DEF 14A of Lemaitre Vascular Inc
Filed Apr 16, 2024 · FY20230001437749-24-012147
Director Nominees
Director Nominees Class III Directors (Current terms expire at our 2024 annual meeting) Lawrence J. Jasinski has served as a member of our Board of Directors since 2003. Mr. Jasinski is the Chief Executive Officer of Lifeward Inc. (formerly ReWalk Robotics Ltd.), a Nasdaq–listed company that has created and commercialized the first Exoskeleton Technology, which enables paralyzed individuals to have the ability to walk again. He has also served on the Board of Directors of Lifeward since 2012. From 2005 until 2012, he was President and Chief Executive Officer of Soteira, Inc., a company that offered products which treated individuals with vertebral compression fractures. From 2000 to 2005, he was President and Chief Executive Officer of Cortek, Inc., a company that developed next-generation treatments for degenerative disc disease. From 1985 to 2000, Mr. Jasinski worked at Boston Scientific Corporation (“BSC”) and served as its Vice President of Global Marketing, BSC Vascular, from 1998 to 2000. Mr. Jasinski received a B.S. in Marketing from Providence College and an M.B.A. from the University of Bridgeport. Mr. Jasinski is also a member of the Board of Directors for Massachusetts Bay Lines, a company that offers commuter services and other commercial vessel services in the Boston Harbor and Islands. The Board has concluded that Mr. Jasinski should serve on our Board due to his experience serving in a variety of executive level positions, coupled with his more than 20 years of experience in the medical device industry, which provides the Board with an understanding of the current trends as well as provides us with deeper contacts in the industry. Mr. Jasinski also provides the Board with operational experience, including building and organizing an effective sales force, seeking and obtaining regulatory approvals for medical devices, and managing significant manufacturing operations. John J. O’Connor has served as a member of our Board of Directors since 2008. Prior to his retirement in December 2006, Mr. O’Connor was a partner at PricewaterhouseCoopers LLP, an independent public accounting firm, from 1982 to December 2006, most recently serving as Vice Chairman of Services from June 2002 to November 2006. Mr. O’Connor served as the leader of the U.S. audit practice at PricewaterhouseCoopers from September 2000 to June 2002, and served as the Managing Partner of the firm’s Boston office from 1995 to September 2000. He is a director of mTuitive, Inc., a developer of clinical data capture and synoptic reporting software for use by healthcare professionals, Health Data Analytics, Inc., a healthcare analytics company, Corvent Medical, Inc., a medical device company, and Almond Fintech, a digital payments company. He previously served on the board of Aspect Medical Systems and Abt Associates. Mr. O’Connor is a graduate of Suffolk University and has attended the Harvard Business School’s Leadership in Professional Service Firms program and the executive M.B.A. program at the Amos Tuck School at Dartmouth College. The Board has concluded that Mr. O’Connor should serve on our Board due to his extensive capabilities in public financial accounting, his financial expertise, his experience and knowledge of operational management and strategic planning, and his insight into the operational challenges of a public company finance department. In addition, this experience qualifies Mr. O’Connor as an “audit committee financial expert.” Joseph P. Pellegrino, Jr. has served as our Chief Financial Officer since 2007 and as a member of our Board of Directors since October 2016. Mr. Pellegrino joined us as our Executive Vice President, Finance, in 2005. From 1997 to 2003, Mr. Pellegrino worked at Zoots, Inc., a consumer services company founded by the founders of Staples, Inc., where most recently he served as Senior Vice President of Operations. Previously, Mr. Pellegrino built and sold a regional mall-based specialty retailing company. Mr. Pellegrino has also served as an investment banking analyst at Lehman Brothers, as part of their mergers and acquisitions group. Mr. Pellegrino is a director of Access Vascular, Inc., a medical device company focused on venous access devices. Mr. Pellegrino received an A.B. in Economics from Harvard College and an M.B.A. from the Harvard Business School. The Board has concluded that Mr. Pellegrino should serve on our Board due to his extensive knowledge of our business, his responsibility within the organization for our finances and his operational and financial experience gained with prior employers.
Continuing Directors
Continuing Directors Class I Directors (Current terms expire at our 2025 annual meeting) George W. LeMaitre has served as our Chief Executive Officer and as a member of our Board of Directors since 1992, serving as our Chairman since 2004. Previously, Mr. LeMaitre was an investment banking analyst at Lehman Brothers, an associate at the leveraged buyout firm McCown De Leeuw and a credit analyst for Connecticut National Bank. Mr. LeMaitre received a B.A. in History from Stanford University and an M.B.A. from the Stanford University Graduate School of Business. The Board has concluded that Mr. LeMaitre should serve on our Board due to his extensive knowledge of our business, his role since 1992 as our principal executive officer, and his corporate vision, operational knowledge and his strategic guidance to the Board. David B. Roberts has served as our President since 2007 and as a member of our Board of Directors since 2001. Mr. Roberts joined us in 1997 as Vice President of Business Development and was promoted to Chief Financial Officer in 2000, which position he held until 2007. Mr. Roberts worked from 1994 to 1997 at BUCA, Inc., and from 1992 to 1994 at Hancock Venture Partners. Mr. Roberts received a B.A. in Business Economics and History from Brown University and an M.B.A. from the Stanford University Graduate School of Business. Mr. Roberts is a director of Lexington Medical, Inc. and of Parasole Restaurant Holdings, Inc. The Board has concluded that Mr. Roberts should serve on our Board due to his extensive knowledge of our business, his responsibility within the organization for strategic transactions, and his thorough understanding of the industry in which we operate and the opportunities and challenges that we face. Martha Shadan has served as a member of our Board of Directors since September 2022. Ms. Shadan was the president and chief executive officer at Miach Orthopaedics, Inc. from 2019 to 2022. From 2018 to 2019, Ms. Shadan served as global vice president of marketing at Smith & Nephew plc, following its acquisition of Rotation Medical, where she was president and chief executive officer from 2013 to 2018. Prior to joining Rotation Medical, from 2011 to 2013, she was the president of the trauma division at Zimmer Biomet, and from 2007 to 2011, she served at Covidien as vice president/general manager of Vascular Therapies and vice president/general manager BioSurgery and Sports Surgery. She also previously held positions at Bristol Myers Squibb Co. and Merck Millipore. Ms. Shadan has served on the board of Advanced Medical Technology Association (AdvaMed) since 2017. She is the past chair of the AdvaMed I&D initiative, AdvaMed Advance. She also serves on the board of CVRx, Inc. (NASDAQ:CVRX), a medical device company with products that address heart failure and resistant hypertension. Ms. Shadan is the chair of the board for BrilliantStrings Therapeutics, an early-stage start-up focused on healing soft tissue injuries. Ms. Shadan has a Master of Business Administration from Northeastern University, a Master of Science in biology from Michigan State University and a bachelor of science in biology from the University of New Hampshire. The Board has