UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant
to Section 14(a) of the Securities
Exchange Act of 1934
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Filed by the Registrant
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Filed by a Party other
than the Registrant
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Check
the appropriate box:
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Preliminary Proxy Statement.
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Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2)).
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Definitive Proxy Statement.
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Definitive Additional Materials.
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Soliciting Material under §240.14a-12.
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COLFAX CORPORATION
(Name of Registrant as
Specified In Its Charter)
(Name of Person(s) Filing
Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notice of 2021
Annual Meeting
of Stockholders
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Wednesday, May 12, 2021
3:00 p.m. Eastern Time
Via live webcast at
www.virtualshareholdermeeting.com/CFX2021
To Our Stockholders:
Notice is hereby given that the 2021 Annual Meeting of Stockholders
(the “Annual Meeting”) of Colfax Corporation will be held via live webcast at www.virtualshareholdermeeting.com/CFX2021
on Wednesday, May 12, 2021 at 3:00 p.m. Eastern Time, for the following purposes:
1.
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To elect the eleven members of the Board of Directors named in the attached proxy statement;
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2.
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To ratify the appointment of Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2021;
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3.
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To approve the compensation of our named executive officers on an advisory basis (“say-on-pay”);
and
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4.
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To consider any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof.
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The accompanying proxy statement describes the matters to be considered
at the Annual Meeting. Only stockholders of record at the close of business on March 22, 2021 are entitled to notice of, and to
vote at, the Annual Meeting and at any adjournments or postponements thereof.
We are pleased to take advantage of the Securities and Exchange
Commission rules that allow us to furnish our proxy materials and our annual report to stockholders on the Internet. We believe
that posting these materials on the Internet enables us to provide our stockholders with the information that they need more quickly
while lowering our costs of printing and delivery and reducing the environmental impact of our Annual Meeting.
Due to continuing concerns relating to the coronavirus (COVID-19)
pandemic and to support the health and well-being of our stockholders, directors, officers, employees and other meeting attendees,
the Annual Meeting will be completely virtual. To attend, participate in, and vote during the Annual Meeting, stockholders of record
must go to the meeting website at www.virtualshareholdermeeting.com/ CFX2021 and enter the control number found on their proxy
card or Notice of Internet Availability of Proxy Materials (the “Notice”). If you are a beneficial stockholder who
owns common stock in street name, meaning through a bank, broker or other nominee, and your voting instruction form or Notice indicates
that you may vote those shares through the http://www.proxyvote.com website, then you may attend, participate in, and vote during
the Annual Meeting using the 16-digit control number indicated on that voting instruction form or Notice. Otherwise, stockholders
who hold their shares in street name should contact their bank, broker or other nominee (preferably at least five days before the
Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at the Annual
Meeting.
As a stockholder of Colfax, your vote is important. Whether or
not you plan to attend the Annual Meeting virtually, we urge you to vote your shares at your earliest convenience and thank you
for your continued support of Colfax Corporation.
Dated: April 1, 2021
By Order of the Board of Directors
Bradley J. Tandy
Secretary
Table of Contents
PROXY SUMMARY
This summary highlights information contained elsewhere in
this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire
proxy statement carefully before voting. Page references are supplied to help you find further information in this proxy statement.
Annual Meeting of Stockholders
Date and Time:
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Wednesday, May 12, 2021 at 3:00 p.m., Eastern Time
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Location:
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Via live webcast at www.virtualshareholdermeeting.com/CFX2021
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Record Date:
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March 22, 2021
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Availability of Proxy Materials – Use of Notice and Access
Important Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be held on May 12, 2021: Our Annual Report to Stockholders and this Proxy Statement are available
at www.proxyvote.com.
Pursuant to the “notice and
access” rules adopted by the Securities and Exchange Commission, we have elected to provide stockholders access to our
proxy materials primarily over the Internet. Accordingly, on or about April 1, 2021, we sent a Notice of Internet
Availability of Proxy Materials (the “Notice”) to our stockholders entitled to vote at the Annual Meeting as of
the close of business on March 22, 2021, the record date of the meeting. The Notice includes instructions on how to access
our proxy materials over the Internet and how to request a printed copy of these materials. In addition, by following the
instructions in the Notice, stockholders may request to receive proxy materials in printed form by mail or electronically by
e-mail on an ongoing basis.
Choosing to receive your future proxy materials by e-mail will
save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment.
If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a
link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in
effect until you terminate it.
Who May Vote
You may vote if you were a stockholder of record at the close
of business on March 22, 2021, the record date.
How to Cast Your Vote
You can vote by any of the following methods:
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Via the internet (www.proxyvote.com) through May 11, 2021;
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By telephone (1-800-690-6903) through May 11, 2021;
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By completing, signing and returning your proxy by mail in the envelope provided or to Vote Processing, c/o Broadridge,
51 Mercedes Way, Edgewood, NJ 11717 by May 11, 2021; or
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Via virtual attendance and voting at the Annual Meeting. To attend the Annual Meeting, you must go to the meeting website
at www.virtualshareholdermeeting.com/CFX2021 and enter your control number. Once admitted, you may vote by following the instructions
available on the meeting website. If you are a beneficial stockholder who owns shares in street name and have questions about
your control number or how to obtain one, please contact the bank, broker or other nominee who holds your shares.
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If you are a beneficial stockholder who owns your shares in street
name, the availability of online or telephone voting may depend on the voting procedures of the organization that holds your shares.
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- 2021 Proxy Statement
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5
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Voting Matters
We are asking you to vote on the following proposals at the Annual
Meeting:
Proposal
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Board Vote Recommendation
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Page Reference
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Proposal 1 – Election of Directors
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FOR each director nominee
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12
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Proposal 2 – Approval of Auditor
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FOR
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24
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Proposal 3 – Say-on-Pay
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FOR
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53
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Board and Governance Highlights
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Balanced Board tenure with four new independent directors appointed since 2016, including two directors since 2020
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82% independent Board with two female and two racially or ethnically diverse directors
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Amended Nominating and Corporate Governance Committee Charter in 2020 to reflect our commitment to seeking highly qualified female and minority director candidates
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Amended Audit Committee Charter to reflect Audit Committee’s oversight role with respect to information technology and cybersecurity
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Stock ownership requirements for officers and directors
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Anti-hedging, anti-pledging, and clawback policies
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Board Nominees (page 13)
The following table provides summary information about each director
nominee:
Name
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Age
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Director
Since
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Occupation
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Independent
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Committee
Memberships
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Other Public Boards
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Mitchell P. Rales
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64
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1995
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Chairman of the Board, Colfax Corporation
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N/A
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Danaher Corporation; Fortive Corporation
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Chairman of the Executive Committee, Danaher Corporation
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Matthew L. Trerotola
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53
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2015
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President and Chief Executive Officer, Colfax Corporation
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N/A
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None
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Patrick W. Allender
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74
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2008
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Former Executive Vice President and Chief Financial Officer, Danaher Corporation
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Nominating (Chair) Audit
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Brady Corporation
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Thomas S. Gayner
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59
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2008
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Co-Chief Executive Officer, Markel Corporation
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Audit
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Markel Corporation; Cable One, Inc.; Graham Holdings, Inc.
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Rhonda L. Jordan
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63
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2009
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Former President, Kraft Foods Inc.
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Compensation (Chair) Nominating
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Ingredion, Inc.
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Liam J. Kelly
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54
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2020
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President and Chief Executive Officer, Teleflex Incorporated
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Nominating
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Teleflex Incorporated
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Philip A. Okala
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52
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2021
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Chief Operating Officer, University of Pennsylvania Health Systems
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Compensation
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None
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A. Clayton Perfall
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62
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2010
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Operating Executive, Tailwind Capital
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Audit (Chair)
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None
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Didier Teirlinck
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64
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2017
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Former Executive Vice President, Climate Segment, Ingersoll Rand
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Audit
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None
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Rajiv Vinnakota
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50
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2008
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President, Institute for Citizens & Scholars (formerly the Woodrow Wilson National Fellowship Foundation)
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Compensation Nominating
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None
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Sharon Wienbar
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59
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2016
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Former Venture Partner, Scale Venture Partners
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Compensation
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Resideo Technologies, Inc.
Covetrus, Inc.
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- 2021 Proxy Statement
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6
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Of our 11 director nominees:
The table below highlights the collective skills, experiences
and attributes of our director nominees:
In accordance with the Company’s Amended and Restated Bylaws
(the “Bylaws”), to be elected each director nominee must receive a majority of the votes cast with respect to that
director’s election. Incumbent directors nominated for election by the Board are required, as a condition to such nomination,
to submit a conditional letter of resignation to the Chairman of the Board. In the event that a nominee for director does not receive
a majority of the votes cast at the Annual Meeting with respect to his or her election, the Board will promptly consider whether
to accept or reject the conditional resignation of that nominee, or whether other action should be taken. The Board will then take
action and will publicly disclose its decision and the rationale behind it no later than 90 days following the certification of
election results.
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- 2021 Proxy Statement
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7
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Corporate Social Responsibility and Sustainability
Our corporate social responsibility (“CSR”)
and sustainability program is organized around identifying, assessing and managing on an ongoing basis the environmental, social
and governance (“ESG”) factors that are relevant to our long-term financial performance. Our sustainability program
takes into account the interests of our key stakeholder constituencies, including our employees, customers, communities and stockholders.
ESG issues that we focus on across the Company include workplace health and safety, energy efficiency, waste management, climate
risk, human capital management, diversity and inclusion, supply chain management, business ethics and compliance, and data privacy
and protection.
In 2020, we committed to enhancing our CSR
and sustainability reporting. At the direction of our Nominating and Corporate Governance Committee, we commenced a review of our
CSR and sustainability programs and disclosures. To facilitate this review, we formed a cross-functional internal working group,
which included a number of our senior leaders, including our CFO, CHRO and General Counsel. The review focused on (i) gaining a
better understanding of the expectations of our stakeholders with respect to ESG disclosures and practices, (ii) identifying those
ESG topics which we believe are most material to our stakeholders and (iii) assessing and disclosing how we currently manage and
measure risks and opportunities related to these ESG topics. These efforts culminated in the publication of our inaugural CSR Report
in March 2021, which can be accessed on our website at www.colfaxcorp.com on the Investors page under the Corporate Governance
tab.
We expect to continue to enhance our CSR
and sustainability reporting into 2021 and beyond, as ESG integration by investors and reporting frameworks continue to evolve.
Highlights of some of our recent ESG enhancements
are discussed below.
The information on our website is not, and
shall not be deemed to be, a part of this Proxy Statement or incorporated into any other filings we make with the SEC.
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Governance; Community Involvement and Corporate Citizenship
We take
ESG-related risks and opportunities into account in our strategic decision-making, both by the Board and management.
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ESG matters are managed and monitored by senior management throughout the year. The Board exercises oversight over ESG matters at the full Board level and through our relevant committees. At our December 2020 Board meeting, the full Board participated in an ESG educational session facilitated by one of our outside advisors.
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Under its charter, our Nominating and Corporate Governance Committee is expressly tasked with reviewing the Company’s undertakings with respect to ESG matters, including our role as a corporate citizen and policies and programs relating to health, safety and sustainability matters. An ESG update is included as a standing agenda item at each Nominating and Corporate Governance Committee Meeting.
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In 2020, we amended our Nominating and Corporate Governance Committee charter to further reflect our commitment to actively seeking out highly qualified women and minority director candidates, as well as candidates with diverse backgrounds, experiences and skills as part of each director search the Company undertakes.
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We recently amended our Audit Committee charter to expressly task the Audit Committee with reviewing the Company’s policies with respect to risk assessment and risk management related to information technology and cybersecurity.
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We believe in giving back to our communities and supporting other worthwhile initiatives that contribute to the betterment of society. Beginning this year, we are encouraging all of our sites to participate in a “Creating Better in the Community Day.” The initiative will be led by our local teams and employees will be provided with an additional day of paid time off to participate.
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- 2021 Proxy Statement
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8
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Health, Safety and Environment
The protection
of human health, personal safety and environmental quality rank at the highest level of importance to Colfax.
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Our full Board reviews our safety initiatives at the start of each regularly scheduled board meeting.
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In addition, our executive leadership team reviews safety matters with our site leaders on a regular and ongoing basis, and our safety initiatives and safety performance are discussed and highlighted with all Colfax associates at each quarterly town hall meeting.
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From the outset of the COVID-19 global pandemic, maintaining the health and safety of our associates has been a top priority. We quickly implemented health and safety protocols based on CDC, WHO and other applicable guidelines at all of our sites. In addition, we established a robust communications and feedback plan, led by our executive COVID-19 crisis response team.
