DEF 14A of Inspire Medical Systems, Inc.
Filed Mar 18, 2025 · FY20240001140361-25-009249
Election of Directors
Election of Directors Board Size, Structure, and Election Process Our certificate of incorporation as currently in effect (“Certificate of Incorporation”) provides that the number of directors shall be established from time to time by our Board of Directors. Our Board of Directors has fixed the number of directors at nine, and we currently have nine directors serving on the Board (see “Current Directors and Terms” below). Our Certificate of Incorporation provides that the Board be divided into three classes, designated as Class I, Class II, and Class III, serving staggered three-year terms, provided that the term of each director will continue until the election and qualification of his or her successor and is subject to his or her earlier death, resignation, or removal. At each annual meeting of stockholders, the Board proposes a slate of nominees to the stockholders for election of directors in the class whose term is expiring. Between annual meetings, the Board may elect directors to fill vacancies with new directors allocated among classes and each class should consist, as nearly as may be possible, of one-third of the total number of directors. As described further below, the Board believes that the current classified structure is appropriate for the Company at this stage and time. Our Corporate Governance Guidelines provide that in an uncontested election of directors, any nominee for director who does not receive a majority of the votes cast for his or her election shall offer to resign from the Board. The Nominating and Corporate Governance Committee shall promptly consider the resignation offer and recommend to the full Board whether to accept it. The Board will act on the Nominating and Corporate Governance Committee’s recommendation within 90 days following the certification of the stockholder vote by the inspector of elections, and will disclose its decision and the reasons for rejecting the offer, if applicable, in a current report on Form 8-K. Any director who tenders his or her offer to resign from the Board pursuant to the Corporate Governance Guidelines may not participate in the Nominating and Corporate Governance Committee or Board deliberations regarding whether to accept the offer of resignation. The Board believes that this process provides accountability to stockholders and responsiveness to stockholders’ votes, while allowing the Board appropriate discretion in considering whether a particular director’s resignation would be in the best interests of the Company and its stockholders. Current Directors and Terms As of the date of this Proxy Statement, the Class I directors with a term ending at the Annual Meeting are Cynthia B. Burks, Timothy P. Herbert, and Shawn T McCormick; the Class II directors with a term ending at the 2026 annual meeting of stockholders are Gary L. Ellis, Georgia Garinois-Melenikiotou, and Dana G. Mead, Jr.; and the Class III directors with a term ending at the 2027 annual meeting of stockholders are Shelley G. Broader, Myriam J. Curet, M.D., and Casey M. Tansey. Nominees for Director Ms. Burks, Mr. Herbert, and Mr. McCormick have been nominated by the Board to stand for election at the Annual Meeting. If elected by the stockholders at the Annual Meeting, Ms. Burks, Mr. Herbert, and Mr. McCormick will each serve for a term expiring at the annual meeting to be held in 2028 (the “2028 Annual Meeting”) and until the election and qualification of her or his successor, or until her or his earlier death, resignation, or removal.
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| | PROPOSAL NO. 1 |
Election of Directors
Each person nominated for election has agreed to serve if elected, and management and the Board have no reason to believe that any nominee will be unable to serve. If, however, prior to the Annual Meeting, the Board of Directors should learn that any nominee will be unable to serve for any reason, the proxies that otherwise would have been voted for this nominee will be voted for a substitute nominee selected by the Board. Alternatively, the proxies, at the Board’s discretion, may be voted for that fewer number of nominees as results from the inability of any nominee to serve.
Election of Directors
| | OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF Cynthia B. Burks, Timothy P. Herbert, and Shawn T McCormick AS CLASS I DIRECTORS to hold office until the 2028 Annual Meeting and until their respective successors have been duly elected and qualified. |
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| | PROPOSAL NO. 1 |
Election of Directors
Information About Board Nominees and Continuing Directors The following pages contain certain biographical information as of March 18, 2025 for each nominee for director and each director whose term as a director will continue after the Annual Meeting, including all positions she or he holds, her or his principal occupation and business experience for the past five years, and the names of other publicly held companies of which the director or nominee currently serves as a director or has served as a director during the past five years. We believe that all of our directors and nominees have or display: personal and professional integrity; satisfactory levels of education and/or business experience; broad-based business acumen; an appropriate level of understanding of our business and its industry and other industries relevant to our business; the ability and willingness to devote adequate time to the work of our Board and its committees; skills and personality that complement those of our other directors and that help build a board of directors that is effective, collegial and responsive to the needs of our company; strategic thinking and a willingness to share ideas; a diversity of experiences, expertise and background; and the ability to represent the interests of all of our stockholders. The information presented below in the matrix and director biographies sets forth specific experience, qualifications, attributes and skills that led our Board to the conclusion that each individual should serve as a director in light of our business and structure.
Election of Directors
| | Broader | Burks | Curet | Ellis | Garinois-Melenikiotou | Herbert | McCormick | Mead | Tansey | | Consumer Marketing / Brand Mgmt. | • | | | | • | | | | | | Financial / Capital Markets | | | | • | • | • | • | | • | | Industry and Technology | | | • | • | | • | • | • | • | | International / Global | • | • | | • | • | | | • | | | Legal / Compliance | | • | • | | | | | | | | Mfg. / Operations / Supply Chain | | | | | | | • | | | | Medical Professional | | | • | | | | | | | | Talent / Human Capital Mgmt. | | • | | | | | | | | | Chief Executive Officer | • | | | | | • | | • | • |
Election of Directors
| Consumer Marketing / Brand Mgmt. includes direct-to-consumer, brand management, and segment marketing | Financial / Capital Markets includes expertise relating to finance and capital formation strategies, familiarity with complex financial and accounting concepts, and deep understanding of financial statements | Industry and Technology includes development of medical devices, digital, and other emerging technologies, particularly those impactful to medical device development | | International / Global includes knowledge of local markets outside the U.S. and insights regarding global business and cultural perspectives | Legal / Compliance includes knowledge of quality and other regulatory requirements relevant to medical device companies | Mfg. / Operations / Supply Chain includes responsibility for oversight of the manufacturing process and management of suppliers | | Medical Professional includes time as a practicing physician and experience as an active member of a medical community | Talent / Human Capital Mgmt. includes expertise with talent strategies, organization health and culture, compensation programs, and organizational design | Chief Executive Officer includes an understanding of the complexities inherent in running a public company that helps the Board independently oversee management |
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| | PROPOSAL NO. 1 |
Election of Directors
CLASS I DIRECTOR NOMINEES FOR ELECTION TO THREE-YEAR TERMS EXPIRING AT THE 2028 ANNUAL MEETING OF STOCKHOLDERS
Election of Directors
| Cynthia B. Burks Age: 59 Independent Director since: 2022 Committee(s): • Organization and Compensation • Audit Other Public Boards: • WD-40 Company (since 2022) Education: • B.S., Finance, Marquette University • M.B.A., Thunderbird School of Global Management at Arizona State University • J.D., Univ. of San Francisco School of Law | Experience: • Genentech, Inc., a biotechnology company that is a member of the Roche Group: Senior Vice President and Chief People and Culture Officer (2019 – 2021); Vice President, Head of Human Resources, Genentech Research and Early Development (2015 – 2019); held various human resource management roles (2011 – 2015) • Held human resource and organizational development positions in industries including media, consumer goods and technology (1999 – 2011) | | | Qualifications: • Talent Management / Human Capital Strategy expertise gained through her significant career in human resources, enables Ms. Burks to help advise the Company on its human capital strategy in areas critical to our business, including talent management, succession planning, compensation strategy, designing culture to increase competitive advantage, diversity, equity and inclusion, and organizational design. • International / Global experience gained in service in various senior-level leadership roles with global responsibility at Genentech enables Ms. Burks bring value to our Board in guiding our global strategy. • Legal / Compliance expertise acquired through her education as an attorney and service in various senior-level human resources roles at Genentech where she was responsible for successfully executing strategies and other initiatives subject to complex rules and regulatory requirements, enables her to share perspectives that are relevant to the Board’s oversight responsibilities. |
Election of Directors
| Timothy P. Herbert Chairman, President & Chief Executive Officer Age: 62 Director since: 2007 Education: • B.S., Electrical Engineering, North Dakota State University • M.B.A., University of St. Thomas | Experience: • President and Chief Executive Officer, Inspire Medical Systems, Inc. (since 2007 when he founded the Company) • Held management positions in product development, clinical research, sales, marketing, and healthcare reimbursement at Medtronic plc, a medical equipment development company (1996 – 2007) | | | Qualifications: • Industry and Technology experience gained through an extensive career in the healthcare and medical device industry, including founding Inspire, enables Mr. Herbert to bring deep knowledge of our business, products and industry to the Board. Additionally, his experience obtained through his time at Medtronic and Inspire, where he was instrumental to successfully developing the technology at the Company’s foundation, strengthen his ongoing Board contributions. • Financial / Capital Markets experience and expertise gained leading capital formation strategies and initiatives, including equity financing and stock offerings, enable Mr. Herbert to offer invaluable insights and perspectives regarding financial and capital markets. • Chief Executive Officer experience gained through his long tenure leading Inspire make him well suited to help our Board with governance and set strategy. |
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| | PROPOSAL NO. 1 |
