | | | | | | | | Independence | • | • | • | | | • | • | • | • | | Tenure (years) | 3 | 27 | 25 | 28 | 3 | 5 | 16 | 8 | 9 |
SCHEDULE 14A INFORMATION
Table of Contents
SCHEDULE 14A INFORMATION
| Solicitation of Proxies | 1 | | Voting Provisions | 1 | | Proposal 1: Election of Directors | 3 | | Corporate Governance | 7 | | Corporate Governance Highlights | 7 | | Director Independence | 8 | | Board Leadership Structure | 8 | | Risk Oversight | 9 | | Cybersecurity and Privacy | 9 | | Human Capital Management | 10 | | Sustainability | 11 | | Board of Directors Meetings | 12 | | Board Committees | 12 | | Board and Committee Evaluations | 14 | | Our Director Nomination Process | 14 | | Communications with Directors | 15 | | Additional Corporate Governance Information | 15 | | 2024 Executive Officer Appointment | 16 | | Director Compensation | 17 | | Executive Compensation: Compensation Discussion and Analysis | 19 | | Executive Summary | 19 | | Compensation Overview | 24 | | Components of Compensation | 25 | | Process for Determining Compensation | 32 | | Other Compensation-Related Governance | 34 | | Compensation and Human Capital Committee Report | 36 | | Executive Compensation Tables and Accompanying Narrative | 37 | | Other Compensation Information | 48 | | Equity Compensation Plan Information | 48 | | CEO Pay Ratio Information | 48 | | Pay Versus Performance | 49 | | Proposal 2: Advisory Vote To Approve Our Executive Compensation | 53 | | Proposal 3: Approval of 2024 Omnibus Incentive Plan | 55 | | Proposal 4: Ratification of Selection of Independent Registered Public Accounting Firm | 65 | | Fees to Independent Registered Public Accountants | 65 | | Audit and Non-Audit Services Pre-Approval Policy | 66 | | Audit Committee Report | 67 | | Certain Relationships and Related-Person Transactions | 68 | | Stock Ownership Information | 69 | | Stockholder Proposals for 2025 Annual Meeting | 71 | | Householding | 71 | | Cautionary Statement Regarding Forward-Looking Statements | 71 | | Other Matters | 72 | | Appendix A: 2024 Omnibus Incentive Plan | A-1 | | Form of Proxy Card | |
SCHEDULE 14A INFORMATION
| PROXY STATEMENT |
SCHEDULE 14A INFORMATION
SOLICITATION OF PROXIES The accompanying proxy is solicited on behalf of the Board of Directors of Nu Skin Enterprises, Inc. (“Nu Skin,” “we,” “us,” or “the company”) for use at the Annual Meeting of Stockholders (the “Annual Meeting”) on June 5, 2024 at 11:00 a.m., Mountain Daylight Time, and at any adjournment or postponement thereof. The Annual Meeting will be held at our corporate offices, 75 West Center Street, Provo, Utah 84601. At the Annual Meeting, you will be asked to consider and vote on the following matters, which are more fully described in this proxy statement:
SCHEDULE 14A INFORMATION
| 1. | To elect the eight directors named in this proxy statement; |
SCHEDULE 14A INFORMATION
| 2. | To hold an advisory vote to approve our executive compensation; |
SCHEDULE 14A INFORMATION
| 3. | To approve our 2024 Omnibus Incentive Plan; |
SCHEDULE 14A INFORMATION
| 4. | To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024; and |
SCHEDULE 14A INFORMATION
| 5. | To transact such other business as may properly come before the Annual Meeting. |
SCHEDULE 14A INFORMATION
This proxy statement and form of proxy are first being sent or given to our stockholders on or about April 25, 2024. We will bear the cost of solicitation of proxies. Expenses include reimbursements paid to brokerage firms and others for their expenses incurred in forwarding solicitation material regarding the Annual Meeting to registered and beneficial owners of our voting stock. Our regular employees may further solicit proxies by telephone, by mail, in person or by electronic communication and will not receive additional compensation for such solicitation. VOTING PROVISIONS Record Date; Shares Outstanding. Only stockholders of record at the close of business on April 8, 2024 are entitled to vote at the Annual Meeting. As of this record date, 49,664,437 shares of our Class A Common Stock were issued and outstanding. Each outstanding share of Class A Common Stock will be entitled to one vote on each matter submitted to a vote of the stockholders at the Annual Meeting. How Proxies Will Be Voted. All shares represented by each properly executed, unrevoked proxy received in time for the Annual Meeting will be voted as directed by the stockholder. Each stockholder may appoint only one proxy holder or representative to attend the meeting on his or her behalf. In the absence of specific instructions, proxies will be voted in accordance with the Board of Directors’ recommendations “FOR” the election of each director nominee and “FOR” Proposals 2, 3 and 4. Although it is anticipated that each director nominee will be able to serve as a director, should any nominee become unavailable to serve, proxies will be voted for such other person or persons as may be designated by the Board of Directors. If any other matters properly come before the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place, the persons named in the accompanying proxy will vote on such matters in accordance with their best judgment. Revocability of Proxy. Any proxy duly given pursuant to this solicitation may be revoked by the person or entity giving it at any time before it is voted by delivering a written notice of revocation to our Corporate Secretary, by executing a later-dated proxy and delivering it to our Corporate Secretary, or by voting at the Annual Meeting (although attendance at the Annual Meeting will not in and of itself constitute a revocation of the proxy). If you hold shares through a broker, bank or other nominee, you must follow the instructions of your broker, bank or other nominee to change or revoke your voting instructions. Attending and Voting at the Annual Meeting. If you are a stockholder of our company, you are invited to attend the Annual Meeting in person at our corporate offices on the date and time indicated above. Directions to our corporate offices may be obtained by calling (801) 345-1000. Please bring proof of your stock ownership. If you are a beneficial, or “street name,” holder of our common stock and you wish to vote in person at the Annual Meeting, you will additionally be required to present a legal proxy from your broker, bank or other nominee. Quorum. In order to constitute a quorum for the conduct of business at the Annual Meeting, a majority of the issued and outstanding shares of the Class A Common Stock entitled to vote at the Annual Meeting must be represented, either in person or by proxy, at the Annual Meeting. Under Delaware law, shares represented by proxy that reflect abstentions or “broker non-votes” (which are shares held by a broker or nominee that are represented at the Annual Meeting, but with respect to which such broker or nominee is not permitted to vote on a particular proposal without instructions from the beneficial owner and instructions are not given) will be counted for purposes of determining the presence of a quorum. However, broker non-votes will not be voted on proposals on which your broker or other nominee does not have discretionary authority to vote under the rules of the New York Stock Exchange (the “NYSE”), including Proposals 1, 2 and 3. Voting Standards and Effects. For a director nominee to be elected in Proposal 1, and for Proposals 2, 3 and 4 to be approved, such director nominee or proposal must receive more “for” votes than “against” votes. Shares not represented in person or by proxy at the Annual Meeting, abstentions and broker non-votes will have no effect on the determination of any of the proposals. Additional provisions applying to the matters to be acted upon at the Annual Meeting are as follows:
SCHEDULE 14A INFORMATION
| – | Proposal 1. Our Bylaws provide that an incumbent director shall be eligible for re-election only if she or he submits an irrevocable resignation that will be effective upon (i) such person failing to receive the required vote for re-election at the next annual meeting and (ii) Board acceptance of such resignation. Thus, an incumbent director’s previously submitted resignation may become effective if such director fails to receive the requisite vote at the meeting. Within 90 days after the date of the certification of the election results, the Board will determine whether to accept or reject the resignation or whether other action should be taken, and the Board will publicly disclose its decision. |
SCHEDULE 14A INFORMATION
| – | Proposals 2 and 4. Proposals 2 and 4 are stockholder advisory votes and will not be binding on the Board of Directors. |
SCHEDULE 14A INFORMATION
PROPOSAL 1: ELECTION OF DIRECTORS Directors are elected at each annual meeting of stockholders and hold office until their successors are duly elected and qualified at the next annual meeting of stockholders or until their earlier death, resignation or removal. Our Bylaws provide that the Board of Directors will consist of a minimum of three and a maximum of fifteen directors, with the number being designated by the Board. The current number of authorized directors is nine, but it will decrease to eight at the time of the director elections at the Annual Meeting due to the retirement of Andrew D. Lipman. The Board has decided not to replace the seat vacated by Mr. Lipman at this time. Set forth below are the name, age as of April 1, 2024, business experience and other qualifications of each of our eight director nominees, listed in alphabetical order. Each nominee is a current director and was elected at our 2023 annual meeting of stockholders. We are not aware of any family relationships among any of our directors, director nominees or executive officers. As previously disclosed, Mr. Lipman has informed us that he will retire from the Board at the time of the Annual Meeting and will not stand for re-election. Our Board extends gratitude to Mr. Lipman for his contributions and many years of service to Nu Skin.