concluded that Ms. Shadan should serve on our Board due to her decades of experience in the life sciences industry as a business leader in a variety of both large and start-up organizations and her strength in commercialization and regulatory approvals. Class II Directors (Current terms expire at our 2026 Annual Meeting) Bridget A. Ross has served as a member of our Board of Directors since April 2020. Ms. Ross serves as CEO and Board Director of ChroniSense Medical, an early-stage medical device company focused on transforming chronic care with Polso CONNECT™, a remote patient monitoring solution. Ms. Ross serves as advisor to Breathe Biomedical (formerly Picomole), a medical technology company focused on developing breath tests for breast and other cancers. She is the Leader of the Innovation Investing Council at The Committee of 200 (C200.org), an association driven to advance women in business leadership. Ms. Ross has served as a mentor for the Canadian Technology Accelerator and MassMEDIC’s IGNITE Accelerator program. From 2017 to 2018, Ms. Ross was President of the Global Medical Group and member of the Executive Management team at Henry Schein, Inc., an international medical and dental product distributor/solutions provider. From 1988 to 2017 she held numerous senior leadership roles at Johnson & Johnson where she was responsible for the commercial success of a variety of businesses and for bringing a number of innovations to market. Most recently she served as VP of Commercial Operations for Medical Devices, J&J North America. She holds a Bachelor of Commerce degree from the University of Alberta. The Board has concluded that Ms. Ross should serve on our Board due to her strong executive management skills, knowledge of the medical device industry and breadth of functional, geographic, and therapeutic experience gained during her 30+ year career. John A. Roush has served as a member of our Board of Directors since 2014. Mr. Roush serves as an operating executive advisor to ACON Investments, LLC, a private equity firm. He currently serves on the board of two privately held ACON portfolio companies: 1) Pine Environmental, LLC, which provides equipment and services to the environmental testing industry and 2) Novipax, LLC, which supplies absorbent pads to the poultry industry. He also serves as a board director and member of the Compensation Committee and Nominating & Corporate Governance Committee for Advanced Energy Industries, Inc. (NASDAQ: AEIS). Mr. Roush also serves as a board director for Targan, a privately held company that is developing vaccine delivery technology for animal health markets. Mr. Roush previously served as chairman of the board and chief financial officer of ACON S2 Acquisition Corporation (NASDAQ:STWO), which was a publicly-traded acquisition company that merged with ESS Inc. (NYSE:GWH) in October 2021. He also previously served as chairman of the board of two additional privately held ACON portfolio companies that were sold in 2021. Prior to his involvement with ACON Investments, Mr. Roush served as Chief Executive Officer and a member of the Board of Directors of Novanta Inc., a global supplier of precision photonic components and subsystems to original equipment manufacturers (OEMs) in the medical, industrial, scientific and microelectronics markets, from 2010 to 2016. Prior to joining Novanta Inc., he was a corporate officer and served in several senior leadership positions for twelve years with PerkinElmer, Inc., a provider of technology and services to the diagnostics, research, environmental, safety and security, industrial and laboratory services markets. Prior to joining PerkinElmer, Mr. Roush held management positions with Outboard Marine Corporation; AlliedSignal, Inc., now Honeywell International; McKinsey & Company Inc. and General Electric. Mr. Roush received a B.S. in Electrical Engineering from Tufts University and an M.B.A. from the Harvard Business School. The Board has concluded that Mr. Roush should serve on our Board due to his experience at an executive level and his more than 20 years of experience supplying products in the medical device and life sciences industries.
GENERAL INFORMATION REGARDING THE BOARD OF DIRECTORS AND CERTAIN COMPLIANCE MATTERS
GENERAL INFORMATION REGARDING THE BOARD OF DIRECTORS AND CERTAIN COMPLIANCE MATTERS
Compensation Committee
| • | reviewing and making recommendations to the Board of Directors with respect to non-employee director compensation; and |
Principles and Philosophy
| Core Objectives of the Executive Compensation Philosophy | | | Core Objective | Primary Purpose | | Market Driven | Provide competitive compensation to attract, motivate, and retain superior talent | | Pay for Performance | Reward individual and team successes linked to the achievement of company objectives aimed at increasing stockholder value | | Equitable | Seek to ensure rewards are internally and externally equitable |
Components of Compensation
| Key Components of Executive Compensation | | | | Compensation Component | Form | Primary Purpose | | Base Salary | Cash | Provide competitive pay to attract and retain experienced and successful executives; intended to reflect the market value of the role, with differentiation for individual capability | | Short-Term Incentive | Cash – Performance Based Bonuses | Encourage and reward contributions with respect to meeting short-term financial and operational goals, tied directly to company performance and company goals | | Long-Term Incentive | Periodic Equity Grants | Encourage and reward long-term stockholder value creation, create and sustain a retention incentive and facilitate long-term stock ownership among our executive team |
Base Salary and Short-Term Incentive Compensation
Base Salary and Short-Term Incentive Compensation For 2023, the Compensation Committee approved a 6% increase in total compensation (base salary plus variable compensation) for company employees. Managers were given discretion to allocate a higher percentage increase to one employee as long as they offset that increase by giving other employee(s) increases lower than the target percentage. Changes in annual cash compensation for the NEOs were:
Base Salary and Short-Term Incentive Compensation
| Name | 2023 Annual Salary | 2023 Annual Bonus at Plan | 2024 Annual Salary | 2024 Annual Bonus at Plan | | George W. LeMaitre | $592,659 | $348,070 | $622,292 | $365,473 | | Joseph P. Pellegrino, Jr. | $381,693 | $148,436 | $419,862 | $163,280 | | David B. Roberts | $430,311 | $167,343 | $460,433 | $179,057 | | Trent G. Kamke | $301,480 | $117,242 | $316,554 | $123,104 |
Base Salary and Short-Term Incentive Compensation
Under our Management Incentive Compensation Plan, or our bonus plan, annual cash bonus objectives are linked to certain operational, financial, product development, regulatory and quality goals that have been approved by the Compensation Committee. Frequently these align with our company “planks,” which are our key corporate performance objectives for the fiscal year. We seek to ensure that each objective is directly linked to increasing either short-term or long-term stockholder value. These key performance objectives are intended to be directional in nature and challenging to achieve in the aggregate. The bonus plan compensation of many of our senior officers is based, in part, on overall company financial performance metrics. For Messrs. LeMaitre, Pellegrino and Roberts in 2023, those metrics were the achievement of target levels of net sales of $173.5 million, adjusted income from operations of $34.6 million and net income of $27.3 million. The adjusted income from operations target was our GAAP income from operations less extraordinary revenue or expenses, which the Compensation Committee determined to be $2.2 million of revenue arising from the Aziyo distributor agreement we entered into in 2023.