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| Shawn T McCormick Age: 60 Independent Director since: 2017 Committee(s): • Audit, Chair • Quality, Product Supply, and Technology Other Public Boards: • Nevro Corp. (since 2014) • Entellus Medical, Inc. (2014 – 2018) • Surmodics, Inc. (2015 – 2020) Education: • B.S., Accounting, Arizona State University • M.B.A., University of Minnesota’s Carlson School of Management • Certified Public Accountant (inactive) | Experience: • Chief Financial Officer, Aldevron, LLC, a technology company specializing in the manufacture of plasmid DNA, mRNA and proteins (2020 – 2022, several months after Aldevron was acquired by Danaher Corporation) • Held executive management roles at various public and private medical device companies (2009 – 2015), including as Chief Financial Officer, Tornier N.V., a global orthopedic company (2012 – 2015 when Tornier merged with Wright Medical Group, Inc.) • Held various management positions at Medtronic plc, including in corporate development and finance (1992 - 2009) | | | Qualifications: • Financial / Capital Markets expertise developed through his experience in finance leadership roles, including service as CFO for several public companies, helps Mr. McCormick bring valuable knowledge of financial oversight and reporting to our Board. • Industry and Technology experience gained through more than three decades working in the healthcare and medical device industries adds valuable industry perspective to our Board. Additionally, his significant career in the medical sector and with medical device companies have given him a deep understanding of technologies in our industry that are core to the Company’s business and strategy. • Mfg. / Operations / Supply Chain experience gained as COO of Lutonix, enable Mr. McCormick to offer invaluable insights and perspectives regarding the Company’s manufacturing, operations and supply chain strategies and related initiatives. |
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| | PROPOSAL NO. 1 |
Election of Directors
CLASS II DIRECTORS WHOSE TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF STOCKHOLDERS
Election of Directors
| Gary L. Ellis Age: 68 Lead Independent Director Independent Director since: 2019 Committee(s): • Nominating and Corporate Governance, Chair • Organization and Compensation Other Public Boards: • The Toro Company (since 2006) • Hill-Rom Holdings, Inc. (2017 – 2021) • Itamar Medical Ltd. (2007 – 2017) Education: • B.S., Accounting, University of S. Dakota • Certified Public Accountant (inactive) | Experience: • Medtronic plc and its subsidiary, Medtronic, Inc., a global medical technology company: Executive Vice President, Global Operations, Information Technology and Facilities & Real Estate (June 2016 – December 2016); Executive Vice President and Chief Financial Officer, Medtronic, Inc. (2014 – 2016); Senior Vice President and Chief Financial Officer, Medtronic, Inc. (2005 – 2014); Vice President, Corporate Controller and Treasurer, Medtronic, Inc. (1999 – 2005) | | | Qualifications: • Financial / Capital Markets expertise acquired through an extensive career in accounting and finance, including as CFO of Medtronic for more than 10 years and before that as a Senior Audit Manager for PwC, helps Mr. Ellis bring valuable knowledge of financial oversight and reporting to our Board. • Industry and Technology experience gained during his almost two decades at Medtronic helps him bring deep knowledge of our Industry to the Board. • International / Global experience developed during his tenure at Medtronic, including his service as EVP, Global Operations, allow him to bring a global operations perspective to our Board. |
Election of Directors
| Georgia Garinois-Melenikiotou Age: 65 Independent Director since: 2020 Committee(s): • Audit • Nominating and Corporate Governance Other Public Boards: • Almirall, S.A. (2015 – 2022) • Douglas Group (since 2024) • Natura & Co (2021 – 2024) • Pulmonx Corporation (since 2020) Education: • B.S. and M.S., Engineering, National Technical University of Athens • M.B.A., Sloan School of Mgmt. at M.I.T. | Experience: • The Estée Lauder Companies, a global beauty products company: Executive Vice President, Corporate Marketing (2015 – 2020); Senior Vice President, Corporate Marketing (2010 – 2014) • Had a 27-year career including several senior leadership positions at Johnson & Johnson, a global manufacturer of medical devices, pharmaceutical products, and consumer packaged goods (1983 – 2010), including serving as President, J&J Consumer France, President, Global Business Unit Strategy and New Growth, and Global President, Beauty | | | Qualifications: • International / Global experience gained through Ms. Garinois-Melenikiotou’s leadership roles at multinational companies, including roles in Belgium, France, Greece, Italy, Switzerland, and the United Kingdom, allow her to add a global business perspective to our Board. • Consumer Marketing expertise developed while serving in senior roles overseeing marketing initiatives at Estée Lauder, help her bring to the Board extensive knowledge of consumer perspectives and trends. • Financial / Capital Markets experience gained establishing and executing corporate finance strategies in senior-level roles enable her to offer invaluable insights and perspectives regarding the Company’s capital and finance strategies. |
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| | PROPOSAL NO. 1 |
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| Dana G. Mead, Jr. Age: 65 Independent Director since: 2008 Committee(s): • Audit • Quality, Product Supply, and Technology, Chair Other Public Boards: • Pulmonx Corporation, (since 2010), Chairman since 2019 • Inari Medical Inc. (2021 – 2025) • Intersect ENT, Inc., (2007 – 2022) • HeartFlow (2019 – 2021) Education: • B.A., Lafayette College • M.B.A., University of Southern California | Experience: • Chief Executive Officer and President, HeartFlow, Inc., a digital health company transforming how heart disease is diagnosed and treated (2019 – 2021) • Chief Executive Officer and President, Beaver-Visitec International, Inc., a surgical device developer and manufacturer (2016 – 2019) • Partner, Kleiner Perkins Caufield & Byers, a venture capital investment firm (2005 – 2016) | | | Qualifications: • Industry and Technology experience developed through Mr. Mead’s roles as CEO of a surgical device developer and manufacturer and at a digital health company, help him add valuable experience in our industry to the Board. He also brings technology expertise gained as CEO and President of HeartFlow, a company focused on the transformation of the diagnosis and treatment of heart disease, enable him to bring to the Board valuable insights in the emerging field of digitization, which is an important aspect of the Company’s strategy. • International / Global experience gained in various senior-level leadership roles with global responsibilities, including President, Asia Pacific Operations for Guidant Corporation, enables Mr. Mead to bring value to our Board in guiding our global strategy. • Chief Executive Officer experience acquired through his CEO roles with HeartFlow and Beaver-Visitec allows him to provide the Board with valuable senior leadership and governance perspective. |
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Election of Directors
| | PROPOSAL NO. 1 |
Election of Directors
CLASS III DIRECTOR NOMINEES WHOSE TERMS EXPIRE AT THE 2027 ANNUAL MEETING OF STOCKHOLDERS
Election of Directors
| Shelley G. Broader Age: 60 Independent director since: 2020 Committee(s): • Organization and Compensation, Chair • Nominating and Corporate Governance Other Public Boards: • Loblaw Companies Limited (since 2022) • Dutch Bros Inc. (2021 – 2023) • Chico’s FAS, Inc. (2015 – 2019) • Raymond James Financial, Inc. (2008 – 2020) Education: • B.A., Washington State University | Experience: • Chief Executive Officer and President, Chico’s FAS, Inc., a fashion retailer (2015 – 2019) • Walmart Inc., a multinational retail company (2009 – 2015): President and Chief Executive Officer, Walmart Europe, Middle East and Sub-Saharan Africa region (2014 – 2015); President and Chief Executive Officer, Walmart Canada Corp. (2011 – 2014); Chief Merchandising Officer, Walmart Canada Corp. (2010 – 2011); Senior Vice President, Sam’s Club, a division of Walmart (2009 – 2010) | | | Qualifications: • International / Global experience gained through leadership of multinational brands helps Ms. Broader bring value to our Board in guiding our global strategy. • Consumer Marketing / Brand Management expertise acquired through her career in retail enables her to contribute extensive insights regarding consumer perspectives. • Chief Executive Officer experience gained through her service as CEO and President of Chico’s enables her to share strategies and perspectives that are relevant to the Board’s oversight responsibilities. |
Election of Directors
| Myriam J. Curet, M.D. Age: 68 Independent director since: 2023 Committee(s): • Nominating and Corporate Governance • Quality, Product Supply, and Technology Other Public Boards: • Stereotaxis (since 2021) • Nektar Therapeutics (2019 – 2024) Education: • B.A., Bryn Mawr College • M.D., Harvard Medical School • Residency, University of Chicago • Fellowship, surgical endoscopy, University of New Mexico | Experience: • Intuitive Surgical, a global technology leader in minimally invasive care and the pioneer of robotic-assisted surgery: Executive Vice President and Chief Medical Officer (since 2017); Senior Vice President and Chief Medical Officer (2014 – 2017); Chief Medical Advisor (2005 – 2014) • Stanford University: Clinical Professor of Surgery (since 2015); Professor (2000 – 2015) • Associate Professor of Surgery, University of New Mexico (1994 – 2000) • Held various positions, Indian Health Service, an agency within the Department of Health and Human Services • Medical Deputy Director, Gallup Indian Medical Center in New Mexico | | | Qualifications: • Medical Professional experience developed through three decades working in healthcare and academia allows Dr. Curet to provide valuable insights into how to educate and work with medical professionals. • Industry and Technology experience gained through her service on the boards of medical device and biopharma companies and her various senior-level roles at Intuitive Surgical has resulted in a deep knowledge of our industry and technology. • Legal / Compliance expertise acquired through her leadership at Intuitive Surgical, including overseeing the development of clinical evidence, physician education, and reimbursement and regulatory activities, is a core competency for Board oversight of the Company. |
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| | PROPOSAL NO. 1 |
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| Casey M. Tansey Age: 67 Independent Director since: 2008 Committee(s): • Organization and Compensation • Quality, Product Supply, and Technology Other Public Boards: • Intersect ENT, Inc. (2006 – 2017) Education: • B.S. and M.B.A., College of Notre Dame | Experience: • U.S. Venture Partners, a venture capital investment firm: Managing Partner (since 2014); Managing Member (2005 – 2014) | | | Qualifications: • Industry and Technology expertise gained through more than three decades in the medical device industry holding roles at companies such as Epicor Medical, Heartport, Inc., a public company that helped pioneer minimally-invasive cardiac surgery, and Baxter Edward enables Mr. Tansey to bring valuable industry knowledge to our Board. Additionally, his years of experience supporting early-stage medical device companies, including at Epicor Medical, Baxter Edward, and now at U.S. Venture Partners, where his focuses include the development of minimally invasive technologies, helps him contribute deep knowledge of technologies critical to our business. • Chief Executive Officer experience gained through his service as CEO of Heartport enables him to share perspectives that are relevant to the Board’s oversight responsibilities. • Financial / Capital Markets expertise acquired through extensive experience at his current firm investing in the medical device, biotechnology and healthcare information technology sectors enable him to offer invaluable insights and perspectives regarding financial and capital markets. |
Election of Directors
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Corporate Governance
| • | Board size, independence, and qualifications | • | Director compensation | | • | Classes of directors and election process | • | Stock ownership | | • | Executive sessions of independent directors | • | Board access to senior management | | • | Board leadership structure | • | Board access to independent advisors | | • | Selection of new directors | • | Board self-evaluations | | • | Director orientation and continuing education | • | Board meetings | | • | Limits on board service | • | Meeting attendance by directors and non-directors | | • | Change of principal occupation of directors | • | Meeting materials | | • | Term limits | • | Board committees, responsibilities, and independence | | • | Director responsibilities | • | Succession planning |
Corporate Governance