SCHEDULE 14A INFORMATION
| Emma S. Battle | | | Director since 2021 | Compensation and Human Capital Committee (Chair) Nominating and Corporate Governance Committee | | Emma S. Battle, 63, has served as the President and Chief Executive Officer of Market Vigor, LLC, a business services company focused on strategic consulting and digital and online marketing, since she founded the company in 2003. From 2015 to 2017, Ms. Battle was Vice President of Client Success at Windsor Circle, an e-commerce marketing company. Previously, she served in executive and senior marketing and sales roles at Three Ships Media, Red Hat, Art.com, 1 Sync and Sara Lee Branded Apparel (now known as Hanesbrands Inc.). Ms. Battle has served on the board of directors of Unifi, Inc., a global textile solutions provider listed on the NYSE, since 2021 and of Bassett Furniture Industries, Inc., a manufacturer and marketer of home furnishings listed on the Nasdaq Global Select Market, since 2020. From 2019 to 2020, she was on the board of directors of Primo Water Corporation, a provider of drinking water products that was listed on the Nasdaq Global Market until the company was acquired in 2020. Ms. Battle pursues continuing education through online classes and membership in professional organizations like Brentwood Advisory Group, and supports and collaborates with current and aspiring board directors through UNC’s Director Diversity Initiative, Onboard NC, Santa Clara University’s Black Corporate Board Readiness program and the Take Your Seat initiative. Ms. Battle also devotes time to charitable and civic causes; since 2017 she has served as the President and Chief Executive Officer of Higher Ed Works, a charitable organization that supports public higher education in North Carolina, and she also serves on the board of Elon University’s School of Business. She received a B.A. degree from Duke University and a M.B.A. degree from Harvard Business School. Ms. Battle is a successful businessperson with an extensive background in digital and online marketing, marketing analytics, and business and marketing strategy, which is valuable to the Board as we continue to build our digital business. She also brings to the Board her perspective from working with other large corporations and on other public company boards. In addition, Ms. Battle’s experience managing and consulting with smaller, entrepreneurial businesses provides a valuable perspective in managing our business in a manner that is effective for our independent sales force. The Board also values Ms. Battle’s commitment to sustainability and social responsibility, which are two areas of focus for our company and many stockholders. | |
SCHEDULE 14A INFORMATION
| Daniel W. Campbell | | | Director since 1997 | Lead Independent Director Audit Committee Compensation and Human Capital Committee | | Daniel W. Campbell, 69, has been a Managing General Partner of EsNet, Ltd., a privately held investment company, since 1994. He served on the Utah State Board of Regents for Higher Education from 2010 to 2019, having served as its Vice Chair from 2012 to 2014 and as Chair from 2014 to 2018. From 1992 to 1994, Mr. Campbell was the Senior Vice President and Chief Financial Officer of WordPerfect Corporation, a software company, and prior to that was a partner of Price Waterhouse LLP. He received a B.S. degree from Brigham Young University. Mr. Campbell is a recognized business leader with expertise in the areas of finance, accounting, transactions, corporate governance and management. He has served on the boards of several other private and public companies. In addition, through his experience as a partner of an international accounting firm, and later as Chief Financial Officer of a large technology company, Mr. Campbell has developed deep insight into the management, operations, finances and governance of public companies. | |
SCHEDULE 14A INFORMATION
| Steven J. Lund | | | Director since 1996 (includes three-year leave of absence) | Executive Chairman of the Board | | Steven J. Lund, 70, has served as the Chairman of the Board since 2012. Mr. Lund previously served as Vice Chairman of the Board from 2006 to 2012. Mr. Lund served as President, Chief Executive Officer and a director of our company from 1996, when our company went public, until 2003, when he took a three-year leave of absence. Mr. Lund was one of our company’s founders. He is a trustee of the Force for Good Foundation, a charitable organization that our company established in 1996 to help encourage and drive the philanthropic efforts of our company and its employees, sales force and customers to enrich the lives of others. Mr. Lund worked as an attorney in private practice prior to joining our company as Vice President and General Counsel. He received a B.A. degree from Brigham Young University and a J.D. degree from Brigham Young University’s J. Reuben Clark Law School. Mr. Lund brings to the Board over 35 years of company and industry knowledge and experience as a senior executive, including service as our General Counsel, Executive Vice President, and President and Chief Executive Officer. He played an integral role in managing our growth from start-up through his term as President and Chief Executive Officer. Mr. Lund also served on the Executive Board of the U.S. Direct Selling Association. A respected leader in his business, religious and civic communities, he currently serves as a general officer of The Church of Jesus Christ of Latter-day Saints and serves on this Church’s Board of Education with oversight of its institutions of higher education, including Brigham Young University. He previously served on the Utah State Board of Regents for Higher Education and as Chairman of the Board of Trustees of Utah Valley University. | |
SCHEDULE 14A INFORMATION
| Ryan S. Napierski | | | Director since 2021 | President and Chief Executive Officer | | Ryan S. Napierski, 50, has served as our company’s CEO since 2021 and as President since 2017. Previously, he served as President of Global Sales and Operations from 2015 to 2017. Prior to serving in that position, he served as both President of our North Asia region since 2014 and President of Nu Skin Japan since 2010. Mr. Napierski has fulfilled multiple leadership positions for Nu Skin since joining our company in 1995, including Vice President of Business Development for Nu Skin EMEA and General Manager of the United Kingdom. Mr. Napierski has a Bachelor’s degree in business, a Master of Business Administration degree from Duke University and a Master’s degree in international business from Goethe Universitat in Germany. | |
SCHEDULE 14A INFORMATION
| Mr. Napierski brings to the Board a strong expertise in direct sales, including through digital and social media platforms. Having served as our CEO, President, President of Global Sales and Operations, and in other management roles in our markets, Mr. Napierski also has a deep understanding of our business globally, including our sales force, products and product development, markets and compensation plans. Mr. Napierski’s leadership has been integral to the success of several of our key initiatives in recent years. Mr. Napierski is also recognized as a leader in the direct selling industry and has served in a variety of industry trade association leadership roles. For example, he is a past Chairman of the U.S. Direct Selling Association and the current Chairman of the Advocacy Committee for the World Federation of Direct Selling Associations. |
SCHEDULE 14A INFORMATION
| Laura Nathanson | | | Director since 2019 | Compensation and Human Capital Committee Nominating and Corporate Governance Committee (Chair) | | Laura Nathanson, 66, retired from The Walt Disney Company in 2019 after 21 years of service in sales and advertising positions. From 2017 to 2019, she served as Executive Vice President of Revenue and Operations at Disney Advertising Sales, and from 2002 to 2017, she served as Executive Vice President of Sales and Marketing at ABC Family/Freeform. Prior to 2002, she served in various other sales and advertising positions with ABC Network Sales, Fox Broadcasting and various media agencies. She received a B.A. degree from Wesleyan University. Ms. Nathanson is an experienced leader who brings to the Board her expertise in sales and advertising, as well as a strong customer focus that is built on a 40-year career in connecting with and communicating with customers. Business strategy is also one of Ms. Nathanson’s strengths; during her career, she has recognized and understood shifts in the business landscape, such as the rise of the millennial demographic and the trend toward digital advertising, and has quickly adapted to these shifts, enabling her companies to capitalize on them at an early stage. She also has experience in streamlining business processes and in promoting sales through digital and social media. | |
SCHEDULE 14A INFORMATION
| Thomas R. Pisano | | | Director since 2008 | Audit Committee Compensation and Human Capital Committee | | Thomas R. Pisano, 79, served as Chief Executive Officer and a director of Overseas Military Sales Corp. (“OMSC”), a marketer of motor vehicles, from 2005 until his retirement in 2010. From 1998 to 2004, he served as the Chief Operating Officer and a director of OMSC. From 1995 to 1997, he served as Vice President and Head of the International Division for The Topps Company, Inc., a sports publications and confectionery products company. Prior to that, he served in various positions, including Vice President of Global New Business Development, for Avon Products, Inc., a direct seller of personal care products, from 1969 to 1994. He received a B.S. from the Georgia Institute of Technology and a M.B.A. from Dartmouth College. Mr. Pisano is an experienced senior executive who is an expert in the direct selling, personal care, beauty products and other consumer goods industries. During his 25-year career at Avon, he was responsible for global new business development, which included new geographic market openings and launching new product lines globally. He was also responsible for the operation of international businesses in Latin America, Europe and Asia. During his international business career at Avon, Topps and OMSC, he traveled to and conducted business in approximately 50 countries. | |
SCHEDULE 14A INFORMATION
| Zheqing (Simon) Shen | | | Director since 2016 | Nominating and Corporate Governance Committee | | Zheqing (Simon) Shen, 44, is the founding member of ZQ Capital Limited, a boutique investment and advisory firm. Prior to founding ZQ Capital in 2015, Mr. Shen was managing director and head of the China Financial Institutions Business at Barclays from 2011 to 2015. From 2004 to 2010, he worked with Goldman Sachs as an investment banker in its New York and Hong Kong offices. In addition to his service on our Board, Mr. Shen has also served since 2016 on the board of directors and the Audit, Remuneration and Nomination Committees of KFM Kingdom Holdings Limited, a precision metals engineering and manufacturing company listed on the Hong Kong Stock Exchange. He has also served since 2022 on the board of directors and the Remuneration Committee of Allergy Therapeutics PLC, a biotechnology company specializing in allergy vaccines that is listed on the Alternative Investment Market, which is a sub-market of the London Stock Exchange. Mr. Shen has a B.A. in mathematics and economics from Wesleyan University. Mr. Shen brings to the Board valuable expertise in helping global companies realize their growth potential in Mainland China, which is one of our company’s key markets. He has spent much of his career working in Asia capital markets, and he has a strong network in Mainland China and valuable local knowledge of Mainland China. His depth of experience with financial and investment matters is also valuable to the Board. | |
SCHEDULE 14A INFORMATION
| Edwina D. Woodbury | | | Director since 2015 | Audit Committee (Chair) Nominating and Corporate Governance Committee | | Edwina D. Woodbury, 72, has over 20 years of experience in the direct selling and personal care products industries, having served at Avon Products, Inc. as Chief Financial and Administrative Officer and in other finance and operations positions from 1977 to 1998. From 1998 to 2015, Ms. Woodbury served as a member of the board of directors of RadioShack Corporation, a retail consumer electronics company. In addition, from 2005 to 2010, Ms. Woodbury served as a member of the board of directors of R.H. Donnelley Corporation, a publishing and marketing company, and from 2000 to 2005, she served as a director of Click Commerce, Inc., a research solutions company. Ms. Woodbury also served as President and Chief Executive Officer of The Chapel Hill Press, Inc., a publishing services company, from 1999 to August 2023, and she served on the board of directors of the nonprofit Medical Foundation of North Carolina from 2009 to 2018. She currently serves on the board and as treasurer of Galloway Ridge, a non-profit continuing care community in North Carolina. She received a B.S.B.A from the University of North Carolina. Ms. Woodbury has extensive experience and understanding of our industry. While serving in various roles of increasing responsibility during her 21 years at Avon, she gained an in-depth understanding of the financial and internal control-related issues associated with global companies in our industry. She also brings to the Board valuable perspective from her service on other public company boards. While serving on the boards of Click Commerce, R.H. Donnelley and RadioShack, she (1) served on and chaired each board’s audit committee; (2) served on the compensation committee at R.H. Donnelley and chaired it at RadioShack; and (3) served on the nominating and governance committee at Click Commerce and RadioShack. | |
SCHEDULE 14A INFORMATION
——————————————— Each nominee was recommended by the Nominating and Corporate Governance Committee for election and has consented to being named in any proxy statement for the Annual Meeting and to serve if elected. Although we do not know of any reason for which any nominee might become unavailable to serve on the Board, if that should happen, the Board may designate a substitute nominee. Shares represented by proxies will be voted for any substitute nominee so designated. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH OF THE EIGHT NOMINEES TO OUR BOARD OF DIRECTORS. CORPORATE GOVERNANCE
Board Committees
| – | Overseeing the administration and maintenance of our broad-based retirement and non-qualified deferred compensation benefit plans to the extent such functions have not been delegated to a management-level committee. |
Board Committees
| – | Making recommendations to the Board regarding changes in compensation of non-employee directors and overseeing the evaluation of the Board and management; |
2024 Executive Officer Appointment
| Non-Employee Director Compensation | | | Annual cash retainer Board Committee | $85,000 $10,000 per committee | | Additional annual cash retainer for leadership: Lead Independent Director Audit Committee Chair Other committee chairs | $25,000 $20,000 $15,000 | | Meeting fees | None(1) | | Annual equity award (restricted stock units) | $150,000 value |
Director Compensation Table – 2023
Director Compensation Table – 2023 The table below summarizes the compensation earned by or paid to each person who served as a director during 2023 except Mr. Napierski, whose compensation is reported in the executive compensation tables. Mr. Napierski served as a director, but as a company employee he received no compensation for services as a director.
Director Compensation Table – 2023
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | | Emma S. Battle | 119,125 | 145,200 | — | 264,325 | | Daniel W. Campbell | 135,000 | 145,200 | — | 280,200 | | Andrew D. Lipman | 115,500 | 145,200 | 20,914 | 281,614 | | Laura Nathanson | 123,000 | 145,200 | — | 268,200 | | Thomas R. Pisano | 111,875 | 145,200 | — | 257,075 | | Zheqing (Simon) Shen | 104,000 | 145,200 | — | 249,200 | | Edwina D. Woodbury | 128,000 | 145,200 | — | 273,200 | | Steven J. Lund | — | — | 856,608 | 856,608 |
Director Compensation Table – 2023
| (1) On June 7, 2023, each of the directors listed in the table above except for Mr. Lund, who is an employee, was granted 4,232 restricted stock units, which will vest on April 30, 2024. The amounts reported in this column reflect the aggregate grant date fair value of the restricted stock units. For this purpose, the value of the restricted stock units is discounted to reflect that no dividends are paid prior to vesting. |
Director Compensation Table – 2023
As of December 31, 2023, none of the directors listed in the table above had any outstanding stock awards or option awards besides the restricted stock units noted in the previous paragraph.