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We continued our highly successful Summer of Safety campaign for the third consecutive year. This program was initiated to increase awareness of risks at work and home, which have historically tended to increase during the summer. Key components of the program include:
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–
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Weekly CEO communications to announce the focus area for the week
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Daily discussion topics and activities, which are incorporated into daily management meetings or other processes
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Use of QR codes for feedback and safety improvement suggestions
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Many of our business units have set objectives for key environmental aspects, such as lowering energy and water use, and eliminating hazardous substances.
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Human Capital; Diversity, Equity and Inclusion; Human
Rights and Supply Chain
As an equal opportunity employer‚
we are committed to a diverse workforce.
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We have strengthened our diversity, equity and inclusion (DE&I) programs to include a DEI Council, proactive training, affinity groups and an increased focus in recruiting and talent development.
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We conduct an annual global associate engagement survey to gather associate feedback. We share the survey results with all associates, and managers conduct formal focus groups and discussions with their teams to implement action plans to address key areas for improvement.
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We have publicly stated our commitment to respecting human rights across all of our business operations in accordance with the Universal Declaration of Human Rights, the UN Guiding Principles on Business and Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work.
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Without
limiting the foregoing, we do not utilize or permit:
Child
labor,
Forced
labor, or
Other
abusive or unsafe working conditions.
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To further emphasize our commitment to human rights, we recently adopted a Global Human Rights Policy, which is available on our website at www.colfaxcorp.com on the Investors page under the Corporate Governance tab.
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- 2021 Proxy Statement
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9
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Auditor Ratification (page 24)
We ask our stockholders to approve the selection of Ernst &
Young LLP as our independent registered public accounting firm for the year ending December 31, 2021. Below is summary information
about fees paid to Ernst & Young LLP for services provided in 2020 and 2019:
Fee
Category (fees in thousands)
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2020
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2019
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Audit Fees
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$
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5,575
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$
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7,417
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Audit-Related Fees
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—
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1,628
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Tax Fees
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646
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1,023
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All Other Fees
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4
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4
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TOTAL
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$
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6,225
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$
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10,072
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Executive Compensation (page 27)
We strive to create a compensation program for our associates,
including our executives, that provides a compelling and engaging opportunity to attract, retain and motivate the best talent.
We believe this results in performance-driven leadership that is aligned to achieve our financial and strategic objectives with
the intention to deliver superior long-term returns to our stockholders. Our compensation program includes the following key features:
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We link rewards to performance and foster a team-based approach by setting clear objectives that, if achieved, we believe will contribute to our overall success;
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We emphasize long-term stockholder value creation by using stock options and performance-based restricted stock units, in combination with a stock ownership policy, to deliver long-term compensation incentives while minimizing risk-taking behaviors that could negatively affect long-term results;
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We set Annual Incentive Plan operational and financial performance targets based on the results of our Board’s strategic planning process and corporate budget, and provide payouts that vary significantly from year-to-year based on the achievement of those targets; and
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We believe the design of our overall compensation program, as well as our internal controls and policies, serve to limit excessive risk-taking behavior, as described further on page 37.
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Say-on-Pay: Advisory Vote to Approve the Compensation of
our Named Executive Officers (page 53)
We are asking our stockholders to approve on an advisory basis
the compensation of our named executive officers. We believe our compensation programs and practices are appropriate and effective
in implementing our compensation philosophy, and our focus remains on linking compensation to performance while aligning the interests
of management with those of our stockholders.
Proxy Statement for Annual Meeting of
Stockholders
2021 Annual Meeting
We are furnishing this Proxy Statement (the “Proxy Statement”)
in connection with the solicitation by the Board of Directors (the “Board”) of Colfax Corporation (hereinafter, “Colfax,”
“we,” “us” and the “Company”) of proxies for use at the 2021 Annual Meeting of Stockholders
(the “Annual Meeting”) to be held on Wednesday, May 12, 2021, at 3:00 p.m. Eastern Time, and at any adjournments or
postponements thereof. The Board has made this Proxy Statement and the accompanying Notice of Annual Meeting available on the Internet.
We first made these materials available to the Company’s stockholders entitled to vote at the Annual Meeting on or about
April 1, 2021.
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- 2021 Proxy Statement
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10
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About Colfax Corporation
Colfax Corporation is a leading diversified technology company
that provides fabrication technology and medical technology products and services to customers around the world, principally under
the ESAB and DJO brands. We have been built through a series of acquisitions and organic growth. We seek to build an enduring premier
global enterprise by applying the Colfax Business System (“CBS”) to continuously improve our company and pursue growth
in revenues and improvements in profit and cash flow.
In January 2012, we completed the acquisition of Charter International
plc, which transformed Colfax from its historical roots as a fluid handling business into a diversified industrial enterprise with
additional growth platforms in the fragmented fabrication technology sector and air & gas handling products. We strengthened
and expanded our fluid handling and air & gas handling operations through acquisitions and the application of CBS before
divesting these platforms in December 2017 and September 2019, respectively. The sales of these businesses were part of a strategic
transformation of our portfolio to create a faster-growing, less cyclical and higher-margin company with more predictable cash
flows.
As part of this transformation, in February 2019, we acquired
DJO Global, Inc. (“DJO”), a global developer, manufacturer and distributor of high-quality medical devices with a broad
range of products used for orthopedic bracing, reconstructive implants, rehabilitation, pain management and physical therapy. DJO
products address the high-margin orthopedic continuum of patient care from injury prevention to rehabilitation from injury or degenerative
disease, enabling people to regain or maintain their natural motion.
Our business management system, CBS, is integral to our operations.
CBS consists of a comprehensive set of values, behaviors, processes and tools that are designed to drive continuous improvement
and create superior value for our customers, shareholders and associates. Rooted in our core values, CBS is our culture. We believe
that our management team’s access to, and experience in, the application of the CBS methodology is one of our primary competitive
strengths. We have used CBS to accelerate our growth and improve business performance.
We believe our disciplined acquisition program is a strength.
Since 2015, we have completed 20 acquisitions to strengthen and accelerate the growth of our businesses. As discussed in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2020 we completed five acquisitions and three other investments
within our medical technology segment during 2020.
We currently report our operations through our fabrication technology
and medical technology segments. These businesses operate in distinct markets, with unique business opportunities and investment
requirements. On March 4, 2021, we announced the intention to separate these businesses into two differentiated, independent publicly
traded companies (the “Separation”).
We expect that the Separation will allow each company to, among
other things: (1) optimize capital allocation for internal investment, M&A and return of capital to shareholders; (2)
tailor investment to its specific business profile and strategic priorities in the most efficient manner possible; (3) increase
operating flexibility and resources to capitalize on growth opportunities in its respective markets; and (4) improve both investor
alignment with its clear value proposition and the ability for investors to value it based on its distinct strategic, operational
and financial characteristics. Completion of the Separation is subject to, among other things, completion of financing and other
transactions on satisfactory terms, other steps necessary to qualify the separation as a tax-free transaction, receipt of other
regulatory approvals and final approval from our Board of Directors. Details of the separation will be included in future filings
with the SEC. There can be no assurance regarding the form and timing of the Separation or its completion.
Our principal executive office is located at 420 National Business
Parkway, 5th Floor, Annapolis Junction, MD, 20701. Our telephone number is (301) 323-9000 and our website is located
at www.colfaxcorp.com. Our common stock trades on the New York Stock Exchange (NYSE) under the symbol CFX.
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- 2021 Proxy Statement
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11
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Proposal
1 Election of Directors
Eleven director nominees will be elected at the Annual Meeting,
each to serve until the next annual meeting of the Company and until his or her successor is duly elected and qualified. At the
recommendation of the Nominating and Corporate Governance Committee, the Board has nominated the following persons to serve as
directors for the term beginning at the Annual Meeting on May 12, 2021: Mitchell P. Rales, Matthew L. Trerotola, Patrick W. Allender,
Thomas S. Gayner, Rhonda L. Jordan, Liam J. Kelly, Philip A. Okala, A. Clayton Perfall, Didier Teirlinck, Rajiv Vinnakota, and
Sharon Wienbar. All nominees are currently serving on the Board.
Director Qualifications
Nominating Committee Criteria for Board Members
The Nominating and Corporate Governance Committee considers, among
other things, the following criteria in selecting and reviewing director nominees:
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personal and professional integrity;
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skills, business experience and industry knowledge useful to the oversight of the Company based on the perceived needs of the Company and the Board at any given time;
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the ability and willingness to devote the required amount of time to the Company’s affairs, including attendance at Board and committee meetings;
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the interest, capacity and willingness to serve the long-term interests of the Company and its stockholders; and
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the lack of any personal or professional relationships that would adversely affect a candidate’s ability to serve the best interests of the Company and its stockholders.
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Pursuant to its charter, the Nominating and Corporate Governance
Committee also reviews, among other qualifications, the perspective, broad business judgment and leadership, business creativity
and vision, and diversity of potential directors, all in the context of the needs of the Board at that time. We believe that Board
membership should reflect diversity in its broadest sense, including persons diverse in geography, gender, and ethnicity, and we
seek independent directors who represent a mix of backgrounds and experiences that will enhance the quality of the Board’s
deliberations and decisions.
The charter of the Nominating and Corporate Governance Committee
affirmatively recognizes diversity as one of the criteria for consideration in the selection of director nominees, and in its deliberations
and discussions concerning potential director appointments the Nominating and Corporate Governance Committee has paid particular
attention to diversity together with all other qualifying attributes. The Nominating and Corporate Governance Committee is committed
to actively seeking out highly qualified women and minority director candidates, as well as candidates with diverse backgrounds,
experiences and skills, as part of each director search that our Company undertakes. In addition, the Nominating and Corporate
Governance Committee annually considers its effectiveness in achieving these objectives as a part of its assessment of the overall
composition of the Board and as part of the annual Board evaluation process described further below, which includes a director
skills matrix to identify areas of director knowledge and experience that may benefit the Board in the future. That information
is used as a part of the director search and nomination process. The Nominating and Corporate Governance Committee looks for candidates
with the expertise, skills, knowledge and experience that, when taken together with that of other members of the Board, will lead
to a Board that is effective, collegial and responsive to the needs of the Company. As further discussed below, certain members
of our Board have experience with the business systems that are an integral part of our Company culture. In addition, we feel that
the familiarity of certain Board members with our business system from their work experiences at Danaher Corporation and at our
Company, combined with strong input from varied and sophisticated business backgrounds, provides us with a Board that is both functional
and collegial while able to draw on a broad range of expertise in the consideration of complex issues.
Board Member Service
The biographies of each of the nominees below contain information
regarding the experiences, qualifications, attributes or skills that the Nominating and Corporate Governance Committee and the
Board considered in determining that the person should serve as a director of the Company. The Board has been informed that all
of the nominees listed below are willing to serve as directors, but if any of them should decline or be unable to act as a director,
the individuals named in the proxies may vote for a substitute designated by the Board. The Company has no reason to believe that
any nominee will be unable or unwilling to serve.
In determining to nominate Mr. Gayner for re-election, the Nominating
and Corporate Governance Committee and the Board carefully evaluated and took into account that Mr. Gayner serves as an executive
officer at Markel Corporation and serves on the boards of Markel Corporation, Graham Holdings Co. and Cable One Inc. (which was
a wholly-owned subsidiary of Graham Holdings until July 2015). The Nominating and Corporate Governance Committee determined, and
the Board concurred, that Mr. Gayner is a valuable, productive and fully engaged director who should be re-elected to the Board.
In reaching this conclusion, the Nominating and Corporate Governance Committee took note of Mr. Gayner’s valuable role on
the Board and stellar attendance record. As a result of his experience as an executive officer at Markel Corporation, Mr. Gayner
provides the Board with substantial knowledge regarding business operations
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strategy, as well as valuable financial and investment expertise.
Moreover, Mr. Gayner has continued to be an active participant in all Colfax Board matters and is well-prepared for Board and Committee
meetings, and played an important role in the Audit Committee’s discussions and decision-making regarding Colfax’s
acquisition of DJO and sale of the Air & Gas Handling business and is expected to provide valuable insight in connection
with the Separation. Based on these factors, Mr. Gayner was unanimously recommended and re-nominated for election to our Board
of Directors.
Nominees for Director
The names of the nominees for director, their ages as of April
1, 2021, principal occupations, employment and other public company board service during at least the last five years, periods
of service as a director of the Company, and the experiences, qualifications, attributes and skills of each nominee are set forth
below:
MITCHELL
P. RALES
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Age 64
Director since: 1995
CHAIRMAN OF THE BOARD
Committees:
• None
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Mitchell
P. Rales is a co-founder of Colfax and has served as a director of the Company since its founding in 1995. He is the Chairman
of our Board of Directors. Mr. Rales is a co-founder and has served as a member of the board of directors of Danaher Corporation,
a global science and technology company, since 1983 and as Chairman of Danaher’s Executive Committee since 1984, and
is also a member of the Fortive Corporation board of directors, which is a diversified industrial growth company that was
spun-off from Danaher in 2016. He has been a principal in a number of private business entities with interests in manufacturing
companies and publicly traded securities for over 25 years. Mr. Rales was instrumental in the founding of our Company and
has played a key leadership role on our Board since that time. He helped create the Danaher Business System, on which the
Colfax Business System is modeled, and has provided critical strategic guidance to the Company during its development and
growth. In addition, as a result of Mr. Rales’ substantial ownership stake in our Company, he is well-positioned to
understand, articulate and advocate for the rights and interests of the Company’s stockholders.