Governance Structure The Board regularly reviews the corporate governance policies and practices of the Company to determine whether they are appropriate and will advance the Board’s and management’s goal of maximizing long-term stockholder value. Our current governance structure includes a classified board, plurality voting for directors, and requires a supermajority vote to make certain changes to our governance documents. Classified Board Structure In accordance with our Certificate of Incorporation, and as permitted under applicable state law, our Board of Directors is divided into three classes. Our classified board structure has been in place since our initial public offering (our “IPO”) in 2018. The Board regularly evaluates whether to maintain a classified Board structure, and has determined that a classified board structure continues to be in the best interests of the Company and our stockholders primarily for the reasons set forth below:
Corporate Governance
| • | We believe that the current structure helps directors to develop a deeper familiarity with the Company’s business. It encourages long-term, strategic thinking, which is critical to carry out the Company‘s business model, which requires substantial investments in research and development projects that may take years to yield the desired results. The Board believes that three-year terms on a staggered basis are currently appropriate and consistent with the long-term nature of our business model, and best serve our stockholders at this time. |
Corporate Governance
| • | We believe that three-year terms promote continuity and foster an appropriate institutional memory among directors, and help our directors to develop a deep knowledge of the business and competitive environment. Staggered terms give the Company’s new directors an opportunity to gain knowledge about the Company’s business from its continuing directors. |
Corporate Governance
| • | The Board has implemented broad measures to ensure accountability of our directors, including our Corporate Governance Guidelines, Code of Business Conduct and Ethics (the “Code of Conduct”), and annual self-evaluations of the performance of the Board and its committees, which is led by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee assesses the performance of each current director as part of its consideration of whether to re-nominate to the Board. As a result, the Company benefits from the stability and continuity of a classified Board structure, while retaining meaningful director accountability. |
Corporate Governance
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Corporate Governance
| | CORPORATE GOVERNANCE |
Corporate Governance
| • | While a classified board structure does not preclude unsolicited acquisition proposals, by eliminating the threat of imminent removal, it allows the Board to maximize the value of a potential acquisition by giving the Company time and bargaining leverage to evaluate and negotiate the adequacy and fairness of any takeover proposal and to consider alternatives, including the continued operation of the Company’s business. |
Corporate Governance
PLURALITY Voting Standard for Director Elections The Company’s current plurality voting standard yields a definitive result in a simple, efficient and transparent manner, which has historically been effective in electing strong, independent directors to our Board. Further, we believe that under the current plurality voting standard, stockholders have a meaningful opportunity to express disapproval with corporate policies, strategy, or director candidates through the use of withhold votes. Our Corporate Governance Guidelines provide that in an uncontested election of directors, any nominee for director who does not receive a majority of the votes cast for his or her election shall offer to resign from the Board. The Nominating and Corporate Governance Committee shall promptly consider the resignation offer and recommend to the full Board whether to accept it. The Board will act on the Nominating and Corporate Governance Committee’s recommendation within 90 days following the certification of the stockholder vote by the inspector of elections, and will disclose its decision and the reasons for rejecting the offer, if applicable, in a current report on Form 8-K. Any director who tenders his or her offer to resign from the Board pursuant to the Corporate Governance Guidelines may not participate in the Nominating and Corporate Governance Committee or Board deliberations regarding whether to accept the offer of resignation. The Board believes that this process provides accountability to stockholders and responsiveness to stockholders’ votes, while allowing the Board appropriate discretion in considering whether a particular director’s resignation would be in the best interests of the Company and its stockholders. SUPERMAJORITY VOTING STANDARD IN OUR Charter and Bylaws Our Certificate of Incorporation and bylaws, as currently in effect (the “Bylaws”), provide that two-thirds of the voting power of the Company are required to enact certain changes to the Company’s governing documents, including, for example, adopting, amending, altering or repealing provisions of the Bylaws. At the time of our IPO in 2018, the Board believed that this supermajority voting standard was an important component of the Company’s governance structure to safeguard the long-term interests of the Company and its stockholders. The Board continues to believe that the Company’s supermajority voting standards are in the best interests of the Company and our stockholders primarily for the following reasons set forth below:
Corporate Governance
| • | The supermajority voting standards are appropriately limited and apply to extraordinary transactions and fundamental changes to corporate governance. |
Corporate Governance
| • | The supermajority vote requirements help protect stockholders, particularly minority stockholders, against the potentially self-interested actions of short-term investors. |
Corporate Governance
| • | The supermajority voting requirements help protect the ability of the Board to evaluate proposed takeover offers, consider alternatives, and protect stockholders against abusive tactics during a potential takeover process. |
Corporate Governance
Board Leadership Structure Our Corporate Governance Guidelines provide our Board of Directors with flexibility to combine or separate the positions of Chair of the Board and Chief Executive Officer, or CEO, in accordance with its determination that utilizing one or the other structure would be in the best interests of the Company and its stockholders. If the Chair of the Board is a member of management or does not otherwise qualify as independent, our Corporate Governance Guidelines provide for the appointment of a presiding non-management director (the “Lead Director”), as recommended by the Nominating and Corporate Governance Committee. The Lead Director’s responsibilities include, but are not limited to: assisting the Chair of the Board in establishing the agendas for Board meetings and the schedule of agenda subjects to be discussed during the year; having the authority to call meetings of the independent directors; presiding at meetings of the Board at which the Chair is not present, including executive sessions of the independent directors;
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| | CORPORATE GOVERNANCE |
Corporate Governance
serving as a liaison between the Chair and the independent directors; previewing the information to be provided to the Board; together with the Chair of the Organization and Compensation Committee, communicating to the CEO the results of his or her annual performance review and compensation; together with the Chair of the Nominating and Corporate Governance Committee, leading the Board’s annual self-evaluation; and to have such other duties as are otherwise determined by the Board from time to time. Mr. Herbert has served in the combined role of Chair and CEO since 2024. The Board believes that Mr. Herbert’s decades of expertise in the medical device industry as well as his deep understanding of the business that he founded make him uniquely qualified to effectively manage the business, execute on our strategic priorities, and lead the Board. Mr. Ellis has served as the Board’s Lead Director since 2024. The Board believes this leadership structure effectively allocates authority, responsibility, and oversight between management and the independent members of our Board, giving primary responsibility for the operational leadership and strategic direction of the Company to our Chair and CEO, while enabling the Lead Director to facilitate the Board’s independent oversight of management. In addition, the Board believes this leadership structure appropriately aligns with the Board’s overall oversight of risk, as described under “Board Role in Risk Oversight” below. We recognize that different leadership structures may be appropriate for companies in different situations and believe that no one structure is suitable for all companies at all times. Accordingly, the Board will continue to periodically review our leadership structure and make such changes in the future as it deems appropriate and in the best interests of the Company and its stockholders. Director Independence Under our Corporate Governance Guidelines and the New York Stock Exchange (“NYSE”) rules, a director is not independent unless the Board affirmatively determines that he or she does not have a direct or indirect material relationship with us. In addition, the director must meet the bright-line tests for independence set forth by the NYSE rules. Our Board has undertaken a review of its composition, the composition of its committees, and the independence of our directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from and provided by each director concerning his or her background, employment, and affiliations, including family relationships, our Board of Directors has determined that none of Ms. Broader, Ms. Burks, Dr. Curet, Mr. Ellis, Ms. Garinois-Melenikiotou, Mr. McCormick, Mr. Mead, or Mr. Tansey, representing 8 of our 9 current directors and directors whose term will continue after the Annual Meeting, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors qualifies as “independent” as that term is defined under the rules of the NYSE. Our Board previously determined that each of Jerry C. Griffin, M.D. and Marilyn Carlson Nelson, directors who served on our Board through the 2024 annual meeting of stockholders, did not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and qualified as “independent” while serving as a director. Mr. Herbert, our President and CEO, is the only director who is not independent. In making these determinations, our Board of Directors considered the relationships that each non-employee director has with us and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including the director’s beneficial ownership of our common stock, the relationships of our non-employee directors with certain of our significant stockholders, and the organizations with which our non-employee directors have current relationships that may be pertinent to their independence. Board Committees Our Board of Directors historically had three standing committees: an Audit Committee, an Organization and Compensation Committee, and a Nominating and Corporate Governance Committee. On February 6, 2025, the Board approved a fourth standing committee of the Board, the Quality, Product Supply, and Technology Committee, to carry out responsibilities of the Board relating to oversight of the quality, safety, and supply of the Company’s products, legal and regulatory compliance matters, and the Company’s research, innovation, and technology initiatives and
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| | CORPORATE GOVERNANCE |
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programs. The Board believes the new committee will enhance the Board’s ability to carry out its oversight responsibilities in areas important to the Company’s current business and future growth. To accommodate the establishment of the new committee, current directors have taken on an additional committee assignment. The Board reviewed industry and peer benchmarking information and believes that expanded committees are aligned with best practices and may also allow for greater information sharing among directors and increased director awareness of committee priorities and strategic considerations across committees. The responsibilities of our standing committees are described below. From time-to-time special committees may be established under the direction of our Board when necessary to address specific issues. Each of the Audit Committee, the Organization and Compensation Committee, the Nominating and Corporate Governance Committee, and the Quality, Product Supply, and Technology Committee operates under a written charter that is available on our website. The table below reflects our committee membership as of March 18, 2025.