Director Compensation Table – 2023
| (2) This column reports our incremental cost for perquisites and other personal benefits provided to those directors whose total was at least $10,000, as well as other forms of compensation. |
Director Compensation Table – 2023
| – | The amount reported for Mr. Lipman includes spouse travel to a sales force event where his spouse was expected to help entertain and participate in events with our sales force and their spouses, $10,170 reimbursed by us for the payment of taxes with respect to such spouse travel, company products and a holiday gift. |
Director Compensation Table – 2023
| – | The amount reported for Mr. Lund consists of Mr. Lund’s compensation as an employee of the company for 2023: $570,000 in salary; a cash incentive plan bonus of $199,386; and $87,222 in other compensation, including $26,057 in premiums for life insurance, $13,200 in 401(k) contributions, $28,277 of spouse travel to a sales force event where his spouse was expected to help entertain and participate in events with our sales force and their spouses, $11,608 reimbursed by us for the payment of taxes with respect to such spouse travel, company products, home security monitoring, premiums for long-term disability insurance and a holiday gift. |
Director Compensation Table – 2023
EXECUTIVE COMPENSATION: COMPENSATION DISCUSSION AND ANALYSIS Our Compensation Discussion and Analysis (“CD&A”) describes our executive compensation programs and compensation decisions in 2023 for our named executive officers (“NEOs”), who for 2023 were:
Director Compensation Table – 2023
| Ryan S. Napierski | President and Chief Executive Officer | | James D. Thomas | Executive Vice President and Chief Financial Officer | | Chayce D. Clark | Executive Vice President and General Counsel | | Steven K. Hatchett | Executive Vice President and Chief Product Officer | | Connie Tang | Former Executive Vice President and Chief Global Growth and Customer Experience Officer | | Mark H. Lawrence | Former Executive Vice President and Chief Financial Officer | | Joseph Y. Chang | Former Executive Vice President and Chief Scientific Officer |
Director Compensation Table – 2023
References to our “Continuing NEOs” in this CD&A refer to all of the above NEOs other than Ms. Tang and Messrs. Lawrence and Chang, who, as discussed below, stepped down from their positions during 2023 (Ms. Tang and Mr. Lawrence) and in March 2024 (Mr. Chang).
Compensation Overview
| – | Provide competitive compensation arrangements that are tied to corporate and individual performance in the short- and long-term; |
Compensation Overview
| – | Drive superior stockholder value over the long-term. |
Compensation Overview
| Component of Compensation Program | Objective | | Base Salary (Fixed Pay) | – Pay for role – Aids in recruitment and retention | | Cash Incentive Plan (Variable Pay: Short-Term Incentive) | – Pay for performance – Aligns with annual operating achievement – Aids in recruitment and retention | | Equity Incentive Plan (Variable Pay: Long-Term Incentive) | – Pay for performance – Aligns with stock price performance and multi-year operating achievement – Aids in recruitment and retention |
Components of Compensation
Cash incentive bonuses under our Executive Cash Incentive Plan are based on annual performance results and are paid annually after the end of each year. The cash incentive program that applies to our non-executive employees is divided between quarterly and annual results and has a quarterly payout opportunity. Mr. Thomas participated in our non-executive bonus program for the first half of 2023, prior to his promotion in July 2023. Accordingly, his aggregate bonus target and payout amounts for 2023 consisted of a mix of our non-executive and executive bonus programs. Target Bonus. Cash incentive bonuses are computed based on the degree to which pre-determined goal performance levels are met or exceeded. If goal performance levels are met for a particular incentive period, a participant will earn a bonus equal to a pre-established percentage of year-end base salary, the “target bonus.” We set the target bonus as a percentage of base salary based on an executive officer’s position and responsibility and on market practices. The following table provides the target bonus percentages (as a percentage of salary) for each of our NEOs in 2023.
Components of Compensation
| Named Executive Officer | 2023 Target Bonus % (End of Year) | | Ryan S. Napierski | 110% | | James D. Thomas | 75% | | Chayce D. Clark | 75% | | Steven K. Hatchett | 75% | | Connie Tang | 75% | | Mark H. Lawrence | N/A | | Joseph Y. Chang | 75% |
Components of Compensation
| ○ | Goal performance levels – The bonus amount will be the participant’s target bonus amount for the incentive period. |
Components of Compensation
| ○ | Minimum performance levels – The bonus amount will be 25% of the participant’s target bonus amount for the incentive period. |
Components of Compensation
| ○ | Stretch performance levels – The bonus amount will be 200% of the participant’s target bonus amount for the incentive period. |
Components of Compensation
| – | Payouts are interpolated linearly if actual results fall between the minimum and goal measurement points or between the goal and stretch measurement points. |
Components of Compensation
| – | If the minimum adjusted operating income performance level is not met, then (1) no bonus is paid for the adjusted revenue performance level regardless of achievement; and (2) payout for achievement of the strategic goals is capped at the goal level, meaning the maximum aggregate bonus that can be earned is 25% of target bonus amount. |
Components of Compensation
| – | If the minimum adjusted operating income performance level is met, a bonus may still be earned based on achievement of the adjusted revenue performance levels and the strategic goals. |
Components of Compensation
| (dollar amounts in thousands; adjusted gross margin improvement in basis points) | | | | | | | | Metric | 2023 Targets | | | 2023 Result (1) | % of Goal Level Achieved | % of Target Bonus Paid (2) | | | Minimum | Goal | Stretch | | | | | Financial Goals - 75% weighting, split evenly between the two metrics | | | | | | | | Adjusted revenue | $1,891,000 | $2,114,000 | $2,338,000 | $2,019,004 | 95.5% | 68.1% | | Adjusted operating income | $127,000 | $178,000 | $216,000 | $156,009 | 87.6% | 67.7% | | Strategic Goals - 25% weighting, split evenly among the four metrics | | | | | | | | New product revenue | $300,000 | $400,000 | $500,000 | $283,708 | 70.9% | 0.0% | | Adjusted gross margin improvement (basis points) | 0 | +20 | +30 | (70) | 0% | 0.0% | | Channel growth | | | | | | | | Sales leaders | 40,000 | 50,000 | 60,000 | 44,059 | 88.1% | 55.4% | | Paid affiliates | 225,000 | 250,000 | 285,000 | 166,886 | 66.8% | 0.0% | | Passed LOIs | 15,000 | 18,000 | 21,000 | 9,372 | 52.1% | 0.0% | | Monthly active app users | | | | | | | | Vera customer app | 200,000 | 250,000 | 300,000 | 114,641 | 45.9% | 0.0% | | Stela business app | 50,000 | 65,000 | 80,000 | 83,234 | 128.1% | 200.0% | | Aggregate payout percentage, reflecting the weightings noted above: | | | | | | 58.3% |
Components of Compensation
| (2) Calculated based on the linear interpolation of actual 2023 results between the minimum and goal targets (which correspond to the 25% and 100% payout levels, respectively) where applicable. Achievement of our goals for Stela monthly active app users was above the stretch target. |
Components of Compensation
Overall, our 2023 results fell below the goal performance levels established at the beginning of the year, and consistent with our commitment to pay for performance, the cash incentive awards were earned below target level in 2023. Equity Awards Aligning the interests of our executive officers with those of our stockholders is an important objective of our compensation program. To accomplish this objective, we tie a significant portion of our executive officers’ total compensation to our long-term stock performance through the grant of equity awards and to our equity retention guidelines, which require our executive officers to retain a specified amount of their equity. We also believe that equity compensation helps motivate executive officers to drive earnings growth because they will be rewarded with increased equity value, and assists in the retention of executive officers who may have significant value tied up in unvested equity awards. Calibration of Equity Awards. We periodically review and adjust the level of our equity awards. We do not use a fixed formula or criteria in determining whether to adjust the level of equity awards, but subjectively evaluate a variety of factors, such as:
Components of Compensation
| – Practices of peer companies – Degree of responsibility for overall corporate performance – Overall compensation levels – Changes in position and/or responsibilities – Individual performance – Company performance – Total stockholder return | – Degree of performance risk in the equity grant program – Potential dilution of our overall equity grants – Accumulated realized and unrealized value of past equity awards – Associated expenses of equity awards – The recommendations of the CEO – Data and context provided by our compensation consultant |
Components of Compensation
Historically, we have referenced peer company compensation data for context on pay levels and performance requirements compared to our peers. We generally have not given significant consideration to the value of existing equity award holdings because we want to ensure that our equity compensation is competitive for the position on an annualized basis and we want to provide an incentive from the date of grant. However, we periodically review and consider the in-the-money value of existing award holdings of our executive officers in connection with our review of equity compensation practices to determine if wealth creation is aligning with performance and the amount of unvested equity in place for retention. Use of Performance-Based Equity Awards. The annual equity award consists of a mix of PRSUs and RSUs. Approximately 50% of the equity awards granted in our annual program in 2023 were performance based, and they are earned for achieving multi-year performance goals. To align management with our stockholders’ interests, the performance goals are tied to adjusted EPS, measured as diluted EPS excluding extraneous items such as the impact of accounting changes; losses or gains on settlements of litigation that began prior to 2023; and other items that are non-recurring, unusual, infrequent or outside of management’s control. The adjusted EPS metric also provides a balance to the top-line and operating-income metrics in the cash incentive bonus program. Consistent with our historical practice, NEOs earn 100% of their target award if performance is at goal level, and they earn 25% of their target award if performance is at the minimum level. The terms of the performance-based equity awards give NEOs the opportunity to earn up to 150% of their target award if performance meets certain pre-defined “stretch” levels, and up to 200% if performance meets certain pre-defined “super stretch” levels. This closely aligns the maximum payout opportunity with competitive practice and further strengthens our alignment with stockholders. Our performance-based equity awards are typically divided into three equal tranches. The three tranches are contingent on performance over the year of the grant and the two following years, respectively. Although the grants measure three one-year periods, the goals for all three years are established up front at the time of grant to ensure a longer-term orientation without the “reset” of goals each year. As reflected in the following table, the performance-based equity awards granted in February 2023 to the NEOs who were serving as executive officers at that time were weighted at 50%.