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MATTHEW
L. TREROTOLA
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Age 53
Director since: 2015
Committees:
• None
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Matthew
L. Trerotola has been our President and Chief Executive Officer and has served as a director of the Company since July
2015. Prior to joining Colfax, Mr. Trerotola was an Executive Vice President and a member of DuPont’s Office of the
Chief Executive, responsible for DuPont’s Electronics & Communications and Safety & Protection segments.
Mr. Trerotola also had corporate responsibility for DuPont’s Asia-Pacific business. Many of Mr. Trerotola’s roles
at DuPont involved applying innovation to improve margins and accelerate organic growth in global businesses. Prior to rejoining
DuPont in 2013, Mr. Trerotola had served in leadership roles at Danaher since 2007, and was most recently Vice President and
Group Executive for Life Sciences. Previously, Mr. Trerotola was Group Executive for Product Identification from 2009 to 2012,
and President of the Videojet business from 2007 to 2009. While at McKinsey & Company from 1995 to 1999, Mr. Trerotola
focused primarily on helping industrial companies accelerate growth. Mr. Trerotola’s day-to-day leadership of Colfax,
combined with his significant international business experience and familiarity with the Danaher Business System, gives the
Board an invaluable Company-focused perspective supplemented by his global operational expertise.
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PATRICK
W. ALLENDER
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Age 74
Director since: 2008
INDEPENDENT
Committees:
• Audit
• Nominating and Corporate Governance (Chair)
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Patrick
W. Allender has served as a director of the Company since May 13, 2008. He is the former Executive Vice President and
Chief Financial Officer of Danaher Corporation, where he served from 1987 until his retirement in 2007. Prior to joining Danaher,
Mr. Allender was an audit partner with a large international accounting firm. Mr. Allender is a director of Brady Corporation,
where he is a member of the audit and corporate governance committees and the chairman of the finance committee. Mr. Allender’s
prior experience as the Chief Financial Officer of a publicly traded company provides him with substantial expertise in financial
reporting and risk management. In addition, his familiarity with the Danaher Business System provides targeted insight on
the nature of the Company’s operations to the Board.
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THOMAS
S. GAYNER
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Age 59
Director since: 2008
INDEPENDENT
Committees:
• Audit
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Thomas
S. Gayner has served as a director of the Company since May 13, 2008. He is Co-Chief Executive Officer of Markel Corporation,
a financial holding company whose principal business markets and underwrites specialty insurance products. Since 1990, Mr.
Gayner has served as President of Markel Gayner Asset Management, Inc. Mr. Gayner has served as a director of Markel Corporation
since August 2016 and previously served on the Markel Corporation board from 1998 to 2003. Mr. Gayner also currently serves
on the board of directors of Graham Holdings Company and Cable One, Inc., as well as a director of The Davis Series Funds.
Through his experience and investment knowledge with the Markel Corporation as well as his service on the boards and committees
of other publicly traded companies, Mr. Gayner brings extensive leadership, financial acumen and public company expertise
to our Board.
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RHONDA
L. JORDAN
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Age 63
Director since: 2009
INDEPENDENT
Committees:
• Nominating and Corporate Governance
• Compensation (Chair)
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Rhonda
L. Jordan has served as a director of the Company since February 17, 2009. She served as President, Global Health &
Wellness, and Sustainability for Kraft Foods Inc. until 2012 and in that role led the development of Kraft’s health &
wellness and sustainability strategies and plans for the company, including marketing, product development, technology, alliances
and acquisitions. Prior to being named President, Health & Wellness in 2010, she was the President of the Cheese
and Dairy business unit of Kraft. From 2006 to 2008 she served as the President of the Grocery business unit of Kraft and
from 2004 to 2005 she was the Senior Vice President, Global Marketing of Kraft Cheese and Dairy. Ms. Jordan is a director
of Ingredion Incorporated, where she is chair of the compensation committee, and the private companies Bush Brothers &
Company and G&L Holdings. Ms. Jordan’s management and operations experience within a large, global corporation gives
her an important strategic voice in Board deliberations, and her knowledge and decision making with respect to business unit
development and sustainable top-line performance makes her a valued member of our Board.
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LIAM
J. KELLY
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Age 54
Director since: 2020
INDEPENDENT
Committees:
• Nominating and Corporate Governance
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Liam
J. Kelly has served as a director of the Company since January 1, 2020. Mr. Kelly has served as the Chairman, President
and Chief Executive Officer of Teleflex Incorporated, a global provider of medical technology products, since May 1, 2020.
Prior to that Mr. Kelly held the office of President and Chief Executive Officer since January 1, 2018. Since joining
Teleflex in 2009, Mr. Kelly has held a variety of senior leadership roles. From May 2016 to December 2017, Mr. Kelly served
as Teleflex’s President and Chief Operating Officer and from April 2015 to April 2016, he served as Executive Vice President
and Chief Operating Officer. Prior to joining Teleflex, Mr. Kelly held various senior level positions with Hill-Rom Holdings,
Inc., a medical device company, from October 2002 to April 2009, serving as its Vice President of International Marketing
and R&D from August 2006 to February 2009. As a result of his significant experience in the medical technology industry,
Mr. Kelly brings a valuable perspective to our Board, particularly in light of our acquisition of DJO.
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PHILIP
A. OKALA
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Age 52
Director since: 2021
INDEPENDENT
Committees:
• Compensation
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Philip
A. Okala has served as a director of the Company since February 22, 2021. Mr. Okala has served as the Chief Operating
Officer of the University of Pennsylvania Health Systems, a network of leading hospitals and associated care facilities serving
Philadelphia County and the surrounding area, since 2017. Prior to this role, Mr. Okala held various positions with Penn Medicine
since 2007, including serving as Senior Vice President for Business Development from 2013 to 2017. Before joining Penn Medicine,
Mr. Okala held various positions with other healthcare organizations including System Vice President of the Cancer Service
Line at Geisinger Health System, Vice President for Clinical Strategic Planning at Roswell Park Cancer Institute and management
positions at the University of Texas MD Anderson Cancer Center. He is a Fellow in the American College of Healthcare Executives
(FACHE) and currently serves on the boards of the Hospital and Healthsystem Association of Pennsylvania, Holy Child School
at Rosemont and Vizient Mid-Atlantic Region. Mr. Okala’s experience as a hospital executive who has led major health
system initiatives for strategic marketing positioning, overseen the expansion of clinical service lines and facilitated the
growth of the Penn Medicine health system, including through successful mergers and strategic alliances, brings an important
perspective to our Board.
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A.
CLAYTON PERFALL
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Age 62
Director since: 2010
INDEPENDENT
Committees:
• Audit (Chair)
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A.
Clayton Perfall has served as a director of the Company since September 21, 2010. He is currently an Operating Executive
of Tailwind Capital, a private equity fund manager focused on growing middle market companies in the Healthcare, Technology,
Business Services and Industrial services sectors. He previously served as the Chairman and Chief Executive Officer of Archway
Marketing Services, Inc., a provider of marketing logistics and fulfillment services, from 2008 through 2013. From 2001 until
2008 Mr. Perfall served as the Chief Executive Officer and as a member of the board of directors of AHL Services, Inc. Mr.
Perfall also served as the Chief Executive Officer of Union Street Acquisition Corp. from 2006 until 2008. He served as the
Chief Financial Officer of Snyder Communications, Inc. from 1996 until 2000 and was previously a partner with a large international
accounting firm. Mr. Perfall currently serves on the board of directors of the private company Distinct Holdings Group, LLC
and previously served on the boards of directors of Comstock Holding Companies, Inc. from 2004 to 2018, Tailwind Premier Holdings,
LLC from 2015 until 2019, Archway Marketing Services, Inc. from 2008 until 2013, RT Acquisition Corp. from 2012 until 2015
and inVentiv Health, Inc. from 1999 to 2010. He served as the audit committee chairman for Comstock Holding Companies, Inc.
and InVentiv Health during his time on those boards. Mr. Perfall’s significant financial expertise and experience as
an audit committee chairman and public company Chief Financial Officer, combined with his substantial executive leadership
background, are assets to both our Board and our Audit Committee.
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DIDIER
TEIRLINCK
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Age 64
Director since: 2017
INDEPENDENT
Committees:
• Audit
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Didier Teirlinck has served as a director of the Company
since September 18, 2017. He retired from Ingersoll Rand, a diversified industrial manufacturing company, in September 2018.
He has been a strategic advisor to the CEO of Ingersoll Rand since 2017, and previously served from November 2013 as executive
vice president for Ingersoll Rand’s Climate segment, overseeing climate businesses around the world and enhancing competitive
position and market share. After joining Ingersoll Rand in 2005, Mr. Teirlinck served as president of Climate Control in Europe
before becoming President of the global Climate Solutions sector in 2009. Before joining Ingersoll Rand, he was President
of Volvo Construction Equipment’s Compact Business Line worldwide and was previously general manager of DANISCO Flexible
Group for southern Europe. Mr. Teirlinck’s international operating history and wealth of knowledge in the climate sector
brings key geographic and market experience to our Board.
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RAJIV
VINNAKOTA
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Age 50
Director since: 2008
INDEPENDENT
Committees:
• Nominating
and Corporate Governance
• Compensation
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Rajiv Vinnakota has served as a director of the Company since May
13, 2008. Since July 2019, he has served as President of the Institute for Citizens & Scholars (formerly the Woodrow
Wilson National Fellowship Foundation), a 75 year-old non-profit organization that has played a significant role in shaping
higher education. With an expanded mission, Citizens & Scholars is now rebuilding how we develop citizens in our
country. From 2015 to September 2018 he was an Executive Vice-President at the Aspen Institute, leading a division focused
on youth and engagement. Prior to this role, Mr. Vinnakota was the Co-Founder and Chief Executive Officer of The SEED Foundation,
a non-profit educational organization, at which he served from 1997 to 2015. Mr. Vinnakota was the chairman of The SEED Foundation
board from 1997 until 2006. Prior to co-founding SEED, Mr. Vinnakota was an associate at Mercer Management Consulting. He
was also a trustee of Princeton University from 2004 until 2007 and a member of the Executive Committee of the Princeton University
board of directors from 2006 to 2007, and he served as the national chairman of Annual Giving at Princeton from 2007 until
2009. Mr. Vinnakota’s management experience, combined with his experience in the non-profit sector, brings a valuable
perspective to our Board.
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SHARON
WIENBAR
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Age 59
Director
since: 2016
INDEPENDENT
Committees:
• Compensation
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Sharon Wienbar has served as a director of the Company since June
15, 2016. She was previously with Scale Venture Partners, a venture capital firm, from 2001 to 2018, where she led investments
in technology companies and served on the board of numerous portfolio businesses. She was also a strategy consultant to Capella
Education Company after it acquired Hackbright Academy, a leading software engineering training company for women, where she
was the CEO from 2015 to 2016. Ms. Wienbar currently serves on the boards of Resideo Technology, a New York Stock Exchange-listed
public company, Covetrus, Inc. a Nasdaq-listed public company, and True Anthem, a privately held software provider. She previously
served on other public and private boards, including the board of Everyday Health, Inc., a New York Stock Exchange-listed
public company, until its acquisition in December 2016. Prior to her venture capital career, Ms. Wienbar was an executive
in several software companies and a consultant at Bain & Company. Ms. Wienbar’s leadership of technology investments,
deep understanding of innovation drivers, and business acumen bring an important perspective to our Board.
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Vote Required
The affirmative vote of the holders of a majority of the votes
cast is required for election of each director.
Board Recommendation
The
Board unanimously recommends that stockholders vote “FOR” the
election of each of the nominees for director listed above.
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CORPORATE GOVERNANCE
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Director Independence
Our Corporate Governance Guidelines require that a majority of
our Board members be “independent” under the NYSE’s listing standards. In addition, the respective charters of
the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee require that each member of these
committees be “independent” under the NYSE’s listing standards and, with respect to the Audit Committee, under
the applicable SEC rules. In order for a director to qualify as “independent,” our Board must affirmatively determine
that the director has no material relationship with the Company that would impair the director’s independence. Our Board
undertook its annual review of director independence in February 2021. The Board has determined that Mr. Allender, Mr. Gayner,
Ms. Jordan, Mr. Kelly, Mr. Okala, Mr. Perfall, Mr. Teirlinck, Mr. Vinnakota, and Ms. Wienbar each qualify as “independent”
under the NYSE’s listing standards. In reaching a determination on these directors’ independence, the Board considered
that during fiscal 2020, Mr. Kelly was the chief executive officer of Teleflex, which does business with Colfax. The amount received
by Colfax or Teleflex in each of the last three fiscal years did not exceed the greater of $1 million or 1% of either Colfax’s
or Teleflex’s consolidated gross revenues. In addition, the Board considered that during fiscal 2020, Mr. Okala was the chief
operating officer of The University of Pennsylvania Health Systems, which does business with Colfax. The amount received by Colfax
or The University of Pennsylvania Health Systems in each of the last three fiscal years did not exceed the greater of $1 million
or 1% of either Colfax’s or The University of Pennsylvania Health Systems’ consolidated gross revenues. None of the
other independent directors nor their immediate family members have within the past three years had any direct or indirect business
or professional relationships with the Company other than in their capacity as directors.