Corporate Governance
| Director | Audit Committee | Organization and Compensation Committee | Nominating and Corporate Governance Committee | Quality, Product Supply, and Technology Committee | | Shelley G. Broader | — | Chair | X | — | | Cynthia B. Burks | X | X | — | — | | Myriam J. Curet, M.D. | — | — | X | X | | Gary L. Ellis | — | X | Chair | — | | Georgia Garinois-Melenikiotou | X | — | X | — | | Timothy P. Herbert | — | — | — | — | | Dana G. Mead, Jr. | X | — | — | Chair | | Shawn T McCormick | Chair | — | — | X | | Casey M. Tansey | — | X | — | X |
Corporate Governance
Audit Committee Our Audit Committee oversees our corporate accounting and financial reporting process and assists our Board of Directors in its oversight of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) our risk management program, (iv) the performance of our independent auditor, and (v) the design and implementation of our internal audit function and internal controls. Our Audit Committee is responsible for, among other things:
Corporate Governance
| • | appointing, compensating, retaining, evaluating, and overseeing the work of our independent auditor and any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or related work or performing other audit, review, or attest services for us; |
Corporate Governance
| • | discussing with our independent auditor any audit problems or difficulties and management’s response; |
Corporate Governance
| • | pre-approving all audit and non-audit services provided to us by our independent auditor (other than those provided pursuant to appropriate preapproval policies established by the committee or exempt from such requirement under SEC rules); |
Corporate Governance
| • | reviewing and discussing our annual and quarterly financial statements with management and our independent registered public accounting firm; |
Corporate Governance
| • | discussing and overseeing our policies with respect to risk assessment and risk management, including major financial risk exposures and the steps management has taken to monitor and control such exposures; |
Corporate Governance
| • | overseeing our information security and technology risks, including information security, cybersecurity, and related risk management programs; |
Corporate Governance
| • | reviewing management’s use of sustainability measures and metrics, as well as other non-GAAP measures and metrics, and reviewing in particular how these measures are used to evaluate performance, whether they are consistently prepared and presented, what disclosure controls and procedures relating to these measures are in place, and how such measures are disclosed; and |
Corporate Governance
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Corporate Governance
| | CORPORATE GOVERNANCE |
Corporate Governance
| • | overseeing, and annually reviewing, procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters, and for the confidential and anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. |
Corporate Governance
The Audit Committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time. The Audit Committee has the authority to engage independent legal, accounting, and other advisors as it deems necessary or appropriate to assist in carrying out its responsibilities. We must provide appropriate funding for payment of reasonable compensation to any advisor retained by the Audit Committee. Our Audit Committee currently consists of Ms. Burks, Ms. Garinois-Melenikiotou, Mr. McCormick, and Mr. Mead, with Mr. McCormick serving as chair. All current members of the committee served on the committee for all of fiscal 2024, except for Ms. Burks who was appointed in February 2025. All members of our Audit Committee meet the requirements for financial literacy under the applicable rules and regulations of the NYSE. Our Board of Directors has affirmatively determined that each of Ms. Burks, Ms. Garinois-Melenikiotou, Mr. McCormick, and Mr. Mead qualifies as “independent” under NYSE’s additional standards applicable to audit committee members and Rule 10A-3 of the Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our Board of Directors has determined that Ms. Garinois-Melenikiotou, Mr. McCormick, and Mr. Mead each qualify as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The determination by our Board of Directors for Mr. McCormick was made based on experience and education which demonstrate his attributes as an audit committee financial expert, including the fact that he has been the chief financial officer of several medical technology companies and is a Certified Public Accountant (inactive), holding a degree in accounting and an M.B.A. Both Ms. Garinois-Melenikiotou and Mr. Mead also have education and experience supporting their determination by the Board of Directors as audit committee financial experts, including that both have M.B.A. degrees and financial oversight experience, with Ms. Garinois-Melenikiotou gaining this experience as a president at Johnson & Johnson and Mr. Mead gaining this experience as a CEO of several medical technology companies. Organization and Compensation Committee Our Organization and Compensation Committee oversees our human capital strategies and programs, and our compensation policies, plans, and benefits programs. The committee is responsible for, among other things:
Corporate Governance
| • | reviewing and approving corporate goals and objectives with respect to the compensation of our CEO, evaluating our CEO’s performance in light of these goals and objectives, and setting the CEO’s compensation; |
Corporate Governance
| • | reviewing and approving the compensation of our other executive officers; |
Corporate Governance
| • | reviewing and making recommendations to our Board of Directors regarding director compensation; |
Director Compensation
Director Compensation Non-Employee Director Compensation Policy We maintain a compensation policy that provides cash and equity compensation to our non-employee directors for their service on the Board and its committees as discussed below. On a periodic basis, the Organization and Compensation Committee reviews the policy to ensure that the level of compensation is appropriate to attract and retain a diverse group of directors with the breadth of experience necessary to perform our Board’s duties and to compensate our directors fairly for their services, and to determine whether any recommendations for adjustment should be made to the Board. The review includes the consideration of qualitative and comparative factors. To ensure directors are compensated relative to the scope of their responsibilities, the Organization and Compensation Committee considers: (1) the time and effort involved in preparing for Board and committee meetings and the additional duties assumed by committee chairs and our chair; (2) the risks associated with fulfilling fiduciary duties; and (3) the compensation paid to directors at the same peer group of companies used to assess the competitiveness of our executive compensation programs. All cash and equity awards granted under the non-employee director compensation policy are granted under, and subject to the limits of, the Inspire Medical Systems, Inc. 2018 Incentive Award Plan (“2018 Plan”). In May 2024, the Board approved changes to the 2024 compensation for our non-employee directors upon the recommendation of the Organization and Compensation Committee and our independent compensation consultant to account for changes in the Board’s leadership structure and the appointment of the Lead Director. As a result, the Board’s non-employee director compensation policy was amended to add an additional annual cash retainer of $32,000 for service as the Lead Director. Cash Compensation. Under the policy last amended in May 2024 for fiscal 2024, each of our non-employee directors was eligible to receive an annual retainer of $50,000. Our non-employee directors were also eligible to receive additional annual retainers as follows:
Director Compensation
| • | the chair of the Board receives an additional annual cash retainer of $50,000; |
Director Compensation
| • | the lead director of the Board received an additional annual cash retainer of $32,000; |
Director Compensation
| • | the chair of the Audit Committee receives an additional annual cash retainer of $20,000, and the non-chair members of that committee receive an additional annual cash retainer of $10,000; |
Director Compensation
| • | the chair of the Organization and Compensation Committee receives an additional annual cash retainer of $15,000, and the non-chair members of that committee receive an additional annual cash retainer of $7,500; and |
Director Compensation
| • | the chair of the Nominating and Corporate Governance Committee receives an additional annual cash retainer of $15,000, and the non-chair members of that committee receive an additional annual cash retainer of $7,500. |
Director Compensation
The cash retainers are paid quarterly following the completion of each calendar quarter. The Board may, in its discretion, permit a non-employee director to elect to receive any portion of the annual cash retainer in the form of fully vested and unrestricted shares of common stock in lieu of cash. In February 2025, in connection with the addition of the Quality, Product Supply, and Technology Committee, the Board further amended the policy upon the recommendation of the Organization and Compensation Committee to provide an additional annual cash retainer of $15,000 for the chair and $7,500 for non-chair members of the new committee. Equity Compensation. In addition to the cash compensation described above, each of our non-employee directors is eligible to receive an award of restricted stock units (“RSUs”) as compensation for his or her service on the Board. Upon a director’s initial election or appointment to the Board, such director will receive an award of RSUs having a grant date fair value of $270,000, which award will vest in three equal installments following the grant date. On an annual basis thereafter, on the date of the annual meeting, each non-employee director is eligible to receive an award
Director Compensation
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Director Compensation
| | DIRECTOR COMPENSATION |
Director Compensation
of RSUs having a grant date fair value of $180,000, which award will vest on the first anniversary of the grant date. The initial and annual awards will be subject to the director’s continuing service through the applicable vesting dates. All initial and annual awards will vest in full immediately prior to the occurrence of a Change in Control (as defined in the 2018 Plan). Director Compensation Table for Fiscal 2024 The following table sets forth information concerning the compensation of our non-employee directors for the fiscal year ended December 31, 2024:
Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2)(4) | Total ($) | | Shelley G. Broader | 65,000(1) | 180,000 | 245,000 | | Cynthia B. Burks | 57,500 | 180,000 | 237,500 | | Myriam J. Curet, M.D. | 57,500 | 180,000 | 237,500 | | Gary L. Ellis | 86,187 (1) | 180,000 | 266,187 | | Georgia Garinois-Melenikiotou | 60,000 (1) | 180,000 | 240,000 | | Jerry C. Griffin, M.D.(3) | 19,430 | — | 19,430 | | Dana G. Mead, Jr. | 66,216 | 180,000 | 246,216 | | Shawn T McCormick | 70,000 | 180,000 | 250,000 | | Marilyn Carlson Nelson(3) | 33,791(1) | — | 33,791 | | Casey M. Tansey | 57,500 (1) | 180,000 | 237,500 |
Director Compensation
| (1) Each of Ms. Broader, Mr. Ellis, Ms. Garinois-Melenikioutou, Ms. Nelson, and Mr. Tansey elected to receive such amounts, or a portion of such amounts, in the form of fully vested shares of our common stock in lieu of cash payment, which resulted in the issuance of 356 shares of our common stock to Ms. Broader, 476 shares of our common stock to Mr. Ellis, 247 shares of our common stock to Ms. Garinois-Melenikioutou, 170 shares of our common stock to Ms. Nelson, and 314 shares of our common stock to Mr. Tansey. |
Director Compensation
| (2) Amounts reflect the full grant date fair value of RSUs granted during fiscal 2024 computed in accordance with ASC 718, rather than the amounts paid to or realized by the named director. We provide information regarding the assumptions used to calculate the value of all RSUs in Note 7 to our audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The table below shows the aggregate numbers of unvested RSUs held as of December 31, 2024 by each director who was serving as of December 31, 2024. |
Director Compensation
| Name | Unvested Restricted Stock Units | | Shelley G. Broader | 716 | | Cynthia B. Burks | 716 | | Myriam J. Curet, M.D. | 1,638 | | Gary L. Ellis | 716 | | Georgia Garinois-Melenikiotou | 716 | | Dana G. Mead, Jr. | 716 | | Shawn T McCormick | 716 | | Casey M. Tansey | 716 |
Director Compensation
| (3) Dr. Griffin and Ms. Nelson each did not stand for reelection at the 2024 annual meeting of stockholders and their service as directors ended on May 2, 2024. |
Director Compensation
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Director Compensation
| | DIRECTOR COMPENSATION |
Director Compensation
| (4) No stock options were granted to our non-employee directors during 2024. The table below shows the aggregate numbers of stock option awards (exercisable and unexercisable) held as of December 31, 2024 by each director who was serving as of December 31, 2024. |
Director Compensation
| Name | Number of Shares of Common Stock Underlying Options Outstanding at Fiscal Year End | | Shelley G. Broader | 5,531 | | Cynthia B. Burks | 1,823 | | Myriam J. Curet, M.D. | — | | Gary L. Ellis | 11,180 | | Georgia Garinois-Melenikiotou | 4,974 | | Dana G. Mead, Jr. | 27,784 | | Shawn T McCormick | 27,784 | | Casey M. Tansey | 27,784 |
Director Compensation
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Executive Compensation
Substantial Majority of Compensation is Variable and At-Risk; Continued to Utilize Performance Stock Units Compensation Philosophy Based on Pay for Performance. Our compensation philosophy is performance-based and focuses on aligning the financial interests of our executive officers with those of our stockholders. Generally, this is accomplished by placing a substantial portion of our executive officers’ total compensation “at risk.” We consider compensation to be “at-risk” if it is subject to achievement of meaningful pre-set, objective financial or operating goals, such as in our cash-based management incentive program, or if it depends on stock price appreciation or value, as in our long-term incentive program. Consistent with the market practice of similar public companies in our industry, and in order to focus executives on growth and increasing stockholder value, our long-term incentive (“LTI”) program historically consisted solely of stock options. In our view, stock options are simple and inherently performance-based, requiring stock price appreciation before there is any value earned. Performance Stock Units. As the Company has continued to evolve and mature following its IPO in 2018, the Organization and Compensation Committee has correspondingly sought to evolve the executive compensation program as appropriate for a company of our stage of development and size.
Executive Compensation
In this regard, beginning in 2022, the Organization and Compensation Committee introduced performance stock units (“PSUs”) as a component of our LTI program. The performance-based metrics associated with these awards, in conjunction with the proportion of total compensation that was variable and at-risk, further enhanced the link between pay and performance for our executive officers, as well as strengthened the alignment of their interests with those of our stockholders. As shown in the graphic below, in fiscal 2024, approximately 91% of our CEO’s target total direct compensation was variable and at-risk compensation, and on average, approximately 84% of the target total direct compensation of our other NEOs was variable and at-risk.
Executive Compensation
| (1) The total direct compensation of our NEOs as reflected in the above graphic differs from the total in the “Summary Compensation Table” because it (a) reflects base salaries approved by the Organization and Compensation Committee, including promotion adjustments, with respect to Mr. Weatherby, (b) only includes cash incentive opportunity at “target”, rather than actual payout, and (c) includes the aggregate grant date value of stock options, RSUs, and PSUs granted during fiscal 2024, as discussed in the section entitled “Long-term Incentives” below, and excludes all other amounts. The Organization and Compensation Committee views target total direct compensation as a useful measure of pay because it reflects the intended aggregate value of key elements of pay at the time the pay decision is made. |
Executive Compensation
The performance-based metrics and the proportion of total compensation that was variable and at-risk further enhanced the link between pay and performance for the CEO and other NEOs and strengthened the alignment of the interests of our NEOs with those of our stockholders. See the following pages for more details on the elements of our compensation program. Short-Term Annual Cash Incentive: Rigorous, Pre-Set Financial, Operating, and Regulatory/Product Development Goals, Strong Performance Achievement, and Annual Incentive Plan Payouts Reflecting Pay for Performance Alignment At the outset of fiscal 2024, we established goals for revenue, operating income or loss, global insurance reimbursement approvals, regulatory and product development objectives, and operations objectives metrics under our annual cash Management Incentive Program (“MIP”). These objectives were rigorous, aggressive, and challenging, attainable only with strong performance, and took into account the relevant opportunities and risks. The revenue target represented an approximately 31% increase over the prior fiscal year’s actual results, reflecting our ambitious business and operational plans for the year. In order to earn any payout with respect to the most heavily weighted goal, revenue, a minimum of approximately 94% of target performance had to be achieved. The Organization and Compensation Committee also set similarly challenging targets and threshold levels for the other performance metrics and evaluated performance achievement relative to the goals. I. COMPENSATION PHILOSOPHY AND OBJECTIVES We are a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea. We believe that for us to be successful, we must hire and retain highly-skilled and experienced people who can continue to develop and execute our strategy, innovate our products and services, and lead our teams.
Executive Compensation
| • | attract, motivate, reward, and retain employees at the executive level who contribute to our long-term success; |
Executive Compensation
| • | effectively align our executives’ interests with those of our stockholders, in part by focusing on long-term equity incentives that correlate with the growth of sustainable long-term value for our stockholders; |
Executive Compensation
| • | align our performance metrics with our corporate strategy and the achievement of our business objectives; and |
Executive Compensation
Committee also considered the nature and amount of work performed for the Organization and Compensation Committee and the fees paid for those services in relation to the firm’s total revenues. On the basis of its consideration of the foregoing and other relevant factors, the Organization and Compensation Committee concluded that Aon was independent and that there were no conflicts of interest. Compensation Peer Group and Peer Selection Process The Organization and Compensation Committee believes that obtaining relevant market and benchmark data is of paramount importance in its executive compensation determinations. Such information provides helpful context and a solid reference point when making compensation decisions, though unique aspects of the Company and our business may ultimately drive compensation decisions that differ from our peers. The Organization and Compensation Committee takes into consideration the structure and components of, and the amounts paid under, the executive compensation programs of other comparable peer companies. This information is derived from public filings and other sources when making decisions about the structure and component mix of our executive compensation program. The Organization and Compensation Committee, with the assistance of Aon, developed a peer group using criteria designed to identify companies that reflect our size (measured by revenue, market capitalization, number of employees, and other size measures) and business profile (generally medical device and health equipment companies). Based on these criteria, the Organization and Compensation Committee approved the following peer group for 2024:
Executive Compensation
| (1) Abiomed, Inc., Cardiovascular Systems, Inc., CareDx, Inc., LeMaitre Vascular, Inc., Mesa Laboratories, and Silk Road Medical were removed from our peer group and Certara, Inc., Doximity, Inc., Haemonetics Corporation, Insulet Corporation, Integra LifeSciences Holdings Corporation, Lantheus Holdings, Inc., Merit Medical Systems, Inc., and Neogen Corporation were added to peer group for 2024 as compared to 2023. |
Executive Compensation
The following table summarizes our scale relative to our peer group. Financial data reflects fiscal year-end data available as of June 2023 and is the data the Organization and Compensation Committee reviewed when it approved the peer group for 2024.