Components of Compensation
| TARGET EQUITY AWARDS – FEBRUARY 2023 | | | | | Named Executive Officer | Perf.-Based RSUs | Time-Based RSUs | Percentage Perf.-Based | | Ryan S. Napierski | 53,064 | 53,064 | 50% | | Chayce D. Clark | 18,090 | 18,090 | 50% | | Steven K. Hatchett | 10,251 | 10,251 | 50% | | Connie Tang | 13,507 | 13,507 | 50% | | Mark H. Lawrence | 19,899 | 19,899 | 50% | | Joseph Y. Chang(1) | — | — | N/A |
Components of Compensation
| (1) Mr. Chang was not granted an equity award in 2023 due to his forthcoming retirement. |
Components of Compensation
Mr. Thomas received an award of 3,406 PRSUs and 9,330 RSUs in February 2023, before he was an executive officer. He was granted 6,360 RSUs upon his appointment as our Interim Chief Financial Officer in March 2023. Upon his promotion to Executive Vice President and Chief Financial Officer in July 2023, Mr. Thomas received an additional award of 8,328 PRSUs and 8,328 RSUs, reflecting the same 50% weighting of performance-based equity for executive officers that is noted in the table above. Performance-Based Awards Granted in 2021–2023 – Goals and Vesting. Our performance-based equity awards in the past several years have generally been structured with three tranches, with vesting contingent on the achievement of adjusted EPS goals in the year of grant and in each of the two following years. The goals for all three of these one-year periods are set at the time of grant. Performance-based equity awards granted in 2021, 2022 and 2023 included tranches that were contingent on 2023 results. Two of these three tranches ultimately paid out at 0%, and the third was earned between minimum and target:
Process for Determining Compensation
Process for Determining Compensation Role of Compensation and Human Capital Committee and Chief Executive Officer The Committee is responsible for establishing and administering our executive compensation program. The Committee participates in the performance evaluation process of the Chairman and of the CEO, which process is led by the Nominating and Corporate Governance Committee. The Committee is then responsible for setting their compensation. The CEO, with oversight by the Nominating and Corporate Governance Committee, is responsible for evaluating the performance of the other executive officers and then making recommendations to the Committee with regard to the compensation packages for these officers. The Committee reviews any such recommendations and has the authority to approve, revise or reject such recommendations. Role of Compensation Consultant The Committee has retained the services of Semler Brossy as its independent compensation consultant to assist in the review of our executive compensation program, to provide compensation data and alternatives to the Committee, and to provide advice to the Committee as requested, including limited advice regarding employee equity grants and the compensation programs of our subsidiary companies when requested by the Committee. The Committee utilizes the compensation data and alternatives provided by the compensation consultant to analyze compensation decisions in light of current market rates and practices. During 2023, Semler Brossy did not perform any work for us outside of the services performed for the Committee and for the Nominating and Corporate Governance Committee with respect to director compensation. The Committee annually reviews the independence of its compensation consultant in light of SEC rules and NYSE Listed Company Rules regarding compensation consultant independence and has concluded that Semler Brossy is independent from the company and has no conflicts of interest related to its engagement by the Committee. In addition, during 2023–2024, management retained the services of Meridian Compensation Partners to advise and assist management and the Committee on equity plan matters and potential amendments to our Third Amended and Restated 2010 Omnibus Incentive Plan. Use of Competitive Data The Committee uses peer group information in making compensation decisions. The Committee compares compensation proposals to the compensation practices of a peer group of publicly-traded companies that compete with us broadly in the consumer products industry—with a preference for those with a direct selling business model—and are similar in size to us. The Committee reviews and updates the peer group from time to time to ensure it is utilizing an appropriate group in terms of size and relevance. Following such a review, in 2022 the Committee determined to update the peer group by removing Primerica, Inc. and Revlon, Inc. and adding Cricut, Inc., Overstock.com, Inc., and Sonos, Inc. These changes were to align with our focus on connected devices and also with our location, market capitalization and revenue. The newly constituted peer group was used in making compensation decisions for 2023, and it consists of the following companies:
Process for Determining Compensation
In August 2023, the Committee removed Church & Dwight Co., Inc. from the peer group due to differences in market capitalization and industry focus, and the Committee removed Tupperware Brands Corporation due to differences in market capitalization. The newly constituted peer group was used in making compensation decisions for 2024. Mix of Compensation When the Committee reviews an executive officer’s compensation, it does not use a specific formula or allocation target to establish the level or mix of total compensation. Rather, it exercises judgment in determining a compensation package that is appropriate to accomplish our compensation objectives under the circumstances applicable to the executive officer. The Committee also reviews the relative mix of compensation provided by other companies in our peer group for context and tries to ensure each component is competitive. Historically, we have tied a substantial amount of compensation to corporate performance under our cash incentive plan and equity incentive plan. The Committee also reviews each executive officer’s total compensation as a market check against the total compensation of executive officers in our peer group. This total compensation review focuses on base salary, cash bonuses, and valuation of equity grants using grant date valuations. The Committee periodically reviews perquisites and retirement benefits to confirm that they remain relatively consistent with the value of perquisites and retirement benefits provided by our peer companies. Risks Arising From Compensation Policies and Practices In establishing and reviewing the components of compensation, the Committee considers potential risks associated with such components. In addition, our management conducted a review of our compensation policies and practices for employees and concluded that risks arising from such compensation policies and practices, as they relate to risk management practices and risk-taking incentives, are not reasonably likely to have a material adverse effect on us. In reaching this conclusion, our management considered the following factors:
Process for Determining Compensation
| – | Our compensation programs are market driven and balance short-term incentives with significant long-term incentives. These awards are capped with maximum payout amounts to avoid encouraging excessive risks. |
Process for Determining Compensation
| – | Performance-contingent awards provide additional long-term incentives to our key employees and executive officers. In addition, our equity retention guidelines help to ensure that a portion of our executives’ equity incentives remains tied to our long-term performance. |
Other Compensation-Related Governance
Other Compensation-Related Governance Clawback Policies and Provisions We have the following clawback-related policies and provisions: Current Omnibus Incentive Plan and Awards Thereunder. Pursuant to our Third Amended and Restated 2010 Omnibus Incentive Plan (the “Third A&R Plan”), any and all awards granted under the Third A&R Plan will be canceled if the participant violates a non-competition, non-solicitation or non-disclosure covenant or agreement or otherwise engages in activity that is in conflict with or adverse to our interests, including conduct contributing to any financial restatements or financial irregularities, as determined by the Committee. In addition, all compensation awarded under our current and prior plans will be subject to recovery or other penalties pursuant to (i) any clawback policy of the company, as may be adopted or amended from time to time; (ii) any clawback provision set forth in an award agreement; and (iii) any applicable law, rule or regulation or applicable stock exchange rule, including, without limitation, Section 304 of the Sarbanes-Oxley Act of 2002, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Section 10D of the Securities Exchange Act of 1934 and any applicable stock exchange listing rule adopted pursuant thereto. Further, if we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws, the Committee may terminate any awards granted under our current and prior plans and/or require any participant to reimburse us for the amount of any payment or benefit received with respect to such awards to the extent they would not have been earned or accrued after giving effect to the restatement. Consistent with the Third A&R Plan, our equity incentive awards and our cash incentive awards contain cancellation, clawback and recoupment provisions that allow the Committee to recover an executive’s gains from such awards if the executive materially breaches certain obligations or covenants, including non-competition, non-solicitation and non-disclosure covenants, or willfully engages in or is convicted of certain illegal activity, fraud or other misconduct. In such event, we may terminate the outstanding awards of such executive and recover any gains from the awards during the twelve months preceding the act or anytime thereafter. Our cash incentive awards and performance-based equity awards additionally include similar cancellation, clawback and recoupment provisions that apply in the case of a financial restatement to the extent the award would not have been earned or accrued after giving effect to the restatement. Recovery Policy. In November 2023, we adopted our Executive Officer Incentive Compensation Recovery Policy (the “Recovery Policy”) in compliance with recently adopted NYSE listing standards and Section 10D of the Securities Exchange Act of 1934. The Recovery Policy applies to current or former Section 16 officers in the event that we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws; misconduct on the part of the executive is not required. Under the Recovery Policy, we are required to recoup incentive-based compensation (as that term is defined in Section 10D of the Exchange Act, which includes our PRSU awards and our annual incentive awards) erroneously received within the three fiscal years preceding the date restatement is determined to be required. A copy of the Recovery Policy was filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2023. 2024 Omnibus Incentive Plan. Our 2024 Omnibus Incentive Plan, which will be submitted for stockholder approval at the Annual Meeting, contains provisions similar to, and consistent with, our Third A&R Plan and the Recovery Policy. For more information about this plan, see “Proposal 3: Approval of 2024 Omnibus Incentive Plan”—“Cancellation of Award; Forfeiture of Gain” and —“Clawback or Recoupment.” Equity Retention Guidelines Our equity retention guidelines are designed to motivate our executive officers and directors to consider the long-term consequences of business strategies and to provide a level of long-term performance risk with respect to our compensation programs. These guidelines generally require executive officers and directors to retain 50% of the net shares (after payment of the exercise price and related taxes) with respect to any equity award unless the individual holds a number of shares having a value equal to a multiple of his or her base salary (for executives) or annual cash retainer (for non-management directors), as follows:
Summary Compensation Table
Summary Compensation Table The following table summarizes the total compensation of each of the NEOs for 2021, 2022 and 2023, as calculated in accordance with SEC rules. The amounts in the “Stock Awards” and “Option Awards” columns do not necessarily reflect the amounts actually earned by the NEOs because they include performance-based equity awards that were granted during the respective year regardless of whether and when they are ultimately earned, based on company performance.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | | Continuing NEOs | | | | | | | | | | Ryan S. Napierski President and Chief Executive Officer | 2023 | 991,918 | — | 4,046,074 | — | 641,300 | 159,287 | 5,838,579 | | | 2022 | 941,918 | 206,842 | 3,485,069 | — | — | 130,637 | 4,764,466 | | | 2021 | 800,960 | — | 1,253,109 | 2,018,409 | 548,758 | 110,734 | 4,731,970 | | James D. Thomas EVP and Chief Financial Officer | 2023 | 410,595 | 7,692 | 1,165,743 | — | 182,980 | 88,030 | 1,855,040 | | Chayce D. Clark EVP and General Counsel | 2023 | 533,836 | — | 1,379,344 | — | 240,488 | 122,147 | 2,275,814 | | | 2022 | 441,918 | 66,029 | 3,244,483 | — | — | 85,709 | 3,838,139 | | | 2021 | 343,725 | 6,767 | 229,070 | 213,228 | 133,742 | 56,683 | 983,215 | | Steven K. Hatchett EVP and Chief Product Officer | 2023 | 413,414 | — | 781,628 | — | 181,896 | 37,952 | 1,414,890 | | Departed NEOs | | | | | | | | | | Connie Tang Former EVP and Chief Global Growth & Cust. Exp. Officer | 2023 | 636,767 | — | 1,029,895 | — | 279,840 | 145,741 | 2,092,244 | | | 2022 | 577,951 | 71,729 | 1,240,666 | — | — | 119,880 | 2,010,226 | | | 2021 | 413,648 | 25 | 929,550 | — | 203,737 | 41,296 | 1,588,256 | | Mark H. Lawrence Former EVP and Chief Financial Officer | 2023 | 199,795 | — | 1,517,278 | — | — | 24,944 | 1,742,017 | | | 2022 | 591,767 | 88,662 | 1,254,647 | — | — | 118,867 | 2,053,943 | | | 2021 | 551,741 | — | 405,495 | 659,598 | 273,006 | 93,829 | 1,983,669 | | Joseph Y. Chang Former EVP and Chief Scientific Officer | 2023 | 702,228 | — | — | — | 308,502 | 112,327 | 1,123,057 | | | 2022 | 685,000 | 102,750 | 743,476 | — | — | 119,291 | 1,650,517 | | | 2021 | 685,858 | — | 294,934 | 479,700 | 338,580 | 105,915 | 1,904,987 |
Summary Compensation Table
| (1) Each of the NEOs, other than Mr. Hatchett, deferred a portion of their salaries under our nonqualified Deferred Compensation Plan, which is included in the Nonqualified Deferred Compensation – 2023 table. Each of the NEOs also contributed a portion of their salary to our 401(k) retirement savings plan. |
Summary Compensation Table
| (2) The amount reported in this column for 2023 for Mr. Thomas consists of a holiday bonus given to all non-executive corporate employees, pro-rated to reflect the time during 2023 preceding Mr. Thomas’s promotion to an executive vice president position. |
Summary Compensation Table
| (3) The amounts reported in these columns reflect the aggregate grant date fair value of equity awards computed in accordance with FASB ASC Topic 718 and, for performance-based awards, are based on the probable outcome of the performance conditions as of the grant date. The amounts do not represent amounts actually received by the NEOs. For this purpose, the estimate of forfeitures is disregarded, and the value of the stock awards is discounted to reflect that no dividends are paid prior to vesting. For information on the valuation assumptions used in calculating these amounts, refer to Note 9 to our financial statements in the Form 10-K filed for the fiscal year ended December 31, 2023. |
Summary Compensation Table
The aggregate grant date fair value of the 2023 PRSU awards, assuming achievement of the maximum performance level, would be: Mr. Napierski – $4,083,693; Mr. Thomas – $712,497; Mr. Clark – $1,392,169; Mr. Hatchett – $788,896; Ms. Tang – $1,039,472; and Mr. Lawrence – $1,531,386.