The independent members of our Board must hold at least two “executive
session” meetings each year without the presence of management. If the Chair of the Board is not an independent director,
the independent directors select an independent director to serve as Chairperson for each executive session. In general, the meetings
of independent directors are intended to be used as a forum to discuss such topics as they deem necessary or appropriate. Mr. Allender
serves as the presiding director of the independent director executive sessions and as such leads the independent directors during
these sessions.
Board of Directors and its Committees
The Board and its committees meet regularly throughout the year,
and may also hold special meetings and act by written consent from time to time. The Board held a total of seven meetings during
the year ended December 31, 2020. During 2020, all of our directors attended all Board meetings and meetings of the committees
of the Board on which such directors served (during the periods that he or she served). Our Corporate Governance Guidelines request
Board members to make every effort to attend our annual meeting of stockholders. Nine out of our ten directors then serving attended
our annual meeting of stockholders in 2020.
The Board has a standing Audit Committee, Compensation Committee,
and Nominating and Corporate Governance Committee. The charters for the Audit Committee, Compensation Committee, and Nominating
and Corporate Governance Committee are available on the Company’s website at www.colfaxcorp.com on the Investors page under
the Corporate Governance tab. These materials also are available in print to any stockholder upon request to: Corporate Secretary,
Colfax Corporation, 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701. The Board committees
review their respective charters on an annual basis. The Nominating and Corporate Governance Committee oversees an annual evaluation
of the Board and each committee’s operations and performance.
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Name
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Audit
Committee
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Nominating and Corporate
Governance Committee
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Compensation
Committee
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Mitchell P. Rales
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Matthew L. Trerotola
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Patrick W. Allender
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Thomas S. Gayner
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Rhonda L. Jordan
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Liam J. Kelly
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Philip A. Okala
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A. Clayton Perfall
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Didier Teirlinck
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Rajiv Vinnakota
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Sharon Wienbar
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Chair
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Member
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Audit Committee
Our Audit Committee met 11 times during the year ended December
31, 2020. The Audit Committee is responsible, among its other duties and responsibilities, for overseeing our accounting and financial
reporting processes, the audits of our financial statements, the qualifications of our independent registered public accounting
firm, and the performance of our internal audit function and independent registered public accounting firm. The Audit Committee
reviews and assesses the qualitative aspects of our financial reporting, our processes to manage business and financial risks,
and our compliance with significant applicable legal, ethical and regulatory requirements. The Audit Committee is directly responsible
for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The members of
our Audit Committee are Mr. Perfall, Chair, Mr. Allender, Mr. Gayner, and Mr. Teirlinck. The Board has determined that each of
Mr. Perfall and Mr. Allender qualify as an “audit committee financial expert,” as that term is defined under the SEC
rules. The Board has determined that each member of our Audit Committee is independent and financially literate under the NYSE’s
listing standards and that each member of our Audit Committee is independent under the standards of Rule 10A-3 under the Securities
Exchange Act of 1934 (the “Exchange Act”).
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee met five times
during the year ended December 31, 2020. The Nominating and Corporate Governance Committee is responsible for recommending candidates
for election to the Board. In making its recommendations, the committee will review a candidate’s qualifications and any
potential conflicts of interest and assess contributions of current directors in connection with his or her renomination. The committee
is also responsible, among its other duties and responsibilities, for making recommendations to the Board or otherwise acting with
respect to corporate governance policies and practices, including Board size and membership qualifications, new director orientation,
committee structure and membership, related person transactions, and communications with stockholders and other interested parties.
The Nominating and Corporate Governance Committee is also responsible for reviewing the Company’s undertakings with respect
to environmental, social, and governance matters, including the Company’s role as a corporate citizen and the Company’s
policies and programs relating to health, safety and sustainability matters. The members of our Nominating and Corporate Governance
Committee are Mr. Allender, Chair, Ms. Jordan, Mr. Kelly and Mr. Vinnakota. The Board has determined that each member of our Nominating
and Corporate Governance Committee is independent under the NYSE’s listing standards.
Compensation Committee
Our Compensation Committee met six times during the year ended
December 31, 2020. The Compensation Committee is responsible, among its other duties and responsibilities, for determining and
approving the compensation and benefits of our Chief Executive Officer and other executive officers, monitoring compensation arrangements
applicable to our Chief Executive Officer and other executive officers in light of their performance, effectiveness and other relevant
considerations and adopting and administering our equity and incentive plans. The members of our Compensation Committee are Ms.
Jordan, Chair, Mr. Vinnakota, Ms. Wienbar and Mr. Okala, who was appointed to the Compensation Committee effective March 3, 2021.
The
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Board has determined that each member of our Compensation Committee
is a “non-employee director” within the meaning of SEC Rule 16b-3, and is independent under the NYSE’s listing
standards for directors and compensation committee members.
The Compensation Committee annually reviews and approves the corporate
goals and objectives relevant to the compensation of our Chief Executive Officer, evaluates his performance in light of those goals
and objectives, and determines his compensation level based on that analysis. The Compensation Committee also annually reviews
and approves all elements of the compensation of our other executive officers. Our Chief Executive Officer plays a significant
role in developing and assessing achievement against the goals and objectives for other executive officers and makes compensation
recommendations to the Compensation Committee based on these evaluations. The Compensation Committee also administers all of the
Company’s management incentive compensation plans and equity-based compensation plans. The Compensation Committee makes recommendations
to the Board regarding compensation of all executive officer hires, all elements of director compensation, and the adoption of
certain amendments to incentive or equity-based compensation plans. The Compensation Committee also assists the Board in its oversight
of risk related to the Company’s compensation policies and practices applicable to all Colfax associates. Additionally, the
Compensation Committee periodically reviews the Company’s strategies and policies related to human capital management, including
with respect to matters such as diversity, inclusion, pay equity, corporate culture, talent development and retention. For further
information on our compensation practices, including a description of our processes and procedures for determining compensation,
the scope of the Compensation Committee’s authority and management’s role in compensation determinations, please see
the Compensation Discussion and Analysis section of this Proxy Statement, which begins on page 27.
Since April 2009, our Compensation Committee has engaged Frederic
W. Cook & Co. as its independent compensation consultant to, among other things, formulate an appropriate peer group to
be used by the Compensation Committee and to provide competitive comparison data and for other compensation consulting services
as requested by the Compensation Committee. Additional information on the nature of the information and services provided by this
independent compensation consultant can be found below in the Compensation Discussion and Analysis.
Compensation Committee Interlocks and
Insider Participation
No member of the Compensation Committee is or has ever been an
officer or an employee of the Company or any of its subsidiaries, and no Compensation Committee member has any interlocking or
insider relationship with the Company which is required to be reported under the rules of the SEC.
Identification of Director Candidates
and Director Nomination Process
The Nominating and Corporate Governance Committee considers candidates
for Board membership suggested by its members and other Board members, as well as by management and stockholders. The Nominating
and Corporate Governance Committee may also use outside consultants to assist in identifying candidates and during 2020 used third-party
recruiters to identify and provide background information on possible candidates. Mr. Okala was first recommended to the Nominating
and Corporate Governance Committee by Mr. Kelly. The Nominating and Corporate Governance Committee is responsible for assessing
whether a candidate may qualify as an independent director. Each possible candidate is discussed and evaluated in detail before
being recommended to the Board. The Nominating and Corporate Governance Committee utilizes the same criteria for evaluating candidates
regardless of the source of the referral.
The Nominating and Corporate Governance Committee recommends,
and the Board nominates, candidates to stand for election as directors. Stockholders may nominate persons to be elected as directors
and, as noted above, may suggest candidates for consideration by the Nominating and Corporate Governance Committee. If a stockholder
wishes to suggest a person to the Nominating and Corporate Governance Committee for consideration as a director candidate, he or
she must provide the same information as required of a stockholder who intends to nominate a director pursuant to the procedures
contained in Section 3.3 of our Bylaws, in accordance with the same deadlines applicable to director nominations, as described
below under “General Matters—Stockholder Proposals and Nominations.”
Board Leadership Structure
Our Corporate Governance Guidelines
specify that the positions of Chairman of the Board and Chief Executive Officer shall be held by separate persons. We believe
that this structure is appropriate given the differences between the two roles in our current management structure. Our Chief
Executive Officer, among other duties, is responsible for setting the strategic direction for the Company and the day-to-day
leadership and performance of the Company, while the Chairman of our Board, among other responsibilities, provides guidance
to the Chief Executive Officer, takes an active role in setting the agenda for Board meetings and presides over meetings of
the full Board. Our current Chairman, Mr. Rales, is not an independent director and, as noted above in “Director
Independence,” Mr. Allender serves as the presiding director for independent director executive sessions and as such
leads the independent directors during these sessions.
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Board Evaluation Process
The Board and its committees conduct self-assessments annually
at their February meetings. The Chair of the Nominating and Corporate Governance Committee oversees the process. The annual evaluation
procedure is summarized below.
Action and Timeframe
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Description
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Preparation – November/December
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Each director receives draft materials for the annual evaluation of (i) the Board’s performance and (ii) the performance of his or her committee(s). The materials include the Board and committee self-assessment questionnaires. In advance of the assessment, questions are revised and supplemented based on the input received from the Board members and, prior to distribution, the Chair of the Nominating and Corporate Governance Committee leads a final review in the December Board and committee meetings.
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Assessment – December/January
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Each director is asked to consider a list of questions to assist with the evaluation of the Board and its committees, covering topics such as Board composition, the conduct and effectiveness of meetings, quality of discussions, roles and responsibilities, quality and quantity of information provided, and other opportunities for improvement.
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Review and Discussion – February
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The Board and its committees receive a report summarizing the annual evaluations as well as a year-over-year comparison. The reports are distributed for consideration in advance of and discussed at the February Board meeting. The committee chairs report to the Board on their respective committee evaluations, noting any actionable items. Past evaluations have addressed a wide range of topics such as Board materials, director education and on-boarding, and allocation of meeting times.
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Actionable Items and Follow-Up – Ongoing
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The Board and committees address any actionable items throughout the year, including a mid-year check-in and end of year assessment against the actionable items identified in February.
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Board’s Role in Risk Oversight
The Board maintains responsibility for oversight of risks that
may affect the Company. The Board discharges this duty primarily through its standing committees and also considers risk in its
strategic planning for the Company and in its consideration of acquisitions. The Board engages in discussions about risk at each
quarterly meeting, where it receives reports from its committees, as applicable, about the risk oversight activities within their
respective areas of responsibility. Specifically, the Audit Committee (i) receives reports from and discusses with management,
our internal audit team, and our independent registered public accounting firm all major risk exposures (whether financial, operating
or otherwise), (ii) reviews the Company’s policies with respect to risk assessment and enterprise risk management, including
with respect to cybersecurity risks, and (iii) oversees compliance with legal and regulatory requirements and our ethics program,
including our Code of Business Conduct and Ethics. In addition, the Nominating and Corporate Governance Committee oversees the
corporate governance principles and governance structures that contribute to successful risk oversight and management. The Compensation
Committee oversees certain risks associated with compensation policies and practices, as discussed below.
The Audit, Nominating and Corporate Governance and Compensation
Committees each make full reports to the Board of Directors at each regularly scheduled meeting regarding each committee’s
considerations and actions, and risk considerations are presented to and discussed with the Board by management as part of strategic
planning sessions and when considering potential acquisitions.
Standards of Conduct
Corporate Governance Guidelines and Pledging
The Board has adopted Corporate Governance Guidelines, which set
forth a framework to assist the Board in the exercise of its responsibilities. The Corporate Governance Guidelines cover, among
other things, the composition and certain functions of the Board and its committees, executive sessions, Board responsibilities,
expectations for directors, director orientation and continuing education, and our policy prohibiting pledging.
In February 2014, the Board amended the Corporate Governance Guidelines
to prohibit any future pledging of Colfax’s common stock as security under any obligation by our directors and executive
officers. The Board excepted from the policy shares of Colfax common stock that were already pledged at the time the policy was
adopted, but any additional share pledges are prohibited. Pledged shares of Colfax common stock do not count toward our stock ownership
requirements.