Executive Compensation
| | Peer Group Comparison | | | | | Revenue | Market Cap | Employees | | 25th Percentile | $412.9 | $3,050.4 | 1,001 | | 50th Percentile | $720.7 | $4,161.6 | 1,793 | | Average | $797.1 | $5,430.5 | 2,167 | | 75th Percentile | $1,069.0 | $6,091.1 | 2,958 | | Inspire | $650.0 | $8,928.1 | 755 |
Executive Compensation
| (1) Dollar amounts are in millions. Revenue reflects trailing-twelve months. Market cap is 30-day average using market data available as of June 2023. |
Executive Compensation
| (3) While the Company’s market capitalization for the pertinent period exceeded the 75th percentile for our per group, the Organization and Compensation Committee, in consultation with Aon, noted that the market capitalizations of some of our continuing peer companies fell below Aon’s proposed target range. However, the Organization and Compensation Committee determined that it would be appropriate to retain some of these peer companies and continue to monitor their market capitalization for future years to minimize year-over-year peer group changes in order to help maintain consistency and mitigate large swings in peer group data sets. |
Executive Compensation
| • | Annual Performance-Based Incentive Compensation. Performance-based cash bonuses promote short-term performance objectives and reward executives for their contributions toward achieving those objectives; and |
Executive Compensation
| • | Equity-Based Long-Term Incentive Compensation. Equity compensation, provided in the form of stock options, RSUs, and PSUs, aligns executives’ interests with our stockholders’ interests and emphasizes long-term financial performance. |
Executive Compensation
Annual Incentive Cash Compensation All of our employees, including our NEOs, are eligible to receive performance-based cash incentive compensation. We believe that performance-based cash incentives motivate our employees, including our NEOs, to achieve both short and long-term goals. This approach is critical to the execution of our overall business strategy which, if achieved, has the potential to significantly enhance stockholder value. In fiscal 2024, the performance-based cash incentive opportunity available to each of our NEOs was provided pursuant to the terms of our MIP. Management Incentive Program Target Opportunities. Consistent with our compensation philosophy and objectives, the Organization and Compensation Committee generally sets the target incentive opportunity under the MIP between the 50th and 75th percentile of annual cash incentive target pay for comparable executives in our peer group. For fiscal 2024, based on a review of the market data and the individual role and duties for each executive, the Organization and Compensation Committee increased the target incentive opportunity for (a) Mr. Herbert from 110% to 115% and (b) for each of our other NEOs, from 55% to 60% (other than for Mr. Ban, who did not previously participate in our MIP). The following table summarizes the fiscal 2024 target incentive opportunity for each of our NEOs under the MIP:
Executive Compensation
Payout Opportunities. At the beginning of the fiscal year, the Organization and Compensation Committee approved the target and performance range for each performance metric. The targets for each performance metric are based on the Board-approved annual operating plan. The targets represented substantial increases from the prior year actual performance. For example, the revenue target represented an approximately 31% increase from prior year actual revenue, the adjusted operating income target represented an approximately 230% increase from prior year actual adjusted operating income, and the global insurance reimbursement approvals target represented an approximately 31% increase from the prior year level. The performance range for each metric defines threshold and above-target levels of performance. The threshold payout for each of the performance metrics is 75% of the target incentive opportunity. The maximum payout for the revenue metric, operating income metric, reimbursement approval metric, and the operations metric is 200% of the target incentive opportunity for each of those metrics. The maximum payout for the quality, regulatory, and product development metrics is 135% of the target incentive opportunity for those metrics as a group. Where applicable, and for performance that exceeds the above-target performance level, the resulting payout percentage is determined on a linear interpolation basis up to the maximum payout for the applicable metric. The table below sets forth the weight, threshold, target, above-target, and actual performance for each performance metric:
Executive Compensation
| (2) For purposes of the 2024 MIP, adjusted operating income was defined as income (loss) from operations, calculated in accordance with generally accepted accounting principles, excluding expenses associated with non-cash stock-based compensation. |
Executive Compensation
| Name | Eligible Earnings ($) | Target Opportunity (%) | Target Opportunity ($) | MIP Achievement (%) | Actual MIP Payout ($)(1) | | Timothy P. Herbert | 725,190 | 115% | 833,969 | 98.4% | 820,625 | | Randall A. Ban | 474,197 | 60% | 284,518 | 98.4% | 279,966 | | Richard J. Buchholz | 457,844 | 60% | 274,706 | 98.4% | 270,311 | | Bryan K. Phillips | 431,983 | 60% | 259,190 | 98.4% | 255,043 | | Carlton W. Weatherby | 500,000 | 70% | 350,000 | 98.4% | 344,400 |
Executive Compensation
| (1) Amounts shown are calculated by multiplying each executive’s base salary in 2024 by their target incentive opportunity and the MIP achievement percentage. |
Executive Compensation
Phillips Performance Bonus. In December 2024, the Organization and Compensation Committee approved a one-time, discretionary cash bonus in the amount of $50,000 for Mr. Phillips. The committee approved the award to recognize Mr. Phillips’ extraordinary contributions in 2024 leading the organization’s legal and compliance functions to successfully meet evolving and complex legal and compliance challenges amidst rapid business and organizational growth. The actual cash incentives earned by each NEO for fiscal year 2024 are set forth below in the Summary Compensation Table under the column entitled “Bonus” (for Mr. Phillips’ discretionary bonus amount) and “Non-Equity Incentive Plan Compensation” (for amounts paid under the MIP). LONG-TERM INCENTIVES As described above, the third and largest primary component of our executive compensation program is long-term equity incentives. The Organization and Compensation Committee designed this long-term incentive opportunity to motivate our executive officers to achieve multi-year strategic goals and to deliver sustained, long-term value to stockholders. Our long-term incentives create a strong link between payouts and performance and align our executive officers’ interests with the interests of our stockholders. Long-term equity incentives promote retention, as executive officers will only receive value if they remain employed by us over the required term, and they foster an ownership culture among our executive officers by making executive officers stockholders with a personal stake in the value they intend to create. The Organization and Compensation Committee intends to make grants of long-term incentive awards annually. Special, one-time awards are used in limited circumstances, including, as may be necessary to attract, retain, and motivate experienced and well-qualified executive officers, and as recognition of an increase in the scope of an executive’s responsibilities or major accomplishments. Equity Vehicles and Mix. Consistent with the market practice of similar, newly-public companies in our industry, our long-term incentive compensation historically consisted solely of stock options. Beginning with fiscal 2022, the Organization and Compensation Committee approved a change in the mix of long-term incentive compensation to be granted to executives to include PSUs. In 2024, the Organization and Compensation Committee further evolved the Company’s long-term incentive compensation program by adding grants of RSUs to the total equity mix for executive officers. The Organization and Compensation Committee determined that this equity mix was appropriate to more closely align with peers, maintain market competitiveness, and to further evolve the Company’s executive compensation program given the current stage of our business.
Executive Compensation
| Equity Vehicle | 2024 Allocation | Vesting Period | How Value is Delivered | Rationale for Use | | PSUs | 50% | 3-year cliff | 2024-2026 Cumulative Revenue (75% weight) and Operating Income (25% weight) | Cumulative Revenue aligns with the critical strategic priority of top line growth Operating income reflects the importance of profitable growth as a measure of increasing stockholder value Promotes long-term focus and retention | | Stock Options | 25% | 4 years: 25% after one year, then 36 equal monthly installments | Share price appreciation | Aligns executive’s financial interests with increasing stockholder value Promotes long-term focus and retention | | RSUs | 25% | 3 years: one-third on each of the first, second, and third anniversaries of the grant date | Share price appreciation | Aligns executive’s financial interests with increasing stockholder value Promotes long-term focus and retention |
Executive Compensation
PSUs. The Organization and Compensation Committee believes that PSUs reinforce the pay-for-performance nature of the long-term incentive grants and the executive compensation program overall, encourages focus on long-term stockholder value creation through growth and increase in stock price over time, aligns compensation with key indicators of the success of our strategy, and promotes retention through long-term performance achievement and vesting requirements. Our PSUs have a three-year performance period and are settled in stock. The actual number of PSUs that vest are based on the Company’s achievement of certain performance objectives over the applicable three-year performance period, with the number of PSUs eligible to vest between 0 – 200% of the target number of PSUs awarded. In the case of the PSUs granted in 2024, the performance objectives are cumulative revenue (weighted at 75%) and operating income (weighted at 25%). The Organization and Compensation Committee selected these metrics because they are the best indicator of our ability to continue to grow and reflect the increasing importance of operating income as a measure of stockholder value creation.