Summary Compensation Table
| (4) See “Executive Compensation: Compensation Discussion and Analysis”—“Cash Incentive Bonus” for information regarding the amounts reported in this column. For 2023, Messrs. Napierski and Chang deferred a portion of their bonuses under our nonqualified Deferred Compensation Plan, which deferrals are reflected in the Nonqualified Deferred Compensation – 2023 table. $84,599 of Mr. Thomas’s 2023 bonus is attributable to our non-executive bonus program, which Mr. Thomas participated in for the first half of 2023. |
Summary Compensation Table
| (5) The following table describes the components of the All Other Compensation column for 2023 in the Summary Compensation Table. |
Summary Compensation Table
| Name | Company Contributions to Deferred Compensation Plan ($) | Company Contributions to 401(k) Retirement Savings Plan ($) | Perquisites and Other Personal Benefits ($)(a) | Other ($)(b) | Total ($) | | Ryan S. Napierski | 99,096 | 13,200 | 42,920 | 4,071 | 159,287 | | James D. Thomas | 40,842 | 13,200 | 24,510 | 9,478 | 88,030 | | Chayce D. Clark | 55,788 | 13,200 | 40,562 | 12,596 | 122,147 | | Steven K. Hatchett | 20,671 | 13,200 | — | 4,081 | 37,952 | | Connie Tang | 61,778 | 13,200 | 58,060 | 12,703 | 145,741 | | Mark H. Lawrence | 10,779 | 11,965 | — | 2,200 | 24,944 | | Joseph Y. Chang | 70,183 | 13,200 | 12,038 | 16,906 | 112,327 |
Summary Compensation Table
| (a) This column reports our incremental cost for perquisites and other personal benefits provided to those NEOs whose total was at least $10,000. In 2023, these included the personal use of company-provided properties; tickets for sporting events (in the amount of $29,344 for Mr. Napierski); company products; tax-planning advice for Mr. Napierski; guest travel to a sales force event where the guest was expected to help entertain and participate in events with our sales force and their guests; family travel for Mr. Clark; and, for Ms. Tang, who lives in a different state from our corporate offices, airfare and other travel expenses associated with commuting to our corporate offices and an apartment near our corporate offices. |
Summary Compensation Table
| (b) This column includes premiums for long-term disability insurance; the amount reimbursed by us for the payment of taxes with respect to the guest travel referenced in footnote (a) (in the case of Mr. Clark, this amount, together with the payment of taxes for his family travel referenced in footnote (a), was $11,035); and premiums for term life insurance, which for Mr. Chang was $16,366. The term life insurance coverage amounts as of December 31, 2023 were $600,000 for Messrs. Thomas and Clark, $750,000 for Mr. Hatchett, $0 for Mr. Lawrence (who was no longer an employee as of such date), and $1 million for all other NEOs. This column also includes less than $50 of tax payments associated with Mr. Napierski’s income received as a result of his former expatriate assignment. These payments were pursuant to our expatriate tax equalization policy. For further discussion regarding tax payments, see “Executive Compensation: Compensation Discussion and Analysis”—“Perquisites and Other Benefits.” |
Grants of Plan-Based Awards – 2023
Grants of Plan-Based Awards – 2023 The following table provides information about equity and non-equity incentive plan awards granted to each NEO in 2023.
Grants of Plan-Based Awards – 2023
| | | Date of Compensation and Human Capital Committee Approval | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($)(3) | | Name | Grant Date | | Threshold ($)(1) | Target ($)(1) | Max ($)(1) | Threshold (#)(2) | Target (#)(2) | Max (#)(2) | | | | Ryan S. Napierski | | | | | | | | | | | | | 2/22/2023 | 2/14/2023 | | | | 13,266 | 53,064 | 106,128 | | 2,041,847 | | | 2/22/2023 | 2/14/2023 | | | | | | | 53,064 | 2,004,227 | | | N/A | | 5,729 | 1,100,000 | 2,200,000 | | | | | | | James D. Thomas | | | | | | | | | | | | | 2/22/2023 | 2/14/2023 | | | | 852 | 3,406 | 6,812 | | 131,059 | | | 2/22/2023 | 2/14/2023 | | | | | | | 9,330 | 352,394 | | | 3/31/2023 | 3/30/2023 | | | | | | | 6,360 | 237,991 | | | 7/26/2023 | 7/26/2023 | | | | 2,082 | 8,328 | 16,656 | | 225,189 | | | 7/26/2023 | 7/26/2023 | | | | | | | 8,328 | 219,110 | | | N/A | | 7,177 | 261,773 | 523,546 | | | | | | | Chayce D. Clark | | | | | | | | | | | | | 2/22/2023 | 2/14/2023 | | | | 4,523 | 18,090 | 36,180 | | 696,085 | | | 2/22/2023 | 2/14/2023 | | | | | | | 18,090 | 683,259 | | | N/A | | 2,148 | 412,500 | 825,000 | | | | | | | Steven K. Hatchett | | | | | | | | | | | | | 2/22/2023 | 2/14/2023 | | | | 2,563 | 10,251 | 20,502 | | 394,448 | | | 2/22/2023 | 2/14/2023 | | | | | | | 10,251 | 387,180 | | | N/A | | 1,625 | 312,000 | 624,000 | | | | | | | Connie Tang | | | | | | | | | | | | | 2/22/2023 | 2/14/2023 | | | | 3,377 | 13,507 | 27,014 | | 519,736 | | | 2/22/2023 | 2/14/2023 | | | | | | | 13,507 | 510,159 | | | N/A | | 2,500 | 480,000 | 960,000 | | | | | | | Mark H. Lawrence | | | | | | | | | | | | | 2/22/2023 | 2/14/2023 | | | | 4,975 | 19,899 | 39,798 | | 765,693 | | | 2/22/2023 | 2/14/2023 | | | | | | | 19,899 | 751,585 | | | N/A | | 2,422 | 465,000 | 930,000 | | | | | | | Joseph Y. Chang | | | | | | | | | | | | | N/A | | 2,756 | 529,163 | 1,058,325 | | | | | |
Grants of Plan-Based Awards – 2023
| (1) The amounts reported in these columns reflect potential payouts under our 2023 cash incentive program if the respective levels of performance were achieved for the year. The amounts reported in the Threshold column reflect the potential payout if any company performance metric was at the minimum level required to receive a bonus. The amounts reported in the Target and Max columns reflect the potential payout if all company performance metrics were at goal and maximum performance levels, respectively. For information about the calculation of each NEO’s potential amounts, see “Executive Compensation: Compensation Discussion and Analysis”—“Cash Incentive Bonus.” |
Grants of Plan-Based Awards – 2023
| (2) The awards reported in these columns are PRSUs granted under our Third Amended and Restated 2010 Omnibus Incentive Plan. The amounts reported in the Threshold, Target and Max columns reflect the potential number of PRSUs that become eligible for vesting or exercisable if certain financial metrics are achieved at the minimum, goal and maximum levels, respectively. |
Grants of Plan-Based Awards – 2023
| (3) The amounts reported in this column reflect the aggregate grant date fair value of equity awards computed in accordance with FASB ASC Topic 718 and, for performance-based awards, are based on the probable outcome of the performance conditions as of the grant date. For this purpose, the estimate of forfeitures is disregarded, and the value of the stock awards is discounted to reflect that no dividends are paid prior to vesting. |
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table Employment Agreement and Consulting Agreement with Mr. Chang Throughout 2023, we had an executive employment agreement with Mr. Chang. Among other things, this agreement provided that:
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
| – | Time-based equity awards granted to Mr. Chang would fully vest upon certain terminations of employment within six months prior to and in connection with, or within two years following, a change in control; and |
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
| – | Mr. Chang would be entitled to certain termination payments, as described in “Executive Compensation Tables and Accompanying Narrative”—“Potential Payments Upon Termination or Change in Control” below. |
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
Mr. Chang retired as our Chief Scientific Officer effective March 30, 2024. As contemplated by his employment agreement, Mr. Chang entered into a four-year consulting agreement with our company, effective March 30, 2024, the fees for which will be $287,500 per year. Mr. Chang will also receive a payment of $500 each month for medical insurance, as well as certain other benefits. In light of Mr. Chang’s forthcoming retirement, Mr. Chang was not granted an equity award in 2023. Equity and Non-Equity Incentive Plan Awards; Discretionary Bonus For information on the terms of the equity awards and non-equity incentive plan awards that were granted to NEOs during 2023, see “Executive Compensation: Compensation Discussion and Analysis”—“Equity Awards,” —“Cash Incentive Bonus,” and the footnotes to the Outstanding Equity Awards at Fiscal Year-End – 2023 table. The NEOs received bonuses for fiscal year 2023 in the amounts shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. CFO Transition Due to Mr. Lawrence’s resignation as Executive Vice President and Chief Financial Officer effective March 31, 2023, none of the 2023 equity awards or cash incentive bonus described in the Summary Compensation Table and Grants of Plan-Based Awards Table were paid out. The equity awards and his bonus opportunity for 2023 were canceled upon his termination. Mr. Thomas’s 2023 salary, stock awards and non-equity incentive plan awards reflect the mix of non-executive, Interim CFO and permanent CFO positions that he held during the year. For information about these positions and their corresponding compensation, see “Executive Compensation: Compensation Discussion and Analysis”—“2023 Named Executive Officer Changes” and —“Cash Incentive Bonus.”
Outstanding Equity Awards at Fiscal Year-End – 2023
Outstanding Equity Awards at Fiscal Year-End – 2023 The following table provides information on each NEO’s holdings of equity awards as of December 31, 2023. Mr. Lawrence did not have any outstanding equity awards as of this date.