Certain shares of common stock owned by Mitchell Rales, Chairman
of our Board, that were pledged at the time that the policy was adopted were grandfathered from the policy. Notwithstanding that
the existing pledge was grandfathered under our policy, as part of its risk oversight function the Audit Committee of the Board
reviews
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Mr. Rales’ share pledges on a quarterly basis to assess
whether such pledging poses an undue risk to the Company. In evaluating Mr. Rales’ pledge of Colfax shares, the Audit Committee
considered that Mr. Rales acquired these shares with his own funds in connection with founding the Company and did not receive
them as compensation from Colfax; that, as a founder of Colfax and dedicated long-term stockholder, he has (as with many institutional
stockholders) pledged a portion of his shares instead of selling shares for liquidity; and that Mr. Rales, as a founder or significant
investor in other public companies (including Danaher Corporation and Fortive Corporation), has significant personal assets. In
addition to taking into account the number of shares and percentage of outstanding shares pledged, the Audit Committee has also
considered the degree of overcollateralization (the amount by which the market value of the shares pledged as collateral exceeds
the amount of secured indebtedness), as the Committee believes this is a key factor in assessing the degree of risk posed by the
pledging arrangements. Based on its evaluation, the Committee has concluded that the existing pledge arrangements do not pose an
undue risk to the Company. The Audit Committee will continue to periodically review the shares pledged as part of its risk oversight
function.
Code of Business Conduct and Ethics
As part of our system of corporate governance, the Board has also
adopted a Code of Business Conduct and Ethics (the “Code of Ethics”), which was updated in 2019, that is applicable
to all directors, officers and employees of the Company. The Code of Ethics sets forth Company policies, expectations and procedures
on a number of topics, including but not limited to conflicts of interest, compliance with laws, rules and regulations (including
insider trading laws), honesty and ethical conduct, and quality. The Code of Ethics also sets forth procedures for reporting violations
of the Code of Ethics and investigations thereof. If the Board grants any waivers from our Code of Ethics to any of our directors
or executive officers, or if we amend our Code of Ethics, we will, if required, disclose these matters through our website within
four business days following such waiver or amendment.
Policies on Insider Trading, Hedging and Stock Ownership
The Company has a Policy on Insider Trading and Compliance which,
in addition to mandating compliance with insider trading laws, prohibits any director, officer or employee of the Company from
engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging and
monetization transactions, such as zero-cost collars, equity swaps, exchange funds and forward sale contracts, that allow the holder
to limit or eliminate the risk of a decrease in the value of the Company’s securities. Further, we have stock ownership policies
applicable to our directors and executives to promote alignment of interests between our stockholders, directors and management.
Where to Find Our Key Governance Policies
The Corporate Governance Guidelines and Code of Ethics are available
on the Company’s website at www.colfaxcorp.com on the Investors page under the Corporate Governance tab. These materials
also are available in print to any stockholder upon request to: Corporate Secretary, Colfax Corporation, 420 National Business
Parkway, 5th Floor, Annapolis Junction, Maryland 20701.
Certain Relationships and Related Person
Transactions
Policies and Procedures for Related Person Transactions
We have adopted a written Policy Regarding Related Person Transactions
pursuant to which our Nominating and Corporate Governance Committee or a majority of the disinterested members of our Board generally
must approve related person transactions in advance. The policy applies to any transaction or series of similar transactions involving
more than $120,000 in which the Company is a participant and in which a “related person” has a direct or indirect material
interest. “Related persons” include the Company’s directors, nominees for director, executive officers, and greater
than 5% stockholders, as well as the immediate family members of the foregoing. In approving or rejecting the proposed transaction,
our Nominating and Corporate Governance Committee takes into account, among other factors it deems appropriate, whether the proposed
related person transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the
same or similar circumstances, the extent of the person’s interest in the transaction and, if applicable, the impact on a
director’s independence. Under the policy, if we discover related person transactions that have not been approved, the Nominating
and Corporate Governance Committee is to be notified and will determine the appropriate action, including ratification, rescission
or amendment of the transaction.
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Related Person Transactions
Set forth below is a summary of certain transactions since January
1, 2020 in which (i) the Company was or is a participant, (ii) any of our directors, executive officers, beneficial owners of more
than 5% of our common stock, or the immediate family members of any of the foregoing had or will have a direct or indirect material
interest and (iii) the amount involved exceeds or will exceed $120,000:
Transactions with Fortive Corporation
Certain of our subsidiaries purchase products from and sell products
to Fortive Corporation (“Fortive”) from time to time in the ordinary course of business and on an arms’-length
basis. Such transactions are pre-approved under our Policy Regarding Related Person Transactions. In 2020, our subsidiaries purchased
approximately $150,437 of products from Fortive, which is less than 0.01% of our, and of Fortive’s, gross revenues for 2020.
Our subsidiaries intend to purchase products from and sell products to Fortive in the future in the ordinary course of their businesses
and on an arms’-length basis. Mitchell P. Rales and Steven M. Rales are each members of Fortive’s Board of Directors,
and both are the beneficial owners of at least 5% of Fortive’s outstanding common stock and our outstanding common stock.
Contacting the Board of Directors
The Board of Directors has established a process for stockholders
and interested parties to communicate with the Board and to report complaints or concerns relating to our accounting, internal
accounting controls or auditing matters. Stockholders and interested parties wishing to communicate with our Board may do so by
writing to any of the members of the Board, the Chairman of the Board, or the non-management members of the Board as a group, at:
Colfax Corporation
420 National Business Parkway, 5th Floor
Annapolis Junction, Maryland 20701
Attn: Corporate Secretary
Complaints or concerns relating to our accounting, internal accounting
controls or auditing matters will be referred to members of the Audit Committee. Other correspondence will be referred to the relevant
director or group of directors. Our Policy on Stockholder and Interested Party Communications with the Board of Directors (the
“Board Communications Policy”) requires that any stockholder communication to members of the Board prominently display
the legend “Board Communication” in order to indicate to the Corporate Secretary that it is communication subject to
our policy and will be received and processed by the Corporate Secretary’s office. Each communication received by the Corporate
Secretary is copied for our files and promptly forwarded to the addressee. In our Board Communications Policy, the Board has requested
that certain items not related to the Board’s duties and responsibilities be excluded from forwarded communications, such
as mass mailings and business advertisements. In addition, the Corporate Secretary is not required to forward any communication
that the Corporate Secretary, in good faith, determines to be frivolous, unduly hostile, threatening, illegal or similarly unsuitable.
However, the Corporate Secretary maintains a list of each communication subject to this policy that is not forwarded, and on a
quarterly basis delivers the list to the Chairman of the Board. In addition, each communication subject to this policy that is
not forwarded because it was determined by the Secretary to be frivolous, commercial advertising, irrelevant or similarly unsuitable
is nevertheless retained in our files and made available at the request of any member of the Board to whom such communication was
addressed.
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DIRECTOR COMPENSATION
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Our Board, at the recommendation of our Compensation Committee,
sets the compensation program for non-employee directors. The Compensation Committee reviews this program on an episodic basis
and recommends director compensation levels based on its evaluation of competitive levels for director compensation, utilizing
data drawn from our current list of peer companies and its reasoned business judgment. See “Role of Compensation Consultants
and Peer Data Review” on page 36. The compensation program was last revised in 2019.
Our non-employee Board members receive the following:
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an annual cash retainer of $85,000;
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an annual equity award valued at $130,000, calculated under the same valuation approach applied in determining our annual
equity grants as described in “Compensation Discussion and Analysis—Additional Compensation Information—Equity
Grant Practice,” and awarded in connection with our annual meeting of stockholders, which consists of 50% director restricted
stock units that vest after one year of service on the Board and 50% director stock options, which are fully vested upon grant
and exercisable for a seven-year term;
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■
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a $20,000 annual retainer for service as the Chair of our Audit Committee and a $15,000 annual retainer for service as
Chair of the Compensation Committee or of the Nominating and Corporate Governance Committee; and
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As part of the changes made in 2019, Directors no longer
receive an initial equity grant, but instead receive a pro-rated portion of the annual equity award.
Our non-executive Chairman of the Board is entitled to receive
an annual cash retainer of $1 and does not receive any other cash fees or the annual equity award described above.
The Board has also approved a stock ownership policy for
our directors. Each director is required to own shares of our common stock (including shares issuable upon exercise of stock options
and shares underlying restricted stock units) with a value equal to five times the annual cash retainer within five years of joining
the Board. All of our directors except for Mr. Kelly, who was appointed during 2020, and Mr. Okala, who was appointed in February
2021, have achieved these ownership targets as of the date of this Proxy Statement.
Further, our Board has adopted a policy prohibiting any director
(or executive officer) from pledging as security under any obligation any shares of Colfax common stock that he or she directly
or indirectly owns and controls (other than shares already pledged as of February 17, 2014), and providing that pledged shares
of Colfax common stock do not count toward our stock ownership requirements.
The Board has adopted a Director Deferred Compensation Plan
which permits non-employee directors to receive, at their discretion, deferred stock units (“DSUs”) in lieu of their
annual cash retainers and committee chairperson retainers. A director who elects to receive DSUs receives a number of units determined
by dividing the cash fees earned during, and deferred for, the quarter by the closing price of our common stock on the date of
the grant, which is the last trading day of the quarter. A non-employee director also may convert director restricted stock unit
grants to DSUs under the plan. DSUs granted to our directors convert to shares of our common stock after termination of service
from the Board, based upon a schedule elected by the director in advance. In the event that a director elects to receive DSUs,
the director will receive dividend equivalent rights on such DSUs to the extent dividends are issued on our common stock. Dividend
equivalents are deemed reinvested in additional DSUs (or fractions thereof) at the dividend payment date.
We also reimburse all directors for travel and other necessary
business expenses incurred in the performance of their services on our Board and the committees thereof and extend coverage to
them under our directors’ and officers’ indemnity insurance policies.
In light of the impact of the COVID-19 pandemic on our business
in 2020, the Compensation Committee recommended, and our Board approved, a 20% reduction to directors’ retainer fees during
the second quarter of 2020 and a 10% reduction to directors’ retainer fees in the third quarter of 2020 for all Board members.
The Compensation Committee recommended, and the Board approved, a reinstatement to 100% of the directors’ retainer fees during
the fourth quarter of 2020. The impact of such reductions is reflected in the table below.
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The following table sets forth information regarding compensation
paid to our non-employee directors during 2020:
DIRECTOR COMPENSATION FOR 2020
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Fees Earned or
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Stock
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Option
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Paid in Cash
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Awards
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Awards
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Total
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Name(1)
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($)
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($)
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(3)
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($)
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(5)
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($)
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Mitchell P. Rales
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1
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—
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—
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1
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Patrick W. Allender
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92,500
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(2)
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65,009
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(4)
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65,007
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222,516
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Thomas S. Gayner
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78,625
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(2)
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65,009
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(4)
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65,007
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208,641
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Rhonda L. Jordan
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92,500
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65,009
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(4)
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65,007
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222,516
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Liam J. Kelly
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78,625
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89,514
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89,512
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257,651
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A. Clayton Perfall
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97,125
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(2)
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65,009
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(4)
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65,007
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227,141
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Didier Teirlinck
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78,625
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(2)
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65,009
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(4)
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65,007
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208,641
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Rajiv Vinnakota
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78,625
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65,009
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65,007
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208,641
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Sharon Wienbar
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78,625
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(2)
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65,009
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(4)
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65,007
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208,641
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(1)
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Mr. Okala was appointed to our Board on February 21, 2021. Accordingly, he did not receive any compensation
for 2020.
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(2)
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Messrs. Allender, Gayner, Perfall and Teirlinck and Ms. Wienbar elected to receive DSUs in lieu of their annual cash retainers
and committee chairperson retainers. DSUs convert to shares of our common stock after termination of service from the Board,
based upon a schedule elected by the director in advance. During 2020, the amount of DSUs received in lieu of annual cash
retainers and committee chairperson retainers by these directors was as follows: Mr. Allender— 3,352, Mr. Gayner—
2,850, Mr. Perfall— 3,520, Mr. Teirlinck— 2,850 and Ms. Wienbar— 2,850. DSUs received for these cash retainers
are considered “vested” and thus are not reflected in the table below.
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(3)
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Amounts shown in the “Stock Awards” column represent the grant date fair value for stock awards granted to
each director during 2020, as computed pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) Topic 718 (“FASB ASC Topic 718”). See Note 14 to our consolidated financial statements
for the year ended December 31, 2020, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission
on February 18, 2021. The amounts reflect the grant date fair value of the 2020 annual grant of 2,568 restricted stock units
made to each director in connection with the 2020 annual meeting of stockholders, which vest in full on May 21, 2021. For
Mr. Kelly, who was appointed to our Board on January 1, 2020, the amount also reflects the grant date fair value of a grant
of 692 restricted stock units in connection with a pro-rated annual grant for the period beginning with his appointment to
the Board through the date of the 2020 annual meeting of stockholders which vested in full on January 2, 2021.