Base Salary and Short-Term Incentive Compensation
| Name | % of 2023 Target Bonus Opportunity Tied to Above Targets | | George W. LeMaitre | 75% | | Joseph P. Pellegrino, Jr. | 53% | | David B. Roberts | 53% |
Base Salary and Short-Term Incentive Compensation
Mr. Kamke’s 2023 target bonus opportunity, however, was predominantly tied to operational metrics instead of company financial performance metrics in view of his position as Senior Vice President, Operations. A bonus was separately payable for each financial performance metric; thus, our failure to reach the minimum threshold for one performance metric would result in no bonus payable for that metric but could still result in a bonus payable for other performance metrics, presuming we reached the minimum threshold performance for such metrics. Additionally, these bonuses are earned based upon a continuously functioning, sliding scale; thus, failure to reach the targeted performance level could still result in a lesser bonus payable, provided that a certain minimum threshold had been achieved. Similarly, exceeding the targeted performance level could result in a greater bonus payable. In 2023, our net sales performance was above the target level of $173.5 million, our income from operations performance was above the target level of $34.6 million, and net income performance was also above the target level of $27.3 million. The remaining percentage of each named executive officer’s bonus opportunity for 2023 was tied to the achievement of individual objectives. Notwithstanding that the objectives are individualized, in establishing those objectives, we seek to maximize the performance of our NEOs in furthering Company planks. Individual performance measures for 2023 cash bonuses varied in scope and subject matter based on each named executive officer’s department and area of functional responsibility. Target cash bonuses under the Management Incentive Compensation Plan for each of the NEOs for 2023 are set forth in the table below. Additionally, each named executive officer was provided the opportunity to earn additional amounts by way of performance beyond targeted performance expectations.
Base Salary and Short-Term Incentive Compensation
| Named Executive Officer | Target 2023 Non-Equity Incentive Plan Compensation under the Management Incentive Compensation Plan ($) | Actual 2023 Non-Equity Incentive Plan Compensation under the Management Incentive Compensation Plan ($) | | George W. LeMaitre | $348,070 | $455,273 | | Joseph P. Pellegrino, Jr. | $148,436 | $175,497 | | David B. Roberts | $167,343 | $194,641 | | Trent G. Kamke | $117,242 | $120,750 |
Base Salary and Short-Term Incentive Compensation
Amounts earned pursuant to our Management Incentive Compensation Plan by our NEOs are reflected in the “Non-Equity Incentive Plan Compensation” payments column in the Summary Compensation Table.
Long-Term Incentive: Equity Compensation
Long-Term Incentive: Equity Compensation The Compensation Committee typically makes annual equity grants to our executive officers. These equity grants vest in equal annual installments over a pre-determined period of time, subject to continued employment. In the fourth quarter of 2021, as part of the annual compensation awards to our NEOs, the Compensation Committee granted performance stock units (“PSUs”) with a grant date fair value of $275,000 to George W. LeMaitre, $125,000 to Joseph J. Pellegrino, Jr. and David B. Roberts, and $56,250 to Trent G. Kamke. On March 1, 2023, with the filing of the Company’s Annual Report on Form 10-K, it was determined that the Company did not achieve 80% of its adjusted operating income target of $40.4 million, resulting in no payout on these PSUs. The adjusted operating income target was our GAAP operating income less the $3.2 million special charge relating to the closure of our St. Etienne factory. Similarly, in the fourth quarter of 2022, as part of the annual compensation awards to our NEOs, the Compensation Committee granted PSUs with a grant date fair value of $275,000 to George W. LeMaitre, $125,000 to Joseph J. Pellegrino, Jr. and David B. Roberts, and $56,250 to Trent G. Kamke. On February 29, 2024, with the filing of the Company’s Annual Report on Form 10-K, it was determined that the Company achieved 100% of its adjusted income from operations target of $34.6 million. The adjusted income from operations target was our GAAP income from operations less extraordinary revenue or expenses, which the Compensation Committee determined to be $2.2 million of revenue arising from the Aziyo distributor agreement we entered into in 2023. This resulted in 100% payout on these PSUs in the form of 5,828 RSUs to George W. LeMaitre, 2,649 RSUs to Joseph J. Pellegrino, Jr. and David B. Roberts, and 1,192 RSUs to Trent G. Kamke, vested 25% on February 29, 2024, and in equal annual instalments from the grant date over the next three years. Our Compensation Committee again approved annual equity awards to the NEOs in the fourth quarter of 2023. The value of the annual equity awards made to our NEOs in 2023 (taking into account the changes described above) was:
Long-Term Incentive: Equity Compensation
| Name | Annual Equity Value(1) | | George W. LeMaitre | $1,100,000 | | Joseph P. Pellegrino, Jr. | $500,000 | | David B. Roberts | $500,000 | | Trent G. Kamke | $225,000 |
Long-Term Incentive: Equity Compensation
| (1) 50% stock options, 25% RSUs and 25% PSUs. In the case of PSUs, the value above assumes target achievement of the performance goal. |
Long-Term Incentive: Equity Compensation
Each stock option award is intended to be an incentive stock option to the maximum extent permitted by applicable laws and regulations, with a per share exercise price equal to the closing price of our common stock on Nasdaq on the date of grant, and subject to a seven-year term except in the case of Mr. LeMaitre, whose incentive stock options have a per share exercise price equal to 110% of the closing price of our common stock on Nasdaq on the date of grant and are subject to a five-year term. All non-qualified stock options, including those granted to Mr. LeMaitre, have a per share exercise price equal to the closing price of our common stock on Nasdaq on the date of grant and are subject to a seven-year term. Each stock option and restricted stock unit (“RSU”) award vests in equal annual installments over a period of four years. Vesting of PSUs awarded in 2023 is contingent upon achievement of budgeted operating income as approved by our Board, less extraordinary revenue or expenses. The number of shares subject to a PSU award will be determined based on achievement of a target level of operating income for 2024, which will be assessed following the public release of our 2024 financial results in Q1 2025, according to the grid below.
Long-Term Incentive: Equity Compensation
| | Operating Income as a % of Budget | PSU Payout | | | <80% | 0% | | Threshold | 80% | 80% | | Target | 100% | 100% | | Maximum | 120% | 120% |
Long-Term Incentive: Equity Compensation
If we achieve the target level of operating income, then the number of shares subject to the PSU becomes fixed at 100%. If we exceed the target level of operating income up to 120%, then the number of shares subject to the PSU becomes fixed proportionately to the level of achievement. If we do not achieve the target level of operating income but achieve at least 80%, then the number of shares subject to the PSU becomes fixed proportionately to the level of achievement. At that time, 25% of the PSUs will vest, and the remaining 75% will vest annually on the next three anniversaries of the grant date.