Outstanding Equity Awards at Fiscal Year-End – 2023
| | | Option Awards | | | | Stock Awards | | | | | | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(2)(3) | | | | | Equity Incentive Plan Awards: | | | Name and Award Type (1) | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2)(3) | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) | | Ryan S. Napierski | | | | | | | | | | | PSO | 3/4/2017 | 32,224 | | 50.68 | 3/4/2024 | | | | | | PSO | 3/8/2018 | 18,919 | | 71.99 | 3/8/2025 | | | | | | PSO | 2/15/2020 | 178,831 | | 30.45 | 2/15/2027 | | | | | | RSU | 6/3/2020 | | | | | 4,975 | 96,615 | | | | PSO | 2/15/2021 | 21,883 | 5,067 | 48.81 | 2/15/2028 | | | | | | RSU | 2/15/2021 | | | | | 6,617 | 128,502 | | | | PSO | 9/1/2021 | | 7,935 | 51.07 | 9/1/2028 | | | | | | RSU | 9/1/2021 | | | | | 6,853 | 133,085 | | | | PRSU | 2/25/2022 | | | | | | | 7,943 | 154,243 | | RSU | 2/25/2022 | | | | | 23,709 | 460,429 | | | | PRSU | 2/22/2023 | | | | | | | 53,064 | 1,030,503 | | RSU | 2/22/2023 | | | | | 53,064 | 1,030,503 | | | | James D. Thomas | | | | | | | | | | | PSO | 2/15/2020 | 13,821 | | 30.45 | 2/15/2027 | | | | | | RSU | 6/3/2020 | | | | | 952 | 18,488 | | | | PSO | 2/15/2021 | 2,710 | 628 | 48.81 | 2/15/2028 | | | | | | RSU | 2/15/2021 | | | | | 1,229 | 23,867 | | | | PRSU | 2/25/2022 | | | | | | | 551 | 10,691 | | RSU | 2/25/2022 | | | | | 6,417 | 124,618 | | | | PRSU | 2/22/2023 | | | | | | | 852 | 16,536 | | RSU | 2/22/2023 | | | | | 9,330 | 181,189 | | | | RSU | 3/31/2023 | | | | | 6,360 | 123,511 | | | | PRSU | 7/26/2023 | | | | | | | 8,328 | 161,730 | | RSU | 7/26/2023 | | | | | 8,328 | 161,730 | | | | Chayce D. Clark | | | | | | | | | | | PSO | 2/15/2020 | 6,739 | | 30.45 | 2/15/2027 | | | | | | RSU | 6/3/2020 | | | | | 1,083 | 21,032 | | | | RSU | 6/5/2020 | | | | | 2,213 | 42,976 | | | | PSO | 2/15/2021 | 1,431 | 331 | 48.81 | 2/15/2028 | | | | | | RSU | 2/15/2021 | | | | | 1,514 | 29,402 | | | | PSO | 8/1/2021 | 3,118 | 722 | 53.69 | 8/1/2028 | | | | | | RSU | 8/1/2021 | | | | | 931 | 18,080 | | | | PRSU | 2/25/2022 | | | | | | | 2,118 | 41,132 | | RSU | 2/25/2022 | | | | | 6,322 | 122,773 | | | | RSU | 12/20/2022 | | | | | 41,224 | 800,570 | | | | PRSU | 2/22/2023 | | | | | | | 18,090 | 351,308 | | RSU | 2/22/2023 | | | | | 18,090 | 351,308 | | | | Steven K. Hatchett | | | | | | | | | | | PSO | 3/8/2018 | 1,224 | | 71.99 | 3/8/2025 | | | | | | PSO | 2/15/2020 | 5,602 | | 30.45 | 2/15/2027 | | | | | | RSU | 6/3/2020 | | | | | 1,116 | 21,673 | | | | RSU | 6/5/2020 | | | | | 1,580 | 30,684 | | | | PSO | 2/15/2021 | 4,879 | 1,130 | 48.81 | 2/15/2028 | | | | | | RSU | 2/15/2021 | | | | | 2,212 | 42,957 | | | | PRSU | 2/25/2022 | | | | | | | 1,483 | 28,790 | | RSU | 2/25/2022 | | | | | 4,425 | 85,934 | | | | PRSU | 2/22/2023 | | | | | | | 10,251 | 199,074 | | RSU | 2/22/2023 | | | | | 10,251 | 199,074 | | |
Outstanding Equity Awards at Fiscal Year-End – 2023
| | | Option Awards | | | | Stock Awards | | | | | | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(2)(3) | | | | | Equity Incentive Plan Awards: | | | Name and Award Type (1) | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2)(3) | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) | | Connie Tang | | | | | | | | | | | RSU | 4/21/2021 | | | | | 9,198 | 178,625 | | | | PRSU | 2/25/2022 | | | | | | | 2,298 | 44,627 | | RSU | 2/25/2022 | | | | | 6,860 | 133,221 | | | | RSU | 4/21/2022 | | | | | 3,948 | 76,670 | | | | PRSU | 2/22/2023 | | | | | | | 13,507 | 262,306 | | RSU | 2/22/2023 | | | | | 13,507 | 262,306 | | | | Joseph Y. Chang | | | | | | | | | | | PSO | 3/4/2017 | 18,562 | | 50.68 | 3/4/2024 | | | | | | PSO | 3/8/2018 | 9,264 | | 71.99 | 3/8/2025 | | | | | | PSO | 2/15/2020 | 59,410 | | 30.45 | 2/15/2027 | | | | | | RSU | 6/3/2020 | | | | | 2,331 | 45,268 | | | | PSO | 2/15/2021 | 10,840 | 2,510 | 48.81 | 2/15/2028 | | | | | | RSU | 2/15/2021 | | | | | 3,278 | 63,659 | | | | PRSU | 2/25/2022 | | | | | | | 1,694 | 32,902 | | RSU | 2/25/2022 | | | | | 5,058 | 98,226 | | |
Outstanding Equity Awards at Fiscal Year-End – 2023
| (1) Award types are as follows: |
Outstanding Equity Awards at Fiscal Year-End – 2023
RSU: Time-Based Restricted Stock Units PRSU: Performance-Based Restricted Stock Units SO: Time-Based Stock Options PSO: Performance-Based Stock Options
Outstanding Equity Awards at Fiscal Year-End – 2023
| (2) PSOs and PRSUs vest in three equal tranches (or two tranches, in the case of the PSOs granted on 9/1/2021) based on the achievement of adjusted EPS performance levels, measured in terms of diluted EPS excluding certain predetermined items. Vesting of PSOs occurs on the later of one year following the grant date or the Committee’s approval of the calculation of adjusted EPS for the respective tranche. Vesting of PRSUs occurs on the later of February 15 of the year following the performance year applicable to the respective tranche or the Committee’s approval of the calculation of adjusted EPS for such tranche. Vesting of the target amount of PSOs and PRSUs is accelerated upon the participant’s termination (including constructive termination) in connection with a change in control. Any portions of the tranches that do not become eligible for vesting will immediately terminate following the Committee’s approval of the calculation of adjusted EPS for such tranche. |
Outstanding Equity Awards at Fiscal Year-End – 2023
| Grant Date | Vesting Schedule | | 2/15/2021 8/1/2021 | A portion of the first tranche vested based on adjusted EPS achieved in 2021. No portion of the second or third tranche vested based on adjusted EPS achieved in 2022 and 2023, and these tranches therefore terminated as of February 14, 2023 and February 13, 2024. | | 9/1/2021 | No portion of the first or second tranche vested based on adjusted EPS achieved in 2022 and 2023, and these tranches therefore terminated as of February 14, 2023 and February 13, 2024. | | 2/25/2022 | No portion of the first or second tranche vested based on adjusted EPS achieved in 2022 and 2023, and these tranches therefore terminated as of February 14, 2023 and February 13, 2024. The portion of the third tranche that vests will be determined by adjusted EPS reaching pre-determined levels in 2024. | | 2/22/2023 7/26/2023 | A portion of the first tranche vested (or will vest on 8/1/2024, in the case of the PRSUs granted on 7/26/2023) based on adjusted EPS achieved in 2023. The portions of the second and third tranches that vest will be determined by adjusted EPS reaching pre-determined levels in 2024 and 2025, respectively. |
Outstanding Equity Awards at Fiscal Year-End – 2023
| (3) In accordance with SEC rules, these columns report the potential number of PSOs or PRSUs that become eligible for vesting or exercisable upon achievement of minimum performance goals, except that, based on 2023 results, the PRSUs granted on 2/22/2023 and 7/26/2023 are reported at the target level. |
Outstanding Equity Awards at Fiscal Year-End – 2023
| (4) Other than the three exceptions noted below, RSUs vest in four equal annual tranches, either on February 15 of each of the first four years following the grant or on each of the first four anniversaries of the grant date, as follows: |
Outstanding Equity Awards at Fiscal Year-End – 2023
| – | Grant dates of RSUs vesting on February 15: 6/3/2020, 2/15/2021, 9/1/2021, 2/25/2022, 4/21/2022, 2/22/2023 |
Outstanding Equity Awards at Fiscal Year-End – 2023
| – | Grant dates of RSUs vesting on grant date anniversary: 6/5/2020, 4/21/2021, 8/1/2021 |
Outstanding Equity Awards at Fiscal Year-End – 2023
Exceptions to the above terms and vesting schedules:
Outstanding Equity Awards at Fiscal Year-End – 2023
| Grant Date | No. Tranches | Vesting Schedule | | 12/20/2022 | 3 | Each of the first three anniversaries of the grant date | | 3/31/2023 | 2 | February 15, 2024 and 2025 | | 7/26/2023 | 4 | August 1 of each of the first four years following the grant date |
Outstanding Equity Awards at Fiscal Year-End – 2023
In addition, vesting of RSUs is accelerated upon the participant’s termination (including constructive termination) in connection with a change in control.
Outstanding Equity Awards at Fiscal Year-End – 2023
| (5) The market value of the RSUs and PRSUs reported in these columns is based on the closing market price of our stock on December 29, 2023, which was $19.42. |
Option Exercises and Stock Vested – 2023
Option Exercises and Stock Vested – 2023 The following table provides information on stock option exercises and vesting of stock awards for each NEO during 2023.
Option Exercises and Stock Vested – 2023
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | | Ryan S. Napierski | 31,513 | 329,260 | 22,016 | 999,086 | | James D. Thomas | — | — | 4,124 | 187,147 | | Chayce D. Clark | — | — | 27,655 | 684,169 | | Steven K. Hatchett | 21,155 | 197,340 | 5,925 | 250,474 | | Connie Tang | — | — | 8,202 | 353,765 | | Mark H. Lawrence | 43,041 | 319,262 | 9,810 | 445,178 | | Joseph Y. Chang | 93,485 | 929,774 | 6,782 | 307,767 |
Option Exercises and Stock Vested – 2023
| (1) Value realized on exercise of stock options is equal to the number of options exercised multiplied by the market value of our common stock at exercise less the exercise price, and is calculated before payment of any applicable withholding taxes and broker commissions. |
Option Exercises and Stock Vested – 2023
| (2) Value realized on vesting of restricted stock units is equal to the number of restricted stock units vested multiplied by the market value of our common stock on the vesting date, and is calculated before payment of any applicable withholding taxes and broker commissions. |
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation Pursuant to our nonqualified Deferred Compensation Plan (the “DCP”), certain employees, including the NEOs, may elect to defer up to 80% of their base salary and up to 100% of cash incentive bonus (minus applicable withholding requirements) that otherwise would be payable in a calendar year. Deferral elections are made prior to the calendar year in which the deferred salary or bonus will be earned. In addition, the company makes contributions to the accounts of each NEO who has an account. Effective in 2021, the DCP was modified to provide a matching contribution by the company for individual contributions up to a maximum of 5% of base salary. We also generally make a discretionary contribution, which in 2021 was reduced from the historical amount of 10% of base salary to approximately 5% of base salary due to the 5% matching contribution. Earnings and losses on deferred base salary and bonus are based on market rates, mirroring the performance of investment funds that are available for participants to track under the DCP. All amounts a participant elects to defer, adjusted for earnings and losses thereon, are 100% vested for purposes of the DCP at all times. All amounts we contribute, adjusted for earnings and losses thereon, either vest 20% per year over five years (for contributions in 2021 or later) or vest over a 20-year period that begins on the participant’s hire date (for contributions prior to 2021). This vesting schedule is subject to acceleration upon the occurrence of certain events, including the attainment of 60 years of age, death or disability as defined in the DCP, discretionary acceleration by the Committee, or, for contributions in 2021 or later, the completion of at least 10 years of employment above a specified job level. For participants who received company contributions prior to 2015, which for the NEOs is only Messrs. Napierski and Chang, the DCP also provides a death benefit that will pay, upon a participant’s death prior to the commencement of benefit payments, an amount equal to the participant’s deferrals, adjusted for earnings and losses thereon, plus the greater of (i) the vested portion of company contributions, adjusted for earnings and losses thereon, or (ii) five times such participant’s average base salary for the previous three years. All distributions under the DCP are payable in cash (except for restricted stock units, which were previously permitted to be deferred and are payable in stock), and the participant may elect either a lump sum payment or annual installments over a maximum of 10 years. The following table shows the investment funds that are available for participants to track under the DCP and their annual rates of return for the fiscal year ended December 31, 2023, as reported by the administrator of the DCP.