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(4)
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2,568 restricted stock units granted to each of these directors, which were awarded in connection with the 2020 annual
meeting of stockholders, were converted into DSUs at the election of each director. DSUs convert to shares of our common stock
after termination of service on the Board, based upon a schedule selected by each director in advance. These DSUs will vest
in full on May 21, 2021 in accordance with the vesting schedule applicable to the underlying restricted stock units.
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(5)
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Amounts represent the aggregate grant date fair value for options to purchase 5,899 shares of our common stock granted
to each director in connection with the 2020 annual meeting of stockholders, as computed pursuant to FASB ASC Topic 718. See
Note 14 to our consolidated financial statements for the year ended December 31, 2020, included in our Annual Report on Form
10-K filed with the Securities and Exchange Commission on February 18, 2021. The director stock options are fully vested upon grant
and exercisable for a seven-year term. For Mr. Kelly, who was appointed to our Board on January 1, 2020, the amount also reflects
the grant date fair value for options to purchase 1,842 shares of our common stock in connection with a pro-rated annual grant
for the period beginning with his appointment to the Board through the date of the 2020 annual meeting of stockholders.
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As of December 31, 2020, the aggregate number of unvested
stock awards and unexercised options outstanding held by each of our non-employee directors was as follows:
Name
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Restricted
Stock Units
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Stock
Options
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Mitchell P. Rales
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—
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—
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Patrick W. Allender
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2,568
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31,732
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Thomas S. Gayner
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2,568
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31,732
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Rhonda L. Jordan
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2,568
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31,732
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Liam J. Kelly
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3,260
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7,741
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A. Clayton Perfall
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2,568
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31,732
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Didier Teirlinck
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2,568
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18,139
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Rajiv Vinnakota
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2,568
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31,732
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Sharon Wienbar
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2,568
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22,377
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Proposal 2
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Ratification of Selection of Independent Registered Public Accounting Firm
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We are asking our stockholders to ratify the Audit Committee’s
selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31,
2021. The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent
auditors. Ernst & Young LLP has served as our independent auditor since its appointment in 2002. Although stockholder
ratification is not required, the appointment of Ernst & Young LLP is being submitted for ratification as a matter of
good corporate practice with a view towards soliciting stockholders’ opinions which the Audit Committee will take into consideration
in future deliberations. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select
another registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select
a different registered public accounting firm at any time during the year if it determines that such a change would be in the best
interests of the Company and our stockholders. The Board of Directors and the Audit Committee believe that the retention of Ernst &
Young LLP as the Company’s independent auditor is in the best interests of the Company and its stockholders.
Representatives for Ernst & Young LLP are expected
to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
Independent
Registered Public Accounting Firm Fees and Services
The following table sets forth the aggregate fees for services
rendered by Ernst & Young LLP for the Company for the fiscal years ended December 31, 2020 and 2019:
Fee Category (fees in thousands)
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2020
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2019
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Audit Fees
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$
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5,575
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$
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7,417
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Audit-Related Fees
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—
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1,628
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Tax Fees
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646
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1,023
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All Other Fees
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4
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4
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TOTAL
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$
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6,225
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$
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10,072
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Audit Fees
This category of the table above includes fees for the fiscal
years ended December 31, 2020 and 2019 that were for professional services rendered (including reimbursement for out-of-pocket
expenses) for the integrated audits of our annual consolidated financial statements, for reviews of the financial statements included
in our Quarterly Reports on Form 10-Q, and for statutory audits.
Audit-Related Fees
This category of the table above includes the fees billed
for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements
and are not reported under “Audit Fees.” There were no Audit-Related Fees incurred for 2020. For 2019, Audit-Related
Fees included fees related to services rendered in connection with audited carve-out financial statements of our Air &
Gas Handling business in connection with the disposition of that business in September 2019 and services rendered in connection
with the acquisition of DJO.
Tax Fees
This category of the table above includes fees billed for
tax compliance, tax preparation, tax planning and other tax services. For 2020, Tax Fees included approximately $518,459 for tax
compliance and tax preparation, approximately $126,300 for tax planning and other tax services and approximately $982 for associated
expenses. For 2019, Tax Fees included approximately $1,004,038 for tax compliance and tax preparation and approximately $19,000
for tax planning and other tax services.
All Other Fees
This category of the table above includes fees billed for
products and services other than those described above under Audit Fees, Audit-Related Fees and Tax Fees. For 2020 and 2019, these
included fees incurred for Ernst & Young LLP’s online accounting information tool.
The Audit Committee has considered whether the services rendered
by the independent registered public accounting firm with respect to the fees described above are compatible with maintaining the
independent registered public accounting firm’s independence and has concluded that such services do not impair its independence.
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Audit Committee’s Pre-Approval
Policies and Procedures
Pursuant
to its charter, the Audit Committee must pre-approve all auditing services, review and attest services, internal control related
services and non-audit services provided to the Company by the independent registered public accounting firm and all fees payable
by the Company to the independent registered public accounting firm for such services. The Audit Committee also is responsible
for overseeing the audit fee negotiations associated with the retention of Ernst & Young LLP for the audit of our financial
statements. The Audit Committee has adopted a pre-approval policy to promote compliance with the NYSE’s listing standards
and the applicable SEC rules and regulations relating to auditor independence. In accordance with the Audit Committee charter and
the pre-approval policy, the Audit Committee reviews with Ernst & Young
LLP and management the plan and scope of Ernst & Young LLP’s proposed annual financial audit and quarterly reviews,
including the procedures to be utilized and Ernst & Young LLP’s compensation, and pre-approves all auditing services,
review and attest services, internal control related services and permitted non-audit services (including the fees and terms thereof)
to be performed for us by Ernst & Young LLP. The Audit Committee may delegate pre-approval authority to one or more members
of the Audit Committee consistent with the pre-approval policy, provided that the decisions of such Audit Committee member or members
must be presented to the full Audit Committee at its next scheduled meeting. Pre-approval of permitted non-audit services can only
be approved by the full Audit Committee.
Vote Required
The affirmative vote of the holders of a majority of shares
present in person or represented by proxy at the Annual Meeting and entitled to vote is required to ratify the appointment of Ernst &
Young LLP as the Company’s independent registered public accounting firm for 2021.
Board Recommendation
The Board unanimously recommends that stockholders vote “FOR”
the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public
accounting firm for 2021.
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AUDIT COMMITTEE REPORT
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The Audit Committee consists of A. Clayton Perfall, Patrick
Allender, Thomas Gayner, and Didier Teirlinck, who are all non-management directors. The members of the Audit Committee meet the
independence and financial literacy requirements of the NYSE and the additional, heightened independence criteria applicable to
members of the Audit Committee under SEC and NYSE rules. In 2020, the Audit Committee held 11 meetings. The Audit Committee operates
pursuant to a written charter adopted by the Board of Directors, which it annually reviews. The charter, which complies with all
current regulatory requirements, is available on the Company’s website at www.colfaxcorp.com on the Investors page under
the Corporate Governance tab. During 2020, at each of its regularly scheduled meetings, the Audit Committee met with senior members
of the Company’s finance team. Additionally, the Audit Committee has separate private sessions, during its regularly scheduled
meetings, with the Company’s independent registered public accounting firm and head of internal audit, respectively. The
Audit Committee is updated periodically on management’s process to assess the adequacy of the Company’s system of internal
control over financial reporting, the framework used to make the assessment, and management’s conclusions on the effectiveness
of the Company’s internal control over financial reporting. The Audit Committee has also discussed with the independent registered
public accounting firm, their evaluation of the Company’s system of internal control over financial reporting.
The Audit Committee evaluates the performance of the Company’s
independent registered public accounting firm each year and determines whether to reengage the current independent registered accounting
firm or consider other independent registered accounting firms. In doing so, the Audit Committee considers the quality and efficiency
of the services provided by the independent registered accounting firm, the firm’s global capabilities, and the firm’s
technical expertise, tenure as the Company’s independent registered accounting firm and knowledge of the Company’s
global operations and businesses. In connection with the applicable audit partner rotation requirements, the Audit Committee also
is involved in considering the selection of the auditors’ lead engagement partner when rotation is required. Based on this
evaluation, the Audit Committee decided to engage Ernst & Young LLP as our independent registered accounting firm for
the year ended December 31, 2021. The Audit Committee reviews with the independent registered accounting firm and management the
overall audit scope and plans, as well as the results of internal and external audit examinations and evaluations by management
and the independent registered accounting firm of the Company’s internal controls over financial reporting and the quality
of the Company’s financial reporting. Although the Audit Committee has the sole authority to appoint the independent registered
public accounting firm, the Audit Committee recommends that the Board ask stockholders, at the Company’s annual meeting,
to ratify the appointment of the independent registered accounting firm (see Proposal 2 beginning on page 24).
The Audit Committee has reviewed and discussed the Company’s
audited financial statements for the fiscal year ended December 31, 2020 with management and with the Company’s independent
registered public accounting firm, including a discussion of the quality and suitability of the accounting principles, the reasonableness
of significant accounting judgments and estimates, and the clarity of disclosures in the financial statements. In addressing the
quality of management’s accounting judgments, members of the Audit Committee are apprised of certifications prepared by the
Chief Executive Officer and the Chief Financial Officer that the unaudited quarterly and audited annual consolidated financial
statements of the Company fairly present, in all material respects, the financial condition, results of operations and cash flows
of the Company.
In performing all of these functions, the Audit Committee
acts in an oversight capacity. The Audit Committee reviews the Company’s quarterly and annual reports on Form 10-Q and Form
10-K prior to filing with the SEC. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s
management, which has the primary responsibility for establishing and maintaining adequate internal control over financial reporting
and for preparing the financial statements, and other reports, and of the independent registered public accounting firm, which
is engaged to review the quarterly consolidated financial statements of the Company, and audit and report on the annual consolidated
financial statements of the Company and the effectiveness of the Company’s internal control over financial reporting as of
the Company’s year-end.
The Audit Committee discussed with the independent registered
public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight
Board (“PCAOB”) and SEC. The Audit Committee has received from the independent registered public accounting firm the
written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent registered public
accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent
registered public accounting firm its independence. On the basis of the reviews and discussions referenced above, the Audit Committee
recommended to the Board of Directors that the audited financial statements for the fiscal year ended December 31, 2020 be included
in the Company’s Annual Report on Form 10-K for filing with the Securities and Exchange Commission.
Audit Committee of the Board of Directors
A. Clayton Perfall, Audit Committee Chair
Patrick Allender
Thomas Gayner
Didier Teirlinck
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COMPENSATION DISCUSSION AND ANALYSIS
|
The following discussion and analysis of compensation
arrangements of our named executive officers for 2020 should be read together with the compensation tables and related disclosures
set forth under the section heading “Executive Compensation.”
Executive Summary
Named Executive Officers
The following discussion provides details regarding our executive
compensation program and the compensation of our named executive officers in 2020. Our named executive officers (“NEOs”)
for 2020 are:
Name
|
Title
|
Matthew Trerotola
|
President and Chief Executive Officer
|
Christopher Hix
|
EVP, Finance, Chief Financial Officer
|
Daniel Pryor
|
EVP, Strategy and Business Development
|
Shyam Kambeyanda
|
Chief Executive Officer of ESAB
|
Brady Shirley
|
Chief Executive Officer of DJO
|
Our Compensation Philosophy and Guiding Principles
Our executive
compensation approach links compensation to Company and individual performance while aligning the long-term interests of management
and stockholders. We strive to create a compensation program for our associates, including our executives, that provides a compelling
and engaging opportunity to attract, retain and motivate the best talent. We believe that our compensation
programs motivate performance-driven leadership that is aligned to achieve our financial and strategic objectives with the intention
to deliver superior long-term returns to our stockholders. Utilizing this philosophy, our executive compensation program has been
designed to:
Link
rewards to performance and foster a team-based approach
|
|
Each executive has clear performance expectations and must contribute to our overall success rather
than solely to objectives within his or her primary area of responsibility.
|
Align the performance
responsibilities of executives with the long-term interests of stockholders
|
|
Our program emphasizes long-term stockholder value creation by using predominantly stock options and performance-based
restricted stock units, in combination with a stock ownership policy, to deliver long-term compensation incentives while minimizing
risk-taking behaviors that could negatively affect long-term results.
|
Provide
transparency through simplicity of design and practices
|
|
We provide three main elements in our compensation program–base salary, annual incentive cash bonuses, and long-term
incentives–with an appropriate blend of purposes and incentives linked to easily understood objectives, as described
further on page 29.
|
Fiscal 2020 Pay for Performance Alignment and Compensation
Overview
Fiscal 2020 was a year unlike any other that we have ever
experienced. Having completed a transformational portfolio shift in 2019 with our acquisition of DJO and the divestiture of our
Air & Gas Handling business, we entered 2020 with significant momentum and prepared to execute on our strategic plans
to drive profitable growth across both of our business platforms. Our Medical Technology and Fabrication Technology segments both
delivered strong operating performance in the first quarter of 2020 until mid-March, when the impacts of the COVID-19 pandemic
drastically reduced economic activity across the world.