Employment Agreements
Employment Agreements We are party to employment agreements with Messrs. LeMaitre, Pellegrino, and Roberts. These agreements do not contain ongoing contractual obligations relating to annual salary and bonus. Such employment agreements do contain ongoing severance arrangements, the material terms of which are described in the section titled “Severance Arrangements Pursuant to Agreements” below.
Summary Compensation Table
Summary Compensation Table The following table sets forth summary information concerning the compensation paid or earned for services rendered to us in all capacities during the years ended December 31, 2023, December 31, 2022, and December 31, 2021, to our Chief Executive Officer, Chief Financial Officer and each of the other two most highly compensated persons serving as our executive officers (collectively, the NEOs).
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | | George W. LeMaitre | 2023 | $592,659 | $— | $550,000 | $550,000 | $455,273 | $72,865(5) | $2,220,797 | | Chairman and Chief | 2022 | 568,498 | — | 550,000 | 550,000 | 206,936 | 64,678 | 1,940,112 | | Executive Officer | 2021 | 473,470 | — | 550,000 | 550,000 | 363,959 | 44,601 | 1,982,030 | | Joseph P. Pellegrino, Jr. | 2023 | 381,693 | 9,000(6) | 250,000 | 250,000 | 175,497 | — | 1,066,190 | | Chief Financial Officer | 2022 | 365,256 | — | 250,000 | 250,000 | 98,322 | — | 963,578 | | | 2021 | 341,438 | — | 250,000 | 250,000 | 177,157 | — | 1,018,595 | | David B. Roberts | 2023 | 430,311 | — | 250,000 | 250,000 | 194,641 | 9,900 | 1,134,852 | | President | 2022 | 411,781 | — | 250,000 | 250,000 | 91,408 | 19,128 | 1,022,317 | | | 2021 | 385,925 | 16,000 | 250,000 | 250,000 | 192,282 | 8,800 | 1,103,007 | | Trent G. Kamke | 2023 | 301,480 | 13,250(6) | 112,500 | 112,500 | 120,750 | 9,900 | 668,380 | | Senior Vice President, | 2022 | 283,080 | — | 112,500 | 112,500 | 125,600 | 9,150 | 642,830 | | Operations | 2021 | 262,316 | 10,000 | 112,500 | 112,500 | 87,500 | 8,800 | 593,616 |
Summary Compensation Table
| (1) The dollar amounts in this column represent the aggregate grant date fair value for each stock award (both RSUs and PSUs) granted to our NEOs for the indicated year pursuant to our equity compensation plan. These amounts have been calculated in accordance with FASB ASC Topic 718, excluding the impact of estimated forfeitures related to service-based vesting conditions. The value of PSUs is based on target attainment of the performance goal and may not reflect the actual value of such units when they vest, which value is contingent upon the Company’s actual performance in the designated performance period. For additional information regarding the assumptions used in the calculation of these amounts, which is incorporated herein by reference, please refer to Note 1 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 29, 2024. The value of PSUs awarded to our NEOs in 2023 at the grant date assuming maximum attainment of the performance goal are: Mr. LeMaitre, $330,000; Mr. Pellegrino, $150,000; Mr. Roberts, $150,000; and Mr. Kamke, $67,500. |
Summary Compensation Table
| (2) The dollar amounts in this column represent the aggregate grant date fair value for each option award granted to our NEOs for the indicated year pursuant to our equity compensation plan. These amounts have been calculated in accordance with FASB ASC Topic 718 using the Black-Scholes option-pricing model excluding the impact of estimated forfeitures related to service-based vesting conditions. For additional information regarding the assumptions used in the calculation of these amounts, which is incorporated herein by reference, please refer to Note 1 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 29, 2024. |
Summary Compensation Table
| (3) Represents cash incentive payments for the achievement of financial, corporate and/or management objectives under our applicable management incentive plans. For more information regarding Non-Equity Incentive Plan Compensation, see the “Short-Term Incentive Compensation” discussion above. |
Summary Compensation Table
| (4) “All Other Compensation” includes for Messrs. LeMaitre, Roberts and Kamke an amount paid by the Company to match, in part, the contributions of each of to his respective 401(k) plan account. |
Summary Compensation Table
| (5) Represents the following: |
Summary Compensation Table
| Amount | Purpose | | $9,049 | Matching contribution by the Company to Mr. LeMaitre’s 401(k) plan account | | $63,816 | Value of personal services provided to Mr. LeMaitre by his executive assistant in 2023 imputed as income to Mr. LeMaitre |
Summary Compensation Table
| (6) Represents extraordinary bonuses approved in advance by the Compensation Committee in relation to cost cutting, regulatory, operational and other initiatives in 2023. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information concerning non-equity incentive plan awards and grants of our common stock and stock options made to our NEOs during the fiscal year ended December 31, 2023.
Grants of Plan-Based Awards
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | | | All Other Stock Awards: Number of Shares of Stock | All Other Option Awards: Number of Securities Underlying | Exercise or Base Price of Option | Grant Date Fair Value of Stock and Option | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | or Units(1) (#) | Options(1) (#) | Awards ($/Sh) | Awards(2) ($) | | George W. LeMaitre | | — | 348,070 | 555,579 | — | — | — | — | — | — | — | | | 12/8/2023 | — | — | — | — | — | — | — | 26,555 | $60.12(3) | $550,000 | | | 12/8/2023 | — | — | — | 4,026 | 5,032 | 6,038 | 5,032 | — | — | $550,000 | | Joseph P. Pellegrino, Jr | | — | 148,436 | 237,893 | — | — | — | — | — | — | — | | | 12/8/2023 | — | — | — | — | — | — | — | 11,996 | $54.65 | $250,000 | | | 12/8/2023 | — | — | — | 1,830 | 2,287 | 2,744 | 2,287 | — | — | $250,000 | | David B. Roberts | | — | 167,343 | 268,033 | — | — | — | — | — | — | — | | | 12/8/2023 | — | — | — | — | — | — | — | 11,996 | $54.65 | $250,000 | | | 12/8/2023 | — | — | — | 1,830 | 2,287 | 2,744 | 2,287 | — | — | $250,000 | | Trent G. Kamke | | — | 117,242 | 187,700 | — | — | — | — | — | — | — | | | 12/8/2023 | — | — | — | — | — | — | — | 5,398 | $54.65 | $112,500 | | | 12/8/2023 | — | — | — | 823 | 1,029 | 1,235 | 1,029 | — | — | $112,500 |
Grants of Plan-Based Awards
| (1) Our Compensation Committee approved annual stock option awards, PSU awards and RSU awards under our Third Amended and Restated 2006 Stock Option and Incentive Plan to the NEOs in the fourth quarter of 2023. Each stock option award was intended to be an incentive stock option to the maximum extent permitted by applicable laws and regulations, with a per share exercise price equal to the closing price of our common stock on Nasdaq on the date of grant, and subject to a seven-year term except in the case of Mr. LeMaitre, whose incentive stock options have a per share exercise price equal to 110% of the closing price of our common stock on Nasdaq on the date of grant and subject to a five-year term. Each option and restricted stock award vests in equal annual installments over a period of four years. The initial vesting of each PSU is contingent upon achievement of operating income for 2024 against budgeted operating income as approved by our Board and will thereafter vest annually on the second, third and fourth anniversaries on the grant date. |
Grants of Plan-Based Awards
| (2) The dollar amounts in this column represent the aggregate grant date fair value for each option and stock award, as applicable. The value of PSUs is based on target attainment of the performance goal and may not reflect the actual value of such units when they vest, which value is contingent upon the Company’s actual performance in the designated performance period. These amounts have been calculated in accordance with FASB ASC Topic 718. For additional information regarding the assumptions used in the calculation of these amounts which is incorporated herein by reference, please refer to Note 1 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 29, 2024. |
Grants of Plan-Based Awards
| (3) The exercise price is $54.65 to the extent these option awards are non-qualified stock options. |
Outstanding Equity Awards as of December 31, 2023
Outstanding Equity Awards as of December 31, 2023 The following table presents information regarding outstanding option and stock awards held by our NEOs as of December 31, 2023.