Nonqualified Deferred Compensation
| Name of Fund | Rate of Return | Name of Fund | Rate of Return | | American Funds Global Growth - Class 2 | 22.60% | MFS Mid Cap Value - Initial Class | 12.73% | | American Funds Global Small Capitalization - Class 2 | 16.17% | MFS VIT Utilities Series - Initial Class | -2.11% | | American Funds IS Capital World Growth & Income - Class 2 | 20.88% | MFS VIT Value - Initial Class | 7.93% | | Delaware VIP Small Cap Value Series - Standard Class | 9.44% | Nu Skin Enterprises Inc. Restricted Stock Units | -51.12% | | DFA VIT Inflation-Protected Securities - Instl Class | 4.02% | PIMCO Intl Bond (USD-Hedged) ? Admin Class | 9.02% | | DWS VIT Small Cap Index VIP - Class A | 16.76% | Putnam VT High Yield - Class IA | 12.29% | | Empower Aggressive Profile Inv Class | 16.94% | Putnam VT International Value - Class IA | 19.08% | | Empower Conservative Profile Inv Class | 8.25% | Vanguard VIF Equity Index | 26.11% | | Empower Gov’t Money Market Instl Class | 4.90% | Vanguard VIF Growth | 40.13% | | Empower Mod Aggressive Prfl Inv Class | 13.60% | Vanguard VIF Real Estate Index | 11.70% | | Empower Mod Conservative Prfl Inv Class | 9.90% | Vanguard VIF Short-Term Investment-Grade | 6.16% | | Empower Moderate Profile Inv Class | 11.93% | Vanguard VIF Small Company Growth | 19.65% | | Empower T. Rowe Price Mid Cap Growth Inv | 19.92% | Vanguard VIF Total Bond Market Index | 5.58% | | Fidelity VIP Int’l Capital Appreciation - Service Class 2 | 27.18% | Vanguard VIF Total Intl Stock Market Index | 15.54% | | LVIP Delaware Value - Standard Class | 3.49% | Zero Return | 0.00% | | LVIP SSgA Mid-Cap Index - Standard Class | 16.05% | | |
Nonqualified Deferred Compensation – 2023
Nonqualified Deferred Compensation – 2023 The following table provides information on each NEO’s account under our nonqualified Deferred Compensation Plan for the year 2023.
Nonqualified Deferred Compensation – 2023
| Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(1) | Aggregate Earnings in Last FY ($)(1) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE ($)(1) | | Ryan S. Napierski | 227,260 | 99,096 | 1,260,081 | — | 6,729,382 | | James D. Thomas | 20,312 | 40,842 | 51,539 | — | 328,015 | | Chayce D. Clark | 53,000 | 55,788 | 98,685 | — | 547,296 | | Steven K. Hatchett | — | 20,671 | 6,735 | — | 164,748 | | Connie Tang | 29,940 | 61,778 | 19,971 | — | 198,181 | | Mark H. Lawrence | 11,077 | 10,779 | 72,948 | (67,463) | 451,640 | | Joseph Y. Chang | 38,157 | 70,183 | 1,643,766 | — | 11,320,880 |
Nonqualified Deferred Compensation – 2023
| (1) Executive and registrant contribution amounts are and have been reflected in the 2023 Summary Compensation Table and prior years’ summary compensation tables, as applicable. Aggregate earnings are not reflected in the 2023 Summary Compensation Table and were not reflected in prior years’ summary compensation tables. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control The information in the table below describes the compensation that would become payable under existing plans and arrangements if each NEO’s employment had terminated on December 31, 2023, given each NEO’s compensation and service level as of such date and, if applicable, based on our closing stock price on that date. Except as indicated in the footnotes below, all amounts would be payable as a lump sum upon termination, except deferred compensation, which may be payable as a lump sum or in installments at the election of the NEO. These benefits are in addition to benefits available generally to salaried employees, such as disability benefits and distributions under our 401(k) plan. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event, our stock price, our financial performance, the NEO’s age and tenure with our company, and any arrangements negotiated in connection with a termination. This table does not include Mr. Lawrence, who resigned during 2023. He did not receive a severance payment in connection with his resignation, and his unvested equity awards were canceled in accordance with the original terms of the awards. In addition, as previously disclosed:
Potential Payments Upon Termination or Change in Control
| – | Ms. Tang resigned as Executive Vice President and Chief Global Growth and Customer Experience Officer as of October 31, 2023, and she is continuing to serve as a non-executive strategic advisor through April 2024. |
Potential Payments Upon Termination or Change in Control
| – | Mr. Chang retired as Chief Scientific Officer as of March 30, 2024. As contemplated by his employment agreement, Mr. Chang entered into a four-year consulting agreement with our company, effective March 30, 2024, the fees for which will be $287,500 per year. Mr. Chang will also receive a payment of $500 each month for medical insurance, as well as certain other benefits. Mr. Chang’s outstanding equity awards continue to vest, as there was not a break in Mr. Chang’s service to our company following his retirement. |
Potential Payments Upon Termination or Change in Control
| Name | Voluntary Termination ($) | Involuntary Termination for Cause ($) | Involuntary Termination Not for Cause ($) | Termination (Including Constructive Termination) in Connection with Change in Control ($) | Death ($)(1) | Disability ($) | | Ryan S. Napierski | | | | | | | | Severance(2) | 750,000 | — | 2,141,300 | 4,841,300 | 641,300 | 887,875 | | Equity(3) | — | — | — | 3,496,610 | — | — | | Deferred Compensation(4) | 6,601,122 | 6,601,122 | 6,601,122 | 6,601,122 | 9,799,594 | 6,601,122 | | Health Benefits(5) | — | — | 23,578 | 23,578 | — | — | | Total | 7,351,122 | 6,601,122 | 8,766,001 | 14,962,610 | 10,440,894 | 7,488,998 | | James D. Thomas | | | | | | | | Severance(2) | — | — | 683,556 | 1,188,716 | 121,056 | 232,015 | | Equity(3) | — | — | — | 904,040 | — | — | | Deferred Compensation(4) | 217,407 | 217,407 | 217,407 | 217,407 | 328,015 | 328,015 | | Health Benefits(5) | — | — | 43,309 | 43,309 | — | — | | Total | 217,407 | 217,407 | 944,272 | 2,353,472 | 449,071 | 560,029 | | Chayce D. Clark | | | | | | | | Severance(2) | 412,500 | — | 927,988 | 1,684,238 | 240,488 | 376,104 | | Equity(3) | — | — | — | 1,901,975 | — | — | | Deferred Compensation(4) | 333,504 | 333,504 | 333,504 | 333,504 | 547,296 | 547,296 | | Health Benefits(5) | — | — | 23,354 | 23,354 | — | — | | Total | 746,004 | 333,504 | 1,284,846 | 3,943,072 | 787,784 | 923,400 | | Steven K. Hatchett | | | | | | | | Severance(2) | 312,000 | — | 701,896 | 1,273,896 | 181,896 | 284,471 | | Equity(3) | — | — | — | 694,556 | — | — | | Deferred Compensation(4) | 23,923 | 23,923 | 23,923 | 23,923 | 164,748 | 164,748 | | Health Benefits(5) | — | — | 19,166 | 19,166 | — | — | | Total | 335,923 | 23,923 | 744,985 | 2,011,541 | 346,644 | 449,219 | | Connie Tang | | | | | | | | Severance(2) | 480,000 | — | 1,079,840 | 1,959,840 | 279,840 | 437,648 | | Equity(3) | — | — | — | 1,091,637 | — | — | | Deferred Compensation(4) | 102,055 | 102,055 | 102,055 | 102,055 | 198,181 | 198,181 | | Health Benefits(5) | — | — | 24,198 | 24,198 | — | — | | Total | 582,055 | 102,055 | 1,206,093 | 3,177,730 | 478,021 | 635,829 | | Joseph Y. Chang | | | | | | | | Severance(2) | 1,391,663 | — | 2,052,940 | 3,023,071 | 308,502 | 482,473 | | Equity(3) | — | — | — | 338,762 | — | — | | Deferred Compensation(4) | 11,317,795 | 11,317,795 | 11,317,795 | 11,317,795 | 12,249,203 | 11,317,795 | | Health Benefits(5) | — | — | 16,755 | 16,755 | — | — | | Total | 12,709,457 | 11,317,795 | 13,387,489 | 14,696,382 | 12,557,705 | 11,800,268 |
Potential Payments Upon Termination or Change in Control
| (1) The amounts reported in this column do not include the proceeds payable on death from term life insurance policies for which we pay the premiums. The term life insurance coverage amounts as of December 31, 2023 were $600,000 for Messrs. Thomas and Clark, $750,000 for Mr. Hatchett, and $1 million for all other NEOs included in the table. |
Potential Payments Upon Termination or Change in Control
| (2) Our Executive Severance Policy applies to all of the NEOs who are still employees. This policy provides for the following termination payments in addition to salary and benefits earned prior to termination, provided that the NEO complies with certain non-competition and other obligations: |
Potential Payments Upon Termination or Change in Control
(a) Voluntary termination: (i) A lump sum equal to 75% of annual salary if the Company elects, in its sole discretion, to enforce the non-competition obligations in the NEO’s Key Employee Covenants Agreement. This provision was eliminated from the Executive Severance Policy in 2023, but pursuant to the terms of the Policy, it remained in effect for a one-year period that ended in January 2024, other than for Mr. Thomas because he was not a participant in the Policy at the time of the amendment. (b) Involuntary termination not for cause (including constructive termination): (i) The pro-rata portion of the NEO’s earned bonus, if any, for any outstanding bonus cycle, payable at the same time as bonuses are paid to other executive officers; and (ii) A lump sum equal to a multiplier (of 1.5 for the CEO; 1.25 for other NEOs) times annual salary. (c) Termination (including constructive termination) in connection with a change in control: (i) The pro-rata portion of the NEO’s earned bonus, if any, for any outstanding bonus cycle, payable at the same time as bonuses are paid to other executive officers; and (ii) A lump sum equal to a multiplier (of 2 for the CEO; 1.5 for other NEOs) times the sum of annual salary and target bonus. (d) Termination upon death or disability: (i) The pro-rata portion of the NEO’s earned bonus, if any, for any outstanding bonus cycle, payable on the date that bonuses are normally paid; and (ii) Salary continuation for up to 90 days in certain circumstances related to a disability. In addition, Mr. Chang’s employment agreement that was in effect throughout 2023 provided that, if his employment terminated pursuant to any of the circumstances outlined above in this footnote 2, other than for death or disability, Mr. Chang would be entitled to a four-year consulting agreement with us for $287,500 per year (paid in equal monthly installments), less any severance payments paid to him during the year pursuant to the Executive Severance Policy. Effective March 30, 2024, Mr. Chang entered into a four-year consulting agreement with our company, the fees for which will be $287,500 per year. Mr. Chang will also receive a payment of $500 each month for medical insurance, as well as certain other benefits.