Our leadership teams quickly adapted to implement COVID-19
safety protocols as the safety of our associates is our top priority. We mandated, supported or encouraged remote work wherever
possible, and implemented restrictions on non-essential travel. We followed CDC, WHO and other applicable government guidelines
at our sites to protect essential workers. These measures included the provision of personal protective equipment; daily wellness
checks utilizing infrared thermometers, thermal cameras and self-monitoring; social distancing, supported by signage and visual
cues; enhanced cleaning and disinfecting routines; and quarantine and
|
- 2021 Proxy Statement
|
27
|
|
|
|
contact tracing protocols. When needed, we provided assistance
and guidance to family members in the same household as our associates. We also established a robust communications and feedback
plan, led by our executive COVID-19 response team, whose efforts included daily, weekly and bi-weekly safety calls, site communications,
employee surveys and town halls.
Colfax businesses were and remain key contributors to the
global battle against COVID-19. We redeployed resources and retrofitted certain facilities to produce masks and supply hand sanitizer.
In addition, we expanded our offerings of telehealth solutions for healthcare providers and ramped up manufacturing of products
such as GCE medical gas controls and Venaflow compression devices used on the front lines to treat COVID-19 patients.
We also quickly and thoughtfully flexed down our costs and
other spending to protect our financial strength and mitigate the impacts of the pandemic on our revenues. These actions included,
among other things, voluntary pay reductions by our NEOs and directors. At the same time, we protected critical investments in
innovation and new product development, including key surgical, bracing and connected medicine product launches across our DJO
business, and additional investments in enhanced digital solutions at our ESAB business, such as our WeldCloud Notes document management
software. Notwithstanding the challenges of the COVID-19 pandemic, we introduced 112 new products in 2020.
As business activity began to stabilize in the second half
of 2020, we resumed our pursuit of strategic bolt-on acquisitions and technology investments, completing a series of acquisitions
that included the STAR total ankle replacement business and LiteCure, LLC, a market leader in therapeutic laser technology for
human and animal health.
Despite unprecedented and challenging conditions, we finished
the fourth quarter of 2020 with strong sequential revenue, earnings and cash flow growth, demonstrating our effective operating
execution. We believe that we exited 2020 and are entering 2021 with a clear path for strong growth in operating results and accelerating
momentum.
Our NEOs,
as well as the rest of our executive management team and our associates worldwide, worked together to overcome the challenges of
a global crisis while remaining focused on our priorities: protecting the health and safety of our associates; serving
our customers and patients; and keeping our Company financially healthy for the future. Our business results reflect these efforts.
The dedication, commitment and focus of our team under tremendous pressure this year is truly remarkable and worthy of extra recognition.
And while we believe the efforts and accomplishments of our NEOs this year would justify a payout in excess of their target bonus
for 2020, management has recommended, and the Compensation Committee has agreed, to award an overall Company performance factor
under our Annual Incentive Plan (“AIP”) of 75% to Messrs. Trerotola, Hix, Pryor and Kambeyanda, and 72.2% to Mr. Shirley.
Further, the Compensation Committee took the following actions
during 2020:
■
|
No base salary increases and voluntary reductions. Due to concerns about the potential
effects of COVID-19 on the business, no base salary increases were provided to the CEO or other NEOs in 2020. In light of
the impact of COVID-19 on our business, the CEO and other NEOs voluntarily took a 20% reduction to their base salaries during
the second quarter and a 10% reduction to their base salaries during the third quarter of 2020. Their base salaries were returned
to 100% at the beginning of the fourth quarter of 2020.
|
|
|
■
|
Continued focus on long-term performance. Each of Messrs. Trerotola, Hix, Kambeyanda and Pryor’s annual
equity awards consisted of (i) 50% PRSUs that cliff vest in three years based on relative TSR performance over a three-year
performance period, (ii) 25% RSUs that vest in equal installments over a three-year period following their grant date, and
(iii) 25% stock options that vest in equal installments over a three-year period following their grant date. Mr. Shirley’s
annual equity awards consisted of 50% PRSUs and 50% RSUs.
|
|
|
■
|
Change in Control Agreements. On the recommendation of the Compensation Committee, the Board approved a
form of change in control agreement for executive officers. Messrs. Hix, Kambeyanda, Shirley and Pryor each entered into a
change in control agreement on October 27, 2020 (the “Change in Control Agreements”). Mr. Trerotola did not enter
into a change in control agreement with the Company, as his current Executive Employment Agreement, which has a current term
that runs through July 24, 2021, addresses any potential change in control.
|
2020 Say-On-Pay Vote
At our 2020
Annual Meeting, approximately 98% of the stockholder votes cast on our advisory proposal to approve the compensation of our NEOs
were voted in favor of our executive compensation proposal. Our Compensation Committee considered the outcome of this vote in the
context of our prior and on-going engagement with stockholders and accordingly did not make any additional changes
to our executive compensation policies and program elements. The Compensation Committee has determined to provide for an annual
“say-on-pay” proposal and will continue to carefully evaluate the feedback received from our stockholders in connection
with the voting on that proposal.
|
- 2021 Proxy Statement
|
28
|
|
|
|
Our Executive Compensation Program
Our executive compensation program includes elements designed
to align executive pay with Company objectives and long-term stockholder returns, including the PRSU grants entirely based on relative
Total Shareholder Return as discussed above.
For 2020, the Compensation Committee established the following
target compensation program for our CEO:
2020 CEO Incentive Compensation
Structure
|
|
|
|
87%
of CEO compensation “at risk” and aligned with company and shareholder success
|
With respect to our other NEOs, for 2020, the Compensation
Committee established the following target compensation program:
2020 Incentive Compensation
Structure for Other NEOs (Average)
|
|
|
|
79% of compensation for other NEOs “at risk” and aligned with company and shareholder
success
|
Our 2020 executive compensation structure consists of three
core compensation elements–base salary, an annual cash bonus, and long-term incentives. The Compensation Committee reviewed
each element individually while also considering the total compensation package provided to create an appropriate mix designed
to attract, incentivize, and retain our executives. The following table summarizes the core elements of our 2020 executive compensation
program:
|
- 2021 Proxy Statement
|
29
|
|
|
|
Element of Compensation
|
|
Purpose/Description
|
|
Form/Timing of Payout
|
Base Salary
|
|
Established at a competitive level to attract and retain our executive talent. Provides a base level of compensation that
is not at risk to avoid fluctuations in compensation that could distract executives from the performance of their responsibilities.
|
|
Paid in cash throughout the year.
|
Annual Incentive Plan (“AIP”)
|
|
Variable compensation that rewards our executive officers for achievement of critical annual operational and financial
performance goals by the Company and, if applicable, respective business units, and recognizes the executive’s individual
performance during the year.
|
|
Paid in cash after the year has ended and performance has been measured. See page 32 for further detail.
|
Long-Term Incentive Plan
|
|
Variable compensation that aligns the rewards of executives with the interests of stockholders to encourage actions and
long-term prioritization that we believe will increase stockholder value by generating sustained and superior operational
and financial performance over an extended period of time.
|
|
See page 34 for further detail.
|
Leading Compensation Practices
The framework of our executive compensation program includes the governance features
and other specific elements discussed below:
What we do
|
|
What we don’t
do
|
|
Pay for performance focus – Our AIP compensation is linked
to pre-established financial and operational goals that are intended to drive performance over the annual performance plan
period. Options, RSUs and PRSUs are linked with longer-term performance, our stock price, and, for PRSUs, relative TSR performance,
which we believe incentivizes long-term Company success and stockholder value creation.
|
|
|
No gross-up payments to cover excise taxes or perquisites –
We do not provide tax gross-ups to our executives in connection with severance benefits or executive perquisites other than
relocation.
|
|
Varying performance metrics under short-term and longer-term incentive plans
– In balancing compensation objectives linked to short-term and long-term time horizons, the Company seeks to align
compensation with several performance metrics that are critical to achievement of sustained growth and stockholder value creation.
|
|
|
No pledging or hedging of Company stock – We prohibit our executives
and directors from hedging Colfax stock and from entering into new pledge arrangements or derivative agreements using Colfax
stock.
|
|
Caps on Annual Incentive Plan payouts – Executive bonus payments are
capped under our AIP, as approved by our stockholders, in part to discourage excessive risk taking. The Compensation Committee
is prohibited from increasing the results with respect to each financial and operational performance metric once established,
but retains the discretion to reduce or eliminate compensation under our AIP even if performance goals are attained.
|
|
|
No repricing or buyout of underwater stock options – We do not permit
the repricing of underwater stock options without the express approval of our stockholders.
|
|
Double trigger provisions for change in control – Severance payable
upon a change in control is only received upon executive’s employment termination without cause or resignation for good
reason within two years following, or the three months preceding, the change in control. This approach is commonly referred
to as “double trigger.”
|
|
|
No excessive change in control payments – No severance upon a change
in control in excess of two times salary and target bonus.
|
|
Clawback Policy and Insider Trading Policy – We have a comprehensive
compensation clawback policy that is triggered by a material restatement of the Company’s financial statements and applies
to all of our executive officers, and enforce a strict insider trading policy and blackout periods for executives and directors.
|
|
|
No short-term vesting – We do not award any long-term incentives with
a vesting period shorter than one year.
|
|
Stock Ownership Policy – We have a robust stock ownership policy to
further align the long-term financial interests of Company executives with those of our stockholders.
|
|
|
No compensation programs or policies that reward for material or excessive risk
taking – We annually review the Company’s compensation policies and practices in relation to our risk management
practices and any potential risk-taking incentives. Our most recent assessment concluded that the risks arising from our compensation
policies and practices are not reasonably likely to have a material adverse effect on the Company.
|
|
Independent Compensation Committee and Consultant – Our Compensation
Committee is comprised solely of independent directors. The compensation consultant to the Compensation Committee during 2020,
FW Cook (i) is, based on the Compensation Committee’s assessment, independent and without any conflicts of interest
with the Company and (ii) has never provided any services to the Company other than the compensation-related services provided
to the Compensation Committee. See page 37 for further details.
|
|
|
No pension plan – We do not maintain a defined benefit pension plan
for any senior executives.
|
|
- 2021 Proxy Statement
|
30
|
|
|
|
Determination of Executive Compensation and Performance Criteria
Our executive compensation program is based on the philosophy
and design outlined above with a focus on exceptional performance and continuous improvement from our management team. Within this
framework, the Compensation Committee exercises its reasoned business judgment in making executive compensation decisions and takes
into account recommendations by our Chief Executive Officer with respect to the compensation of each executive officer, other than
himself (see “CEO Recommendations” on page 36). Some of the factors that generally are referenced when making executive
compensation decisions, none of which is assigned a particular weight, are as follows:
■
|
The nature of the executive’s
position
|
■
|
The Compensation Committee’s assessment
of pay levels and practices for executives with the skills and experience our executives possess (see “Role of Compensation
Consultants and Peer Data Review” on page 36)
|
■
|
The experience and performance record
of the executive
|
■
|
The Company’s operational and financial
performance
|
■
|
The executive’s leadership potential
|
■
|
The retention value of our compensation
program over time
|
Further, a substantial percentage of compensation under our
Annual Incentive Plan is determined solely by the achievement of annual performance criteria based on Board-approved financial
and operational goals for the fiscal year. These goals are then incorporated into the metrics set for our Annual Incentive Plan
and approved by the Compensation Committee, as further discussed under “Bonus Calculation and Payment - Financial and Operational
Metrics and 2020 Performance Results” on page 32. We believe that this link to our Board-established corporate and business
goals reinforces alignment and incents breakthrough results both at the business-unit level and Company-wide.