Outstanding Equity Awards as of December 31, 2023
| | Option Award | | | | Stock Awards | | | | | Name | Number of Securities underlying Unexercised Options - # Exercisable | Number of Securities underlying Unexercised Options - # Unexcercisable | Option Exercise Price | Option Expiration Date | Number of shares or units of stock that have not vested - # | Market value of shares or units of stock that have not vested - $ | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested - #(1) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested - $ | | George W. LeMaitre | - | 2,818(2) | $39.03 | 12/20/2024 | - | - | - | - | | | - | 2,681(3) | $41.02 | 12/2/2025 | - | - | - | - | | | - | 5,792(8) | $35.48 | 12/20/2026 | - | - | - | - | | | - | 2,119(4) | $51.91 | 12/12/2027 | - | - | - | - | | | - | 12,991(9) | $37.29 | 12/2/2027 | - | - | - | - | | | 7,733(10) | 15,467(10) | $48.60 | 12/11/2028 | - | - | - | - | | | 7,075(11) | 21,225(11) | $47.19 | 12/12/2029 | - | - | - | - | | | - | 1,829(5) | $60.12 | 12/8/2028 | - | - | - | - | | | - | 24,726(12) | $54.65 | 12/8/2030 | - | - | - | - | | | - | - | - | - | 1,067(8) | $60,587 | - | - | | | - | - | - | - | 2,002(9) | $113,645 | - | - | | | - | - | - | - | 2,888(10) | $163,943 | - | - | | | - | - | - | - | 4,415(11) | $250,603 | - | - | | | - | - | - | - | 5,032(12) | $285,616 | - | - | | | - | - | - | - | - | - | 4,709(11) | $267,309 | | | - | - | - | - | - | - | 4,026(12) | $228,493 | | Joseph P. Pellegrino, Jr. | 3,461(6) | - | $31.30 | 12/22/2024 | - | - | - | - | | | 8,733(7) | - | $23.56 | 12/19/2025 | - | - | - | - | | | 5,883(8) | 2,941(8) | $35.48 | 12/20/2026 | - | - | - | - | | | 5,346(9) | 5,345(9) | $37.29 | 12/2/2027 | - | - | - | - | | | 7,031(10) | 7,030(10) | $48.60 | 12/11/2028 | - | - | - | - | | | 3,430(11) | 10,291(11) | $47.19 | 12/12/2029 | - | - | - | - | | | - | 11,996(12) | $54.65 | 12/8/2030 | - | - | - | - | | | - | - | - | - | 367(8) | $20,809 | - | - | | | - | - | - | - | 691(9) | $39,204 | - | - | | | - | - | - | - | 1,314(10) | $74,556 | - | - | | | - | - | - | - | 2,007(11) | $113,921 | - | - | | | - | - | - | - | 2,287(12) | $129,810 | - | - | | | - | - | - | - | - | - | 2,141(11) | $121,500 | | | - | - | - | - | - | - | 1,830(12) | $103,848 | | David B. Roberts | 4,366(7) | - | $23.56 | 12/19/2025 | - | - | - | - | | | 2,941(8) | 2,941(8) | $35.48 | 12/20/2026 | - | - | - | - | | | 8,019(9) | 5,345(9) | $37.29 | 12/2/2027 | - | - | - | - | | | 7,031(10) | 7,030(10) | $48.60 | 12/11/2028 | - | - | - | - | | | 3,430(11) | 10,291(11) | $47.19 | 12/12/2029 | - | - | - | - | | | - | 1,829(12) | $54.65 | 12/8/2030 | - | - | - | - | | | - | 10,167(12) | $54.65 | 12/8/2030 | - | - | - | - | | | - | - | - | - | 367(8) | $20,809 | - | - | | | - | - | - | - | 691(9) | $39,204 | - | - | | | - | - | - | - | 1,314(10) | $74,556 | - | - | | | - | - | - | - | 2,007(11) | $113,921 | - | - | | | - | - | - | - | 2,287(12) | $129,810 | - | - | | | - | - | - | - | - | - | 2,141(11) | $121,500 | | | - | - | - | - | - | - | 1,830(12) | $103,848 | | Trent G. Kamke | 182(6) | - | $31.30 | 12/22/2024 | - | - | - | - | | | 4,018(7) | - | $23.56 | 12/19/2025 | - | - | - | - | | | 3,978(8) | 1,353(8) | $35.48 | 12/20/2026 | - | - | - | - | | | 3,690(9) | 2,458(9) | $37.29 | 12/2/2027 | - | - | - | - | | | 3,164(10) | 3,163(10) | $48.60 | 12/11/2028 | - | - | - | - | | | 1,544(11) | 4,631(11) | $47.19 | 12/12/2029 | - | - | - | - | | | - | 5,398(12) | $54.65 | 12/8/2030 | - | - | - | - | | | - | - | - | - | 170(8) | $9,657 | - | - | | | - | - | - | - | 318(9) | $18,050 | - | - | | | - | - | - | - | 590(10) | $33,513 | - | - | | | - | - | - | - | 903(11) | $51,256 | - | - | | | - | - | - | - | 1,029(12) | $58,406 | 963(11) | $54,673 | | | - | - | - | - | - | - | 823(12) | $46,725 |
Outstanding Equity Awards as of December 31, 2023
| (1) The number of PSUs is based on threshold attainment of the performance goal in accordance with Item 402(f) of Regulation S-K and may not reflect the actual number of such units when they vest, which is contingent upon the Company’s actual performance in the designated performance period. |
Outstanding Equity Awards as of December 31, 2023
| (2) 100% of this award vests on November 20, 2024. |
Outstanding Equity Awards as of December 31, 2023
| (3) 100% of this award vests on November 2, 2025. |
Outstanding Equity Awards as of December 31, 2023
| (4) 100% of this award vests on December 12, 2026. |
Outstanding Equity Awards as of December 31, 2023
| (5) 100% of this award vests on December 8, 2027. |
Outstanding Equity Awards as of December 31, 2023
| (6) 20% of this award vested on December 22, 2018, and the remainder vested annually at the rate of 20% per year. | | (7) 20% of this award vested on December 19, 2019, and the remainder vested annually at the rate of 20% per year. |
Outstanding Equity Awards as of December 31, 2023
| (8) 20% of this award vested on December 20, 2020, and the remainder vests annually at the rate of 20% per year. | | (9) 20% of this award vested on December 2, 2021, and the remainder vests annually at the rate of 20% per year. | | (10) 25% of this award vested on December 11, 2022, and the remainder vests annually at the rate of 25% per year. | | (11) 25% of this award vested on December 12, 2023, and the remainder vests annually at the rate of 25% per year. | | (12) 25% of this award vests on December 8, 2024, and the remainder vests annually at the rate of 25% per year. |
2023 Option Exercises and Stock Vested
2023 Option Exercises and Stock Vested The following table provides certain information regarding option exercises and stock vested during the fiscal year ended December 31, 2023, with respect to our NEOs.