Executive Compensation
Performance Results Under the 2022-2024 PSUs. The three-year performance period for the PSUs granted to our NEOs in 2022 ended on December 31, 2024. The sole performance objective for the PSUs granted in 2022 was cumulative revenue (weighted at 100%). The Organization and Compensation Committee selected cumulative revenue because it was considered the best indicator of our ability to continue to grow. In February 2025, the Organization and Compensation Committee reviewed and approved the Company’s actual performance for cumulative revenue over the performance period and approved payout under the 2022-2024 PSUs as reflected in the table below.
Executive Compensation
| Performance Objective / Payout | Below Target | Target | Above Target | Maximum | Actual Achievement | | Cumulative Revenue(1) | <$1,500.0 | $1,500.0 | $1,650.0 | $1,800.0 | $1,835.5 | | Payout (as a % of Target) | 0% | 100% | 150% | 200% | 200%(2) |
Executive Compensation
| (2) Achievement under the performance goal exceeded the maximum achievement under the plan resulting in an overall achievement percentage of 200%. The shares of our common stock that were awarded to each of our NEOs in connection with the vesting of the 2022-2024 PSUs are reflected in the table below. Mr. Weatherby joined our Company in June 2023 after the 2022-2024 PSUs were granted. The amounts include shares of our common stock that were withheld in connection with the satisfaction of tax withholding obligations arising out of the vesting of the PSUs. |
Executive Compensation
| Name | Vested PSUs (#) | | Timothy P. Herbert | 18,458 | | Randall A. Ban | 6,152 | | Richard J. Buchholz | 6,152 | | Bryan K. Phillips | 6,152 | | Carlton W. Weatherby | — |
Executive Compensation
Stock Options. In order to focus executives on growth and increasing stockholder value, the Organization and Compensation Committee has used stock options to motivate stock price appreciation over the long term, which deliver value only if the stock price increases. Stock options reward our NEOs for increasing stockholder value over the lengthier term of the option, which we believe is consistent with the longer medical technology development cycle. Furthermore, awards of stock options align with our growth strategy and provide significant leverage if our growth objectives are achieved. They also place a significant portion of compensation at risk if our objectives are not achieved and provide no guaranteed value. RSUs. In 2024, the Organization and Compensation Committee added RSUs to the mix of long-term incentives provided to executives. Like stock options, RSUs reward our NEOs for increasing stockholder value over the long term. RSUs also provide a retention incentive for executives even during periods of stock price volatility. In future years, the Organization and Compensation Committee will continue to evaluate and select the form and mix of long-term incentive compensation (which may include stock options, restricted shares, RSUs, PSUs, or other long-term incentives) provided to our executive officers that it believes best accomplishes the goals discussed above. Equity Acceleration. In December 2024, the Organization and Compensation Committee approved changes to the treatment of equity awards under the Company’s 2018 Plan upon the holder’s death, disability, or retirement as part of the evolution of the Company’s long-term incentive compensation program and to help it attract and retain key talent. Pursuant to these changes, in the event of a holder’s termination due to death or disability, all outstanding unvested stock options and RSUs will accelerate and vest in full and, to the extent such termination occurs after the first twelve months of the performance period applicable to any outstanding and unvested PSUs, a prorated number of PSUs based on target performance will accelerate and vest. In the event of a holder’s qualifying retirement, all outstanding unvested stock options will accelerate and vest, all outstanding unvested RSUs will remain outstanding and vest in
Executive Compensation
accordance with the original vesting and payment terms contained in the applicable award agreement and, to the extent such termination occurs after the first twelve months of the performance period applicable to any outstanding and unvested PSUs, such PSUs shall remain outstanding and a prorated number of PSUs will be eligible to be earned and vest based on actual performance achievement. Grant Timing. Since 2021, the Organization and Compensation Committee has generally approved our annual equity grants in the first quarter of a new fiscal year. This grant timing allows for consideration of full-year financial results for the most recently completed fiscal year prior to making the grants. The fiscal 2024 equity awards were granted in February 2024. We do not time the granting of equity awards with any favorable or unfavorable news released by the Company. We do not take material nonpublic information into account when determining the timing and terms of equity awards or for the purpose of affecting the value of executive compensation. Proximity of any awards to an earnings announcement or other market events is coincidental. In the event material nonpublic information were to become known to the Organization and Compensation Committee before the grant of an equity award, the Organization and Compensation Committee would consider the information and use its business judgment to determine whether to delay the grant to avoid any appearance of impropriety. Target Opportunities. The Organization and Compensation Committee established target long-term incentive opportunities for each of the NEOs in February 2024. The grant date value of the long-term incentive compensation granted to our NEOs in February 2024 was as follows:
Executive Compensation
| Name | Restricted Stock Units ($) | Stock Options ($) | Performance Stock Units ($)(1) | Target Total LTI Compensation ($) | | Timothy P. Herbert | 1,650,000 | 1,650,000 | 3,300,000 | 6,600,000 | | Randall A. Ban | 525,000 | 525,000 | 1,050,000 | 2,100,000 | | Richard J. Buchholz | 525,000 | 525,000 | 1,050,000 | 2,100,000 | | Bryan K. Phillips | 525,000 | 525,000 | 1,050,000 | 2,100,000 | | Carlton W. Weatherby | 525,000 | 525,000 | 1,050,000 | 2,100,000 |
Executive Compensation
| (1) PSUs are reflected at target payout. |
Executive Compensation
IV. OTHER ELEMENTS OF EXECUTIVE COMPENSATION AND OTHER ASPECTS OF EXECUTIVE COMPENSATION PROGRAM Retirement Plans We currently maintain a 401(k) retirement savings plan for our employees, including our NEOs, who satisfy certain eligibility requirements. Our NEOs are eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Internal Revenue Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. We believe that providing a vehicle for tax-deferred retirement savings through our 401(k) plan adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our NEOs, in accordance with our compensation policies. Employees are immediately and fully vested in their contributions. Beginning in 2022, we began matching 50% of the first 6% of each participant’s contributions up to 3% of eligible earnings. Benefits All of our full-time employees, including our NEOs, are eligible to participate in our health and welfare plans, including (a) medical, dental, and vision benefits; (b) medical and dependent care flexible spending accounts; (c) short-term and long-term disability insurance; and (d) life insurance. We believe the general benefits described above are necessary to provide a competitive compensation package to our NEOs. We do not currently provide perquisites or other special benefit arrangements to our NEOs. In the future, we may provide perquisites or other personal benefits in limited circumstances where our Organization and Compensation Committee deems appropriate to assist an individual executive officer in the performance of his duties or for motivation or retention purposes, though we do not expect these perquisites to be a significant component of our compensation program. Severance and Other Benefits Payable Upon Termination of Employment or Change in Control Pursuant to their respective employment agreements and/or option agreements, each of our NEOs is entitled to certain payments and benefits in certain termination situations or upon a change in control. See “— Potential Payments Upon Termination or Change-In-Control” for information regarding benefits under Company Executive Severance.