Potential Payments Upon Termination or Change in Control
| (3) Our equity award agreements generally provide that unvested awards will terminate upon the termination of employment. However, vesting (of the target amount, in the case of performance-based awards) is accelerated upon the participant’s termination (including constructive termination) in connection with a change in control. Accordingly, the amounts in the equity category are based on the $19.42 closing price of our stock on December 29, 2023 multiplied by each NEO’s number of unvested RSUs and target number of unvested PRSUs. No amount is reflected for PSOs because all PSOs were out of the money as of the end of 2023. |
Potential Payments Upon Termination or Change in Control
| (4) The amounts reported for deferred compensation, other than for death and disability, reflect only the amounts deferred by the NEOs, the vested portion of amounts contributed by us and earnings on such amounts. We may, at our discretion, accelerate vesting of the unvested amounts contributed by us in the event of a change in control. If we were to accelerate vesting, the total amounts of deferred compensation payable to our NEOs would be as follows: Mr. Napierski – $6,601,122; Mr. Thomas – $328,015; and Mr. Clark – $547,296; Mr. Hatchett – $164,748; Ms. Tang – $198,181; and Mr. Chang – $11,317,795. |
Potential Payments Upon Termination or Change in Control
For information about vesting and benefits applicable to death and disability, see “Nonqualified Deferred Compensation,” above.
Potential Payments Upon Termination or Change in Control
| (5) Our Executive Severance Policy entitles the NEOs to a lump sum equal to twelve months of health care continuation coverage upon involuntary termination not for cause (including constructive termination) and termination (including constructive termination) in connection with change in control. These payments are conditioned on the NEO’s compliance with certain non-competition and other obligations. |
Potential Payments Upon Termination or Change in Control
OTHER COMPENSATION INFORMATION
CEO Pay Ratio Information
CEO Pay Ratio Information As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and SEC rules, we are disclosing the annual total compensation of the CEO, the median of the annual total compensation of all other employees, and the ratio of these two numbers (the “CEO pay ratio”), each as calculated pursuant to applicable rules and guidance. We also provide supplemental information and calculations to provide context regarding our global operations and unique features of our workforce. CEO Compensation Mr. Napierski’s 2023 annual total compensation was $5,838,579, as reported in our Summary Compensation Table. Median Employee Compensation and CEO Pay Ratio Disclosure As of December 31, 2023, our global employee population consisted of 15,123 individuals, excluding Beauty Biosciences, LLC and LifeDNA, Inc., two businesses that we acquired during 2023 and which had a total of 53 employees. To identify the median employee, we used each employee’s annualized base pay plus target cash incentive as of December 31, 2023 (for Mainland China sales employees, described below, this was calculated by annualizing their salary and bonus amounts for the last portion of the year, as those amounts are indicative of their recent activity; and for one of our Rhyz entities, whose employees do not have a target cash incentive, we used their actual cash incentive), translated into U.S. dollars. With these amounts for all of our employees, we identified a median group of 101 employees. We then calculated the annual total compensation of each of these 101 employees using the same methodology that is required under SEC disclosure requirements for our NEOs’ compensation, and we identified the median employee from that population. Our median employee is a sales employee in Mainland China whose 2023 annual compensation was $563, which yields a CEO pay ratio of 10,377:1. However, as discussed below, due to a unique characteristic in our employee population, we do not believe this ratio appropriately represents our company’s compensation practices. Excluding the impact of this characteristic, our CEO pay ratio is 139:1. Supplemental Information – Global Employee Population and Structure The structure of our business model in Mainland China causes a unique and significant increasing impact on our CEO pay ratio. In all of our markets other than Mainland China, our sales force members are independent distributors rather than employees of our company. Because of restrictions on direct selling and multi-level commissions in Mainland China, we have implemented a business model for that market that is different from our business model in other markets. One of the differences is that our sales force in Mainland China includes not only independent sellers but also part-time sales employees. Our Mainland China sales employees constitute a large proportion of our total employee base, and as a result, these employees have a significant impact on our CEO pay ratio. As of December 31, 2023, 11,503, or 76%, of our employees were Mainland China sales employees, compared to 3,620 other full- and part-time employees worldwide. Like all members of our sales force globally, our Mainland China sales employees devote as much or as little time and effort to their sales efforts as they desire, and their compensation varies significantly as a result. Due to the impact of our Mainland China sales employees on our CEO pay ratio, we do not believe the required pay ratio disclosure, above, appropriately represents our company’s compensation practices. To better allow stakeholders to evaluate our CEO’s compensation within the context of our company, we also disclose a ratio that excludes our Mainland China sales employees. Based on our 3,620 employees who are not Mainland China sales employees, our median employee is a warehouse employee in the United States whose 2023 annual compensation was $42,069, resulting in a CEO pay ratio of 139:1. We believe the compensation amounts and ratios provided above represent reasonable estimates calculated in accordance with SEC regulations and guidance. The SEC rules allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio for our company, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.
Pay Versus Performance
Pay Versus Performance As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing information about the compensation of our Principal Executive Officers (“PEOs”) and other NEOs, as disclosed in the Summary Compensation Table (“SCT”) and also their “compensation actually paid.” The dollar amounts reported as “compensation actually paid” were computed in accordance with applicable SEC rules and do not necessarily reflect the actual amount of compensation earned by or paid to the NEOs during the applicable year.
Pay Versus Performance
| | | | | Comp. Actually Paid to Second PEO ($)(2) | Average SCT Total for Non-PEO Named Executive Officers ($)(3) | Average Comp. Actually Paid to Non-PEO Named Executive Officers ($)(2)(3) | Value of Initial Fixed $100 Investment Based On: | | | | | Year (1) | SCT Total for First PEO ($) | Comp. Actually Paid to First PEO ($)(2) | SCT Total for Second PEO ($) | | | | Total Shareholder Return ($)(4) | Peer Group Total Shareholder Return ($)(4) | Net Income ($000s) | Adjusted EPS ($)(5) | | 2023 | N/A | N/A | 5,838,579 | 2,731,348 | 1,750,510 | 577,117 | 55.88 | 153.95 | 8,595 | 2.06 | | 2022 | N/A | N/A | 4,764,466 | (116,058) | 2,388,206 | 1,177,614 | 114.25 | 133.89 | 104,778 | 2.90 | | 2021 | 2,657,102 | 1,103,513 | 4,731,970 | 3,676,080 | 1,501,890 | 953,242 | 132.76 | 143.15 | 147,266 | 4.14 | | 2020 | 6,636,559 | 18,066,470 | N/A | N/A | 2,553,707 | 5,745,210 | 138.78 | 111.14 | 191,355 | 3.63 |
Pay Versus Performance
| (1) NEOs included in the above table for each year are the following: |
Pay Versus Performance
| Year | First PEO | Second PEO | Non-PEOs | | 2023 | N/A | Ryan S. Napierski | James D. Thomas, Chayce D. Clark, Steven K. Hatchett, Connie Tang, Mark H. Lawrence, Joseph Y. Chang | | 2022 | N/A | Ryan S. Napierski | Mark H. Lawrence, Connie Tang, Joseph Y. Chang, Chayce D. Clark | | 2021 | Ritch N. Wood | Ryan S. Napierski | Mark H. Lawrence, Connie Tang, Joseph Y. Chang, Chayce D. Clark, D. Matthew Dorny, Jeffrey C. Bettinger | | 2020 | Ritch N. Wood | N/A | Mark H. Lawrence, Ryan S. Napierski, Joseph Y. Chang, D. Matthew Dorny |
Pay Versus Performance
| (2) Adjustments made to calculate 2023 “compensation actually paid” pursuant to SEC rules are as follows: |
Pay Versus Performance
| | PEO | Average of Other NEOs | | Total Compensation in SCT | 5,838,579 | 1,750,510 | | Less: Grant date value of stock awards and option awards reported in SCT | (4,046,074) | (978,982) | | Plus: Year-end value of awards granted during the year that are outstanding and unvested as of year-end | 1,684,997 | 318,528 | | Plus (less): Change in value, from prior year-end to year-end, of awards granted in a prior year that are outstanding and unvested as of year-end | (896,403) | (367,743) | | Plus (less): Change in value, from prior year-end to vesting date, of awards granted in a prior year that vested during the year | 150,249 | (37,240) | | Less: Prior year-end value of awards granted in a prior year that failed to vest during the year | — | (107,957) | | Total Adjustments | (3,107,231) | (1,173,394) | | Compensation Actually Paid | 2,731,348 | 577,117 |
Pay Versus Performance
Fair value amounts were calculated in a manner consistent with the fair value methodology used to account for share-based payments in our financial statements under U.S. GAAP. The fair value amounts were calculated using our stock price on the last day of each fiscal year or the date of vesting, as applicable, and assuming the probable level of achievement for performance-based awards as of the end of the covered fiscal year. For information on the assumptions used in calculating these amounts, refer to Note 9 to our financial statements in the Form 10-K filed for the fiscal year ended December 31, 2023.
Pay Versus Performance
| (3) Mr. Lawrence served as our CFO through March 31, 2023, at which time Mr. Thomas began serving as our CFO. Removing the impact of Mr. Lawrence’s compensation on the calculations in the table (i.e., if we had a single CFO, Mr. Thomas, throughout the entire year), the average SCT total compensation for 2023 would have been $1,752,209, and the average CAP would have been $760,347. |
Pay Versus Performance
| (4) Calculated in the manner prescribed by SEC rules. Indicates the value, as of December 31 of each year, of an assumed $100 initial investment that is invested on December 31, 2019 in our company’s common stock and the S&P SmallCap 600 Consumer Staples Index (the “SmallCap Index”), the same index that was used in the Stock Performance Graph in our Form 10-K filed for the fiscal year ended December 31, 2023. |
Pay Versus Performance
We used the S&P MidCap 400 Consumer Staples Index (the “MidCap Index”) in the Pay Versus Performance table of our proxy statement for our 2023 Annual Meeting. We determined to begin using the SmallCap Index this year because we believe the SmallCap Index is better reflective of our current market cap. The value, as of December 31 of each year, of an assumed $100 initial investment in the MidCap Index on December 31, 2019 would be $154.48 for 2023, $133.52 for 2022, $134.56 for 2021, and $122.23 for 2020.
Pay Versus Performance
| (5) We believe Adjusted EPS is the most important financial performance measure that is used to link the “compensation actually paid” to our NEOs in 2023 to our performance. On average, equity awards constitute the largest component of our NEOs’ 2023 target compensation, and Adjusted EPS is the metric used for our performance-based equity awards. Adjusted EPS is measured as diluted EPS excluding extraneous items such as the impact of accounting changes; losses or gains on settlements of litigation that began prior to the beginning of the respective year; and other items that are non-recurring, unusual, infrequent or outside of management’s control. For further information about the calculation of Adjusted EPS, see “Executive Compensation: Compensation Discussion and Analysis”—“Performance-Based Awards Granted in 2021–2023 – Goals and Vesting.” |
Pay Versus Performance
Most Important Financial Performance Measures. We believe the most important financial performance measures that are used to link the “compensation actually paid” to our NEOs to our 2023 performance are the following, with Adjusted EPS being the most important of these measures:
Pay Versus Performance
| Adjusted EPS | | Adjusted revenue | | Adjusted operating income |
Pay Versus Performance
Relationship Between “Compensation Actually Paid” and Other Metrics. The following chart depicts the relationship between the “compensation actually paid” to our NEOs and our total shareholder return, and it compares our total shareholder return to that of our peer group. The following chart depicts the relationship between the “compensation actually paid” to our NEOs and our net income. The following chart depicts the relationship between the “compensation actually paid” to our NEOs and our Adjusted EPS. PROPOSAL 2: ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended, we are requesting stockholder approval of a non-binding advisory resolution approving our NEOs’ compensation as disclosed in this proxy statement.