2023 Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (2) | | George W. LeMaitre | 53,374 | $1.306,401 | 6,604 | $360,994 | | Joseph P. Pellegrino, Jr. | - | - | 2,601 | 142,006 | | David B. Roberts | 43,593 | 1,243,840 | 2,601 | 142,006 | | Trent G. Kamke | 3,681 | 80,431 | 1,170 | 63,875 |
2023 Option Exercises and Stock Vested
| (1) Value realized is calculated on the basis of the difference between the exercise price and the closing price of our common stock as reported on Nasdaq on the date of the exercise, multiplied by the number of shares of common stock underlying the options. | | (2) Value realized is calculated on the basis of the closing price of our common stock as reported on Nasdaq on the vesting date, multiplied by the number of shares. |
Potential Payments upon Termination or Change-in-Control
Potential Payments upon Termination or Change-in-Control The following tables set forth potential payments payable to our NEOs under their current employment agreements as at December 31, 2023, upon termination of employment or a change in control of our company.
Pay Ratio Disclosure
Pay Ratio Disclosure As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the annual total compensation of our “median” employee to the annual total compensation of our Chief Executive Officer, George W. LeMaitre, for 2023. As permitted by SEC rules, we used annual base pay and target bonus as the consistently applied compensation measure to compare the total compensation of our 614 full-time employees (excluding our CEO) as of December 31, 2023, and to identify our median employee. We annualized the base pay and target bonus for any permanent employees who commenced work during 2023 or who were on unpaid leave during the year. Additionally, compensation for employees outside of the U.S. was converted to U.S. dollars. Using this approach, we identified our median employee. We collected annual total compensation for our median employee for 2023 using the same methodology we used for our NEOs as disclosed in the Summary Compensation Table above. The annual total compensation of our median employee for 2023 was 69,351, and our CEO’s compensation as reported in the Summary Compensation Table plus the 401(k) match was $2,220,797, resulting in a ratio of 32:1. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described above. Given that companies may use a range of methodologies to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION The following table sets forth the retainers, other cash fees, and equity compensation received by our non-employee directors for their service during the year ended December 31, 2023.
2023 DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash(1) ($) | Stock awards ($)(2) | Option awards ($)(3) | Non-equity incentive plan compensation ($) | All other compensation ($) | Total ($) | | Lawrence J. Jasinski | $41,500 | $56,000 | $56,000 | — | — | $153,500 | | John J. O’Connor | 51,000 | 56,000 | 56,000 | — | — | 163,000 | | Bridget A. Ross | 32,500 | 56,000 | 56,000 | — | — | 144,500 | | John A. Roush | 34,500 | 56,000 | 56,000 | — | — | 146,500 | | Martha Shadan | 26,833 | 56,000 | 56,000 | — | — | 138,833 |
2023 DIRECTOR COMPENSATION
| (1) Represents fees earned in 2023 pursuant to our non-employee director compensation policy in effect for 2023, as discussed below. |
2023 DIRECTOR COMPENSATION
| (2) The dollar amounts in this column represent the aggregate grant date fair value for each stock award (both RSUs and PSUs) granted to our directors in 2023 pursuant to our equity compensation plan. These amounts have been calculated in accordance with FASB ASC Topic 718, excluding the impact of estimated forfeitures related to service-based vesting conditions. The value of PSUs is based on target attainment of the performance goal and may not reflect the actual value of such units when they vest, which value is contingent upon the Company’s actual performance in the designated performance period. For additional information regarding the assumptions used in the calculation of these amounts, which is incorporated herein by reference, please refer to Note 1 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 29, 2024. The value of PSUs awarded to each of our non-employee directors in 2023 at the grant date assuming maximum attainment of the performance goal is $33,600. As of December 31, 2023, each current non-employee director held 1,109.48 RSUs (other than Ms. Shadan who held 912 RSUs) and 1,110.99 PSUs (assuming target attainment). |
2023 DIRECTOR COMPENSATION
| (3) The dollar amounts in this column represent the aggregate grant date fair value for each option award granted to our directors in 2023 pursuant to our equity compensation plan. These amounts have been calculated in accordance with FASB ASC Topic 718 using the Black-Scholes option-pricing model, excluding the impact of estimated forfeitures related to service-based vesting conditions. For additional information regarding the assumptions used in the calculation of these amounts, which is incorporated herein by reference, please refer to Note 1 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 29, 2024. As of December 31, 2023, non-employee directors held outstanding options for the following number of shares: Mr. Jasinski, 10,777; Mr. O’Connor, 24,425; Ms. Ross, 24,925; Mr. Roush, 24,425; and Ms. Shadan 5,981. |
2023 DIRECTOR COMPENSATION
Employee directors do not receive cash compensation for their service as members of the Board of Directors. In accordance with our non-employee director compensation policy, in 2023, non-employee directors receive an annual retainer for Board membership of $26,000. The chairman of our Audit Committee receives an annual retainer of $20,000, the chairman of our Compensation Committee receives an annual retainer of $7,500, and the chairman of our Nominating and Corporate Governance Committee receives an annual retainer of $6,500. Members of our Audit Committee receive an annual retainer of $6,000, members of our Compensation Committee receive an annual retainer of $2,500, and members of our Nominating and Corporate Governance Committee receive an annual retainer of $2,000. In addition, under our non-employee director compensation policy, each non-employee director is eligible for an annual equity grant valued at $112,000, comprised of 50% options, 25% PSUs and 25% RSUs, provided that he or she has served as a director for at least six months at the time of grant. All of the directors are reimbursed for out-of-pocket expenses incurred on our behalf, and all of the directors are eligible to participate in the Third Amended and Restated 2006 Stock Option and Incentive Plan on an ad hoc basis from time to time at the discretion of the Board of Directors.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” our executive compensation program reflects a variable pay-for-performance philosophy. The following table and related disclosures provide further “pay versus performance” disclosure with respect to our chief executive officer, also referred to as our principal executive officer (“PEO”), and our other named executive officers (“NEOs”), as contemplated by Item 402(v) of Regulation S-K.
PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total to PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total For Non-PEO | Average Compensation Actually Paid to Non-PEO | Value of Initial Fixed $100 Investment Based On: | | Net Income (millions)(7) | Income from Operations (millions)(8) | | | | | Named Executive Officers(3) | Named Executive Officers(4) | Company TSR(5) | Peer Group TSR(6) | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | $2,220,797 | $4,433,645 | $956,474 | $1,680,471 | $165 | $125 | $30.1 | $36.7 | | 2022 | $1,940,112 | $2,426,823 | $876,242 | $984,574 | $132 | $121 | $20.6 | $26.8 | | 2021 | $1,982,030 | $5,341,607 | $905,073 | $1,704,467 | $143 | $150 | $26.9 | $36.4 | | 2020 | $1,386,506 | $3,114,459 | $598,045 | $1,062,349 | $114 | $124 | $21.2 | $28.8 |
PAY VERSUS PERFORMANCE
| (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. LeMaitre (our Chief Executive Officer or PEO) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation –Summary Compensation Table.” | | (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. LeMaitre, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the average amount of compensation earned by or paid to Mr. LeMaitre during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average compensation for Mr. LeMaitre for each year to determine the compensation actually paid: |
PAY VERSUS PERFORMANCE
| Year | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards(a) | Equity Award Adjustments(b) | Compensation Actually Paid to PEO | | 2023 | $2,220,797 | ($1,100,000) | $3,312,848 | $4,433,645 | | 2022 | $1,940,112 | ($1,100,000) | $1,586,711 | $2,426,823 | | 2021 | $1,982,030 | ($1,100,000) | $4,459,577 | $5,341,607 | | 2020 | $1,386,506 | ($725,000) | $2,452,953 | $3,114,459 |
PAY VERSUS PERFORMANCE
(a) Represents the grant date fair value of equity-based awards granted each year as reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. Because we do not maintain a pension in which any NEO participates, no adjustments from the SCT total related to pension value are needed to calculate “compensation actually paid” in accordance with Item 402(v) of Regulation S-K. (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:
PAY VERSUS PERFORMANCE
| Year | Year End Fair Value of Equity Awards | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $1,160,658 | $522,974 | $0 | $1,629,216 | $0 | $0 | $3,312,848 | | 2022 | $1,065,968 | ($357,456) | $1,759 | $1,161,759 | ($286,647) | $1,329 | $1,586,711 | | 2021 | $1,157,309 | $703,308 | $2,304 | $2,596,656 | $0 | $0 | $4,459,577 | | 2020 | $831,690 | $448,074 | $2,387 | $1,170,802 | $0 | $0 | $2,452,953 |
PAY VERSUS PERFORMANCE
| (3) The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s NEOs as a group (excluding Mr. LeMaitre, who has served as our CEO in each of the covered years) in the “Total” column of the Summary Compensation Table in each applicable year. For each of the reported years, the names of each of the NEOs (excluding Mr. LeMaitre) included for purposes of calculating the average amounts in each applicable year are David B. Roberts, Joseph P. Pellegrino, and Trent G. Kamke. | | (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” (“CAP”) to the NEOs as a group (excluding Mr. LeMaitre), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. LeMaitre) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average compensation for the NEOs as a group (excluding Mr. LeMaitre) for each year to determine the compensation actually paid: |
PAY VERSUS PERFORMANCE
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Average Reported Value of Equity Awards(a) | Average Equity Award Adjustments(b) | Average Compensation Actually Paid to Non-PEO NEOs | | 2023 | $956,474 | ($408,333) | $1,132,330 | $1,680,471 | | 2022 | $876,242 | ($408,333) | $516,666 | $984,574 | | 2021 | $905,073 | ($408,333) | $1,207,728 | $1,704,467 | | 2020 | $598,045 | ($205,000) | $669,304 | $1,062,349 |
PAY VERSUS PERFORMANCE
(a) Represents the grant date fair value of equity-based awards granted each year as reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. Because we do not maintain a pension in which any NEO participates, no adjustments from the SCT total related to pension value are needed to calculate “compensation actually paid” in accordance with Item 402(v) of Regulation S-K. (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:
PAY VERSUS PERFORMANCE
| Year | Average Year End Fair Value of Equity Awards | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Average Equity Award Adjustments | | 2023 | $430,777 | $178,470 | $0 | $523,083 | $0 | $0 | $1,132,330 | | 2022 | $395,661 | ($108,829) | $6,860 | $328,914 | ($106,362) | $422 | $516,666 | | 2021 | $429,021 | $198,028 | $384 | $580,295 | $0 | $0 | $1,207,728 | | 2020 | $234,727 | $119,345 | $772 | $314,460 | $0 | $0 | $669,304 |
PAY VERSUS PERFORMANCE
| (5) Company total shareholder return (“TSR”) is calculated to show the cumulative stockholder return on our common stock during the covered period, including reinvestment of dividends. |
PAY VERSUS PERFORMANCE
| (6) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: iShares US Medical Devices ETF Index (Ticker: IHI). We have adopted IHI as a comparator this year, replacing the Nasdaq Medical Equipment Index, because the Nasdaq Medical Equipment Index ceased to exist as a published index during 2023. The values of $100.00 invested in the Nasdaq Medical Equipment Index as of December 31, 2019 was $140.00 as of December 31, 2020, $144.00 as of December 31, 2021, and $97.00 as of December 31, 2022. Because the Nasdaq Medical Equipment Index ceased to exist in 2023, we are unable to provide a value as of December 31, 2023. |
PAY VERSUS PERFORMANCE
| (7) The dollar amounts reported represent the amount of net income reflected in our audited financial statements for the applicable year. |
PAY VERSUS PERFORMANCE
| (8) The dollar amounts reported represent the amount of income from operations reflected in our audited financial statements for the applicable year. |
PAY VERSUS PERFORMANCE
Financial Performance Measures As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” our executive compensation program reflects a variable pay-for-performance philosophy. The most important financial performance measures we used to link executive compensation actually paid to our NEOs, for the most recently completed fiscal year, to our performance are as follows:
PAY VERSUS PERFORMANCE
| ● | Net sales; |
PAY VERSUS PERFORMANCE
| ● | Income from operations; |
PAY VERSUS PERFORMANCE
| ● | Adjusted income from operations; and |
PAY VERSUS PERFORMANCE
| ● | Net income |
PAY VERSUS PERFORMANCE
Analysis of the Information Presented in the Pay versus Performance Table While we utilize several performance measures to align executive compensation with our performance, not all these measures are presented in the above Pay versus Performance Table. Moreover, we generally seek to incentivize long-term performance, and therefore do not specifically align our performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance Table.