Executive Compensation
Tax and Accounting Considerations COMPENSATION DEDUCTIBILITY / SECTION 162(M) OF THE INTERNAL REVENUE CODE Section 162(m) of the Code, as amended by the Tax Cuts and Jobs Act of 2017, generally prohibits executive compensation in excess of $1 million per year to be deducted by us as a compensation expense. The Organization and Compensation Committee has approved, and may continue to approve, compensation exceeding the $1 million limitation, including with respect to a portion of base salary, annual bonus, and long-term incentives. For any taxable year beginning after December 31, 2026, the American Rescue Plan Act of 2021 updated Section 162(m) to include an additional five highest paid employees to the definition of “covered employees.” While compensation tax deductions are relevant issues to consider, the Organization and Compensation Committee believes that stockholder interests are best served by not restricting flexibility in designing compensation programs, even though such programs may result in nondeductible compensation expenses for tax purposes. Accounting Standards. Accounting Standards Codification Topic 718 (“ASC 718”) requires us to calculate the grant date “fair value” of our stock-based awards using a variety of assumptions. ASC 718 also requires us to recognize an expense for the fair value of equity-based compensation awards. Grants of stock options, restricted stock, RSUs and PSUs under our equity incentive award plans are accounted for under ASC 718. The Organization and Compensation Committee will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align the accounting expense of our equity awards with our overall executive compensation philosophy and objectives. Recovery of Erroneously Awarded Compensation Policy The Company has adopted a Recovery of Erroneously Awarded Compensation Policy to comply with final SEC and NYSE rules that require the clawback of certain erroneously awarded compensation. In conformance with these rules, our policy requires the clawback by the Company of certain incentive-based compensation paid to current and former executive officers in the event that the Company is required to prepare an accounting restatement. A copy of our Recovery of Erroneously Awarded Compensation Policy is included as Exhibit 97.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Organization and Compensation Committee Report This Organization and Compensation Committee Report shall not be deemed to be incorporated by reference into any filing made by the Company under the Securities Act of 1933 or the Exchange Act, notwithstanding any general statement contained in any such filing incorporating this proxy statement by reference, except to the extent the Company incorporates this report by specific reference. The Organization and Compensation Committee reviewed and discussed the Compensation Discussion and Analysis with the management of the Company. Based on this review and these discussions, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K and the Company’s proxy statement. The preceding report has been furnished by the following members of the Organization and Compensation Committee: Shelley G. Broader, Chair Cynthia B. Burks Gary L. Ellis Casey M. Tansey
Executive Compensation
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Other ($)(5) | Total ($) | | Timothy P. Herbert President and Chief Executive Officer | 2024 | 725,190 | — | 4,949,893 | 1,610,435 | 820,625 | — | 8,106,143 | | | 2023 | 690,000 | 33,396 | 2,999,761 | 3,133,094 | 634,524 | — | 7,490,775 | | | 2022 | 644,829 | 145,086 | 2,099,874 | 2,227,312 | 558,293 | — | 5,675,394 | | Randall A. Ban Chief Commercial Officer(6) | 2024 | 474,197 | — | 1,574,939 | 512,342 | 279,966 | 10,350 | 2,851,794 | | | 2023 | 370,466 | — | 799,743 | 835,431 | 253,980 | 9,900 | 2,269,520 | | | 2022 | 352,825 | — | 699,882 | 742,396 | 406,400 | 9,150 | 2,210,653 | | Richard J. Buchholz Chief Financial Officer | 2024 | 457,844 | — | 1,574,939 | 512,342 | 270,311 | 9,189 | 2,824,625 | | | 2023 | 447,243 | 10,810 | 799,743 | 835,431 | 205,382 | 9,900 | 2,308,509 | | | 2022 | 425,406 | 53,176 | 699,882 | 742,396 | 204,620 | 9,150 | 2,134,630 | | Bryan K. Phillips SVP, General Counsel, CCO and Secretary | 2024 | 431,983 | 50,000 | 1,574,939 | 512,342 | 255,043 | 9,744 | 2,834,051 | | Carlton W. Weatherby Chief Strategy Officer(6) | 2024 | 465,189 | — | 1,574,939 | 512,342 | 344,400 | — | 2,896,870 | | | 2023 | 200,083 | 4,795 | 800,112 | 742,683 | 91,107 | 436,167 | 2,274,947 |
Pay Versus Performance
Pay Versus Performance The following table sets forth information concerning the compensation of our NEOs for each of the fiscal years ended December 31, 2020, 2021, 2022, 2023, and 2024, and our financial performance for each such fiscal year:
Pay Versus Performance
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for PEO ($) | Compensation Actually Paid to PEO ($)(1) | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($)(1) | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($)(2) | Net Income ($) | Revenue ($) | | 2024 | 8,106,143 | 2,500,749 | 2,851,835 | 1,727,650 | 249.80 | 103.67 | 53,509,000 | 802,804,000 | | 2023 | 7,490,775 | 876,350 | 2,184,323 | (488,837) | 274.13 | 98.68 | (21,153,000) | 624,799,000 | | 2022 | 5,675,394 | 8,351,516 | 2,140,038 | 3,119,563 | 339.42 | 104.93 | (44,881,000) | 407,856,000 | | 2021 | 1,272,916 | 10,637,336 | 1,132,482 | 3,925,220 | 310.25 | 137.24 | (42,042,000) | 233,394,000 | | 2020 | 4,865,607 | 21,661,173 | 2,459,027 | 6,851,303 | 253.46 | 132.83 | (57,203,000) | 115,381,000 |
Pay Versus Performance
| (1) Amounts represent compensation “actually paid” to our principal executive officer, or PEO, and the average compensation actually paid to our remaining NEOs for the relevant fiscal year, as determined under SEC rules (and described below), which includes the individuals indicated in the table below for each fiscal year: |
Pay Versus Performance
| Year | PEO | Non-PEO NEOs | | 2024 | Timothy P. Herbert | Randall A. Ban, Richard J. Buchholz, Bryan K. Phillips, and Carlton W. Weatherby | | 2023 | Timothy P. Herbert | Randall A. Ban, Richard J. Buchholz, Philip J. Ebling, and Carlton W. Weatherby | | 2022 | Timothy P. Herbert | Randall A. Ban, Richard J. Buchholz, Philip J. Ebeling, and John C. Rondoni | | 2021 | Timothy P. Herbert | Randall A. Ban, Richard J. Buchholz, Philip J. Ebeling, and Bryan K. Phillips | | 2020 | Timothy P. Herbert | Randall A. Ban, Richard J. Buchholz, Philip J. Ebeling, and Steven L. Jandrich |
Pay Versus Performance
Compensation actually paid (CAP) to our NEOs represents the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year, as adjusted as reflected below. The fair values of PSUs and stock options included in the CAP to our PEO and the Average CAP to our non-PEO NEOs are calculated at the required measurement dates, consistent with the approach used to value the awards at the grant date as described in Note 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. Any changes to the PSU fair values from the grant date are based on our updated stock price at the respective measurement dates and updated performance metric projections. Changes to the stock option fair values are based on the updated stock price at the respective measurement dates, in addition to updated expected option term, implied volatility of our stock over the updated expected option term, risk-free rate assumptions, and changes to our non-PEO NEOs.
Pay Versus Performance
| | 2024 | | | Adjustments | PEO | Average non-PEO NEOs | | Decrease for Amounts Reported under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable FY | (6,560,328) | (1,043,641) | | Add the Fair Value (based on ASC 718) of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End | (625,096) | (198,884) | | Add the Fair Value (based on ASC 718) of Awards Granted during Applicable FY that Vested during Applicable FY, determined as of Vesting Date | — | — |
Pay Versus Performance
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Pay Versus Performance
| | PAY VERSUS PERFORMANCE |
Pay Versus Performance
| | 2024 | | | Adjustments | PEO | Average non-PEO NEOs | | Increase/decrease for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End, determined based on change in ASC 718 Fair Value from Prior FY End to Applicable FY End | (738,613) | (478,355) | | Increase/decrease for Awards Granted during Prior FY that Vested During Applicable FY, determined based on change in ASC 718 Fair Value from Prior FY End to Vesting Date | 2,318,643 | 596,695 | | Deduction of ASC 718 Fair Value of Awards Granted during Prior FY that were Forfeited during Applicable FY, determined as of Prior FY End | — | — | | Increase based on Dividends or Other Earnings Paid during Applicable FY prior to Vesting Date | — | — | | Increase based on Incremental Fair Value of Options/SARs Modified during Applicable FY | — | — | | Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” Column of the Summary Compensation Table for Applicable FY | — | — | | Increase for Service Cost and, if applicable, Prior Service Cost for Pension Plans | — | — | | TOTAL ADJUSTMENTS | (5,605,394) | (1,124,185) |
Pay Versus Performance
| (2) For the relevant fiscal year, represents the cumulative TSR (the “Peer Group TSR”) of the S&P Healthcare Equipment Select Industry Index (the “Peer Group”). |
Pay Versus Performance
| (3) We have selected Revenue as our company-selected measure, which is a GAAP measure. |
Pay Versus Performance
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Pay Versus Performance
| | PAY VERSUS PERFORMANCE |
Pay Versus Performance
Narrative Disclosure to Pay Versus Performance Table
Relationship Between Financial Performance Measures
| | PAY VERSUS PERFORMANCE |
Pay Versus Performance Tabular List
Pay Versus Performance Tabular List We believe that revenue, adjusted operating income (loss), and insurance reimbursement approvals, given the Company’s stage of development and market opportunity, represent the most important financial performance measures used by us to link compensation actually paid to our NEOs for the fiscal year ended December 31, 2024.
Pay Versus Performance Tabular List
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CEO Pay Ratio
CEO Pay Ratio As required by Item 402(u) of Regulation S-K, we are providing pay ratio information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Herbert, our CEO. For 2024, our last completed fiscal year:
CEO Pay Ratio
| • | the median of the annual total compensation of all employees of our Company (other than our CEO) was $261,111; and |
CEO Pay Ratio
| • | the annual total compensation of our CEO, as reported in the Summary Compensation Table presented elsewhere in this Proxy Statement was $8,106,143. |
CEO Pay Ratio
Based on this information, the ratio of the CEO’s fiscal 2024 annual total compensation to that of the median employee was 31 to 1. Methodology, Assumptions and Estimates Used in Determining our Pay Ratio Disclosure In determining the pay ratio calculation, we used the methodology, assumptions, and estimates set forth below in determining the median employee.
CEO Pay Ratio
| 1. | We selected October 1, 2024, which is within the last three months of fiscal 2024, as the date upon which we would identify the median employee. |
CEO Pay Ratio
| 2. | We determined that, as of October 1, 2024, our employee population consisted of 1,195 individuals working at the Company. |
CEO Pay Ratio
| 3. | For purposes of measuring the compensation of our employee population, we selected a “consistently applied compensation measure” (“CACM”). We chose a CACM that closely approximates the annual target total direct compensation of our employees. Specifically, we identified the median employee by aggregating, for each employee as of October 1, 2024: (1) annual base pay, (2) the actual cash incentive opportunity using the payout under the 2024 MIP, and (3) the grant date fair value for equity awards granted through December 31, 2024. In identifying the median employee, we annualized the compensation values of permanent employees that joined our Company during fiscal 2024. Amounts paid in foreign currencies were converted to U.S. Dollars based on the average annual exchange rate as of October 1, 2024. |
CEO Pay Ratio
| 4. | After applying our CACM methodology, we identified the median employee. Once the median employee was identified, we calculated the median employee’s annual target total direct compensation in accordance with the requirements of the Summary Compensation Table. |
CEO Pay Ratio
| 5. | Once we identified the median employee, we identified and calculated the elements of such employee’s compensation for fiscal 2024 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $261,111. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our Summary Compensation Table included elsewhere in this document. |
CEO Pay Ratio
We believe the pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
CEO Pay Ratio
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