Compensation Actually Paid versus Total Shareholder Return
Compensation Actually Paid versus Total Shareholder Return As shown in the chart below, the PEO and other NEOs’ CAP amounts are aligned with the Company’s TSR. This is partly due to the Company’s use of equity incentives, which are tied directly to stock price in addition to the company’s financial performance.
Compensation Actually Paid versus Net Income
Compensation Actually Paid versus Net Income As shown in the chart below, there is a correlation between the Company’s net income and the PEO and other NEOs’ CAP each year.
Compensation Actually Paid versus Company-Selected Measure
Compensation Actually Paid versus Company-Selected Measure The chart below compares the PEO and other NEOs’ CAP to our Company Selected Measure (“CSM”), income from operations, which indicates there is a relationship between this CSM and CAP.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our Board of Directors currently consists of eight members. Our charter divides the Board of Directors into three classes. One class is elected each year for a term of three years. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified. The Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated Lawrence J. Jasinski, John J. O’Connor and Joseph P. Pellegrino, Jr. and recommended that each be elected to the Board of Directors as a Class III director, to hold office until the annual meeting of stockholders to be held in the year 2027 and until their successor has been duly elected and qualified or until their earlier death, resignation, or removal. Each nominee is currently serving as a director, and their current term as a Class III director expires at this Meeting. The Board of Directors knows of no reason why any of the nominees would be unable or unwilling to serve, but if any nominee should for any reason be unable or unwilling to serve, the proxies will be voted for the election of such other person for the office of director as the Board of Directors may recommend in the place of such nominee. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the nominees named below. This Proposal 1 relates solely to the election of three Class III directors nominated by the Board and does not include any other matters relating to the election of directors, including, without limitation, the election of directors nominated by any of our stockholders. The Board expects the nominees will be available for election. If a nominee declines or is unable to act as a director, your proxy may be voted for any substitute nominee proposed by the Board or the size of the Board may be reduced. In accordance with our Bylaws, directors are elected by a plurality of the votes properly cast on the election of directors. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF LAWRENCE J. JASINSKI, JOHN J. O’CONNOR AND JOSEPH P. PELLEGRINO, JR.
Current Overview of Outstanding Equity Awards
Current Overview of Outstanding Equity Awards The below table shows the number of shares subject to (i) outstanding stock options, (ii) outstanding and unvested RSUs, (iii) shares subject to outstanding and unvested PSUs, and (iv) shares available for future awards under the Current Plan and the Prior Plans, in each case as of March 8, 2024. The total number of shares of our common stock outstanding as of March 8, 2024, was 22,408,970.
Current Overview of Outstanding Equity Awards
| Shares Subject to Outstanding Stock Options(1) | Shares Subject to Outstanding Full-Value Awards(2)(3) | Shares Remaining Available for Future Grant | | 695,083 | 171,720 | 275,111 |
Current Overview of Outstanding Equity Awards
| (1) Outstanding stock options have a weighted average exercise price of $43.64, a term of ten years, and a weighted average remaining term of 4.42 years. |
Current Overview of Outstanding Equity Awards
| (2) Consists of RSU and PSU awards. |
Current Overview of Outstanding Equity Awards
| (3) PSU awards included in these columns are reflected assuming a maximum level of performance. |
Current Overview of Outstanding Equity Awards
Based on our shares of common stock outstanding as of March 8, 2024, the 1,141,914 shares subject to outstanding grants or available for future grants under the Current Plan and Prior Plans represent, in the aggregate, an “overhang” of approximately 4.9% of shares. If shareholders approve the Fourth Amended and Restated 2006 Plan, the additional 1,000,000 shares available for issuance would increase the overhang to approximately 8.7%. We calculate “overhang” as:
Current Overview of Outstanding Equity Awards
| shares underlying outstanding awards + shares available for issuance under future awards | ÷ | total shares outstanding + shares underlying outstanding awards + shares available for issuance under future awards |
Current Overview of Outstanding Equity Awards
We recognize that equity awards dilute existing shareholders and are committed to using equity incentive awards prudently and within reasonable limits. Accordingly, we monitor our stock award burn rate each year. Our annual stock award burn rate is determined by dividing the number of shares of our common stock subject to stock-based awards granted in a fiscal year by the weighted average number of shares of our common stock outstanding for that fiscal year, as shown in the following table.
Current Overview of Outstanding Equity Awards
| Fiscal Year | Stock Options Granted | Full Value Awards Granted(1) | Weighted Average # of Shares of Common Stock Outstanding | Stock Award Burn Rate | | 2023 | 148,115 | 75,108 | 22,216,798 | 1.0% | | 2022 | 159,275 | 79,861 | 21,975,153 | 1.0% | | 2021 | 151.161 | 79,479 | 21,157,149 | 1.0% |
Current Overview of Outstanding Equity Awards
| (1) PSU awards included in this column are reflected assuming a target level of performance. |
New Plan Benefits
| (1) Represents the number of shares underlying stock options granted in 2023. Please see the Grants of Plan-Based Awards Table on page 25 for details of the options granted to our NEOs. Please see the 2023 Director Compensation Table on page 30 for details of the options granted to our non-employee directors in fiscal 2023. | | (2) Represents the number of RSUs and PSUs (at target) granted in 2023. Please see the Grants of Plan-Based Awards Table on page 25 for details of the RSUs and PSUs granted to our NEOs in 2023. Please see the 2023 Director Compensation Table on page 30 for details of the RSUs and PSUs granted to our non-employee directors in fiscal 2023. | | (3) Five directors fall into this category. |