Elements of Our 2020 Executive Compensation Program
Base Salary
Base salaries are designed to provide compensation that is
market competitive so that we can attract the best qualified individuals and retain our senior management. Base salaries are established
at an executive’s hire and generally reviewed annually for potential increases. In February 2020, the Compensation Committee
set the salary levels for each of our NEOs based on the Compensation Committee’s assessment of the relative roles and responsibilities
of management and the results of their individual performance assessments, combined with perspective from competitive compensation
data prepared by FW Cook and the Compensation Committee’s reasoned business judgment. Because of concerns about the potential
effects of COVID-19 to the business, none of the executives were provided with a base salary increase in 2020. In addition, as
noted above, in light of the impact of COVID-19 on our business, our CEO and other NEOs voluntarily took a 20% reduction to their
base salaries during the second quarter of 2020 and a 10% reduction to their base salaries during the third quarter of 2020. Accordingly,
the base salary levels set forth below are higher than the actual base salaries received by our NEOs in 2020, as reflected in the
Summary Compensation Table. A comparison of base salary levels as of December 31, 2020 and 2019 is set forth below:
Named Executive Officer
|
|
|
2019 Annual
Base Salary
|
|
|
2020 Annual
Base Salary*
|
|
|
Percentage
Increase
|
Mr. Trerotola
|
|
|
$
|
1,077,000
|
|
|
$
|
1,077,000
|
|
|
—
|
Mr. Hix
|
|
|
$
|
650,000
|
|
|
$
|
650,000
|
|
|
—
|
Mr. Pryor
|
|
|
$
|
565,000
|
|
|
$
|
565,000
|
|
|
—
|
Mr. Kambeyanda
|
|
|
$
|
625,000
|
|
|
$
|
625,000
|
|
|
—
|
Mr. Shirley
|
|
|
$
|
850,000
|
|
|
$
|
850,000
|
|
|
—
|
*
|
2020 Annual Salary does not reflect
the voluntary reductions of 20% for Q2 and 10% in Q3. See the Summary Compensation Table for the actual salary received for
each executive in 2020.
|
|
- 2021 Proxy Statement
|
31
|
|
|
|
Annual Incentive Plan
The goal of our AIP is to reward our executives for achievement
in key areas of Company operational and financial performance as well as each executive’s individual contributions to Company
success. Our NEOs are eligible to receive a cash incentive payment that is expressed as a percentage of the executive’s base
salary (i.e., “target bonus”) under our Annual Incentive Plan. Performance measures include corporate and individual
performance against pre-determined financial and operational metrics approved by the Compensation Committee at the beginning of
the fiscal year.
These performance metrics established by the Compensation
Committee for business leaders reflect both Company-wide and business-specific performance targets resulting in a company performance
factor (“CPF”). The CPF for Messrs. Kambeyanda and Shirley is a weighted average consisting of 70% segment performance
and 30% Colfax corporate performance. The amount payable under the AIP can be adjusted upward or downward based on the individual
performance factor (“IPF”), which is linked to specific, individualized business goals. Actual bonus amounts are determined
following completion of the performance year and are based on performance relative to these pre-established business and individual
goals using the following formulas:
Executives can achieve a payout percentage of their target
bonus ranging from zero for below-threshold performance to a threshold of 50% to a maximum of 200%, with 100% target goal achievement
resulting in 100% payout of the individual’s target bonus for that performance metric, based on the extent to which objective
pre-established financial and operational performance goals are achieved.
The total amount earned is subject to adjustment based on
individual achievement as measured by an IPF. The IPF is a multiplier that ranges from 0 to 1.5 (subject to an overall payout cap
of 250% of the target bonus). For 2020, due to impacts of COVID-19, the IPFs for our NEOs were recommended by management not to
exceed 1.0. The IPF rating is based on individual performance against pre-established objectives and the embodiment of our Company’s
core values and behaviors. The IPF and key performance indicators include both financial and non-financial Company objectives over
which the executive has primary control.
Detail regarding the individual components of these formulas
for fiscal year 2020, including a calculation of the payout percentages and description of the IPF component, follows below.
Key Executive Team Achievements
■
|
Continued improvements in safety performance, despite the challenges of COVID-19, including a reduction
in total recordable incident rate by more than 30%
|
|
|
■
|
Exemplary leadership and crisis management in responding to the COVID-19 pandemic, prioritizing the health and safety
of our associates while ensuring continuity of supply to our customers
|
|
|
■
|
Successfully and aggressively flexed costs in order to keep the Company financially strong and healthy during the height
of the pandemic, while protecting key strategic investments
|
|
|
■
|
Excellent cash flow management, which included efforts that ensured that the Company stayed cash flow-positive during
a difficult second quarter, and resulted in strong cash conversion for the second half of 2020
|
|
|
■
|
Delivered strong sequential revenue and profit growth in the third and fourth quarter as markets began to recover
|
|
|
■
|
Fabrication Technology segment continued to outperform peers, even in a market impacted by COVID-19
|
|
|
■
|
Continued focus on innovation, resulting in the introduction of 112 new products into the market, as well as increased
market penetration in the digital space in both of our businesses, with a 90% increase in the number of devices connected
to our ESAB WeldCloud solution and 900 new accounts at our DJO business, where we are now servicing 2.5 million patient agreements
through MotionMD
|
|
|
■
|
Completed five strategic acquisitions and three other investments in our Medical Technology platform, building out our
portfolio and moving into the fast growing foot and ankle segment
|
|
|
■
|
Strengthened DJO management team to provide a solid foundation for growth, significantly improved associate engagement
and enhanced diversity, equity and inclusion programs
|
Bonus Calculation and Payment – Financial and Operational
Metrics and 2020 Performance Results
For corporate executives, in 2020 we utilized financial targets
based on net sales (as adjusted), adjusted EBITA, cash conversion, and adjusted EPS for the Company performance factors (“CPF”).
The targets were based upon Board-approved operational and financial goals for 2020, and represented significant progress in each
category toward the achievement of the Company’s long-term growth objectives and aligned with the Board-approved corporate
budget.
|
- 2021 Proxy Statement
|
32
|
|
|
|
Through the first quarter of 2020, the Company was on track
to achieve above-target performance based on these metrics. However, the impacts of the COVID-19 pandemic began to affect our businesses
during the last two weeks of March 2020. These impacts continued and intensified during the second quarter of 2020, as worldwide
economic activity sharply decreased and government-ordered shutdowns, delays or cancellations in elective surgical procedures and
the cessation of organized sporting events, among other things, had a significant negative impact on our financial performance.
Based on the extraordinary and unforeseen impacts of the
COVID-19 pandemic, which had not been contemplated when the original financial targets for 2020 were established, the Compensation
Committee determined that it was necessary and appropriate to re-evaluate the financial targets to be used to determine the CPF.
The Compensation Committee approved a modified approach, whereby performance would be separately evaluated for the first quarter,
second quarter, and the second half of 2020. In approving such an approach, the Compensation Committee took into consideration
the extraordinary efforts required of our teams in order to keep our associates safe and preserve business continuity, while at
the same time continuing to execute on our strategic goals and objectives. Management exceeded the modified goals and, as a result,
were awarded a payout opportunity as described below.
For the first quarter of 2020, during which the Company’s
performance, as previously noted, was tracking above target, the Compensation Committee determined that the Company had achieved
100% of target performance. Accordingly, for the first quarter of 2020, a CPF of 25% was earned (100% x ¼ of the year).
For the second quarter of 2020, the Compensation Committee
determined that the Company would have achieved 0% of target performance based on the original metrics, resulting in a CPF of
0%.
For the second half of 2020, the Compensation Committee approved
the use of adjusted EPS as a single metric across our businesses. The adjusted EPS metric was based on the Compensation Committee’s
assessment of the Company’s performance goals and expected recovery from the impacts of the pandemic in the second half of
2020. Based on the Company’s results for the second half of 2020, the Compensation Committee determined that the Company
had achieved 115% of the target adjusted EPS goal for such period, resulting in a CPF of 57.5% for the second half of 2020 (115%
x ½ of the year); however, management recommended, and the Committee approved a CPF of 50% for such period. Accordingly,
the total CPF for the year was 75% of target.
The following table sets forth the financial performance
measures, the actual performance of the Company and resulting CPF for 2020:
Period
|
%
of Target
Bonus
Opportunity
Attributable
to Period
|
Financial
Targets Utilized*
and Target/Threshold/Maximum Goals
|
Performance
Achieved
|
CPF
for
Measurement
Period
|
Total
CPF
Achieved
|
Q1
2020
|
25%
|
Corporate – (Annual Target)
■ Net
Sales (as adjusted): $3.56 billion
■ Adjusted
EBITA: $507 million
■ Cash
Conversion: 83%
■ Adjusted
EPS: $2.18
ESAB/DJO (Annual Target)
■ Net
Sales (as adjusted): ESAB: $2.26 billion; DJO: $1.30 billion
■ Adjusted
EBITA: ESAB: $351.6 million: DJO: $221.6 million
■ Cash
Conversion: ESAB: 90%; DJO: 85%
|
Q1 performance above target for all metrics on an annualized basis for Corporate,
DJO and ESAB
|
100%
|
25%
(100% of 25%)
|
Q2 2020
|
25%
|
Same as Q1
|
Q2 performance below target for all metrics on an annualized basis for Corporate,
DJO and ESAB
|
0%
|
0%
(0% of 25%)
|
H2
2020
|
50%
|
Adjusted
EPS
■ Threshold
(50% of target attributable to period): $0.75
■ Target
(100% of target attributable to period): $0.85
■ Max
(125% of target attributable to period): $0.95
|
$0.91
|
115% (however, as noted above, management recommended, and Compensation Committee
approved, a CPF of 100% for H2 2020)
|
50%
(100% of 50%)
|
*
|
For purposes of calculating CPF, the Company used the following
definitions:
|
|
■
|
Net sales measured by U.S. GAAP sales excluding any sales from unbudgeted 2020 acquisitions, compared to 2020 budgeted
sales at actual foreign exchange rates.
|
|
- 2021 Proxy Statement
|
33
|
|
|
|
|
■
|
Adjusted EBITA is U.S. GAAP net income from continuing operations plus net interest expense, income taxes and acquisition-related
amortization and inventory step-up charges, adjusted for business unit entities divested in 2020 including related gain/loss
on disposition, restructuring costs per Company policy, non-cash asset impairments including goodwill and intangibles, unbudgeted
acquisition and divestiture costs, foreign currency exchange gains or losses arising from initial recognition of a highly
inflationary currency, pension curtailment costs, effects from changes in U.S. GAAP or similar unplanned material tax or regulatory
changes, the after-tax impact of discontinued operations, early extinguishment of debt costs, or other unplanned or nonrecurring
items that the Compensation Committee considers unusual and not representative of the underlying economic performance of the
Company.
|
|
■
|
Cash Conversion is free cash flow (cash from operating activities less capital expenditures plus proceeds from asset
sales) divided by adjusted net income from continuing operations. ESAB and DJO use Modified Cash Conversion which excludes
income taxes, interest expenses and defined benefit plan costs and funding.
|
|
■
|
Adjusted EPS is defined as U.S. GAAP net income adjusted for business unit entities divested in 2020 including related
gain/loss on disposition, restructuring costs per Company policy, non-cash asset impairments including goodwill and intangibles,
unbudgeted acquisition and divestiture costs, foreign currency exchange gains or losses arising from initial recognition of
a highly inflationary currency, pension curtailment costs, effects from changes in U.S. GAAP or similar unplanned material
tax or regulatory changes, the after-tax impact of discontinued operations, early extinguishment of debt costs, or other unplanned
or nonrecurring items that the Compensation Committee considers unusual and not representative of the underlying economic
performance of the Company, divided by the weighted average of diluted shares outstanding.
|
For Messrs.
Kambeyanda and Shirley, Colfax corporate measures constituted 30% of the potential payout factor with their business unit goals
consisting of 70% of the total target. These weightings are intended to drive accountability for business operational results while
also encouraging thoughtful work and cooperation across the organization. Based on overall business performance for their business
units during the second half of 2020, Mr. Kambeyanda achieved an overall
CPF of 75% and Mr. Shirley achieved a CPF of 72.2%.
Bonuses for each of our NEOs, as calculated pursuant to the
foregoing calculations, are set forth in the following table. These bonuses are also reflected in the “Non-Equity Incentive
Plan Compensation” column of the Summary Compensation Table below on page 40.
NEO
|
Base Salary
|
|
|
|
Target Bonus
Percentage
|
|
|
|
Target
Bonus
|
|
|
|
CPF
|
|
Bonus
before IPF
application
|
|
Individual
Performance
Factor (IPF)
|
|
|
|
Executive
Bonus
Payment
|
Mr. Trerotola
|
|
$1,077,000
|
|
X
|
|
125%
|
|
=
|
|
$1,346,250
|
|
X
|
|
75%
|
|
1,009,690
|
|
100%
|
|
=
|
|
$1,009,690
|
Mr. Hix
|
|
$ 650,000
|
|
X
|
|
80%
|
|
=
|
|
$ 520,000
|
|
X
|
|
75%
|
|
390,000
|
|
100%
|
|
=
|
|
$ 390,000
|
Mr. Pryor
|
|
$ 565,000
|
|
X
|
|
80%
|
|
=
|
|
$ 452,000
|
|
X
|
|
75%
|
|
339,000
|
|
100%
|
|
=
|
|
$ 339,000
|
Mr. Kambeyanda*
|
|
$ 625,000
|
|
X
|
|
80%
|
|
=
|
|
$ 500,000
|
|
X
|
|
75%
|
|
375,000
|
|
100%
|
|
=
|
|
$ 375,000
|
Mr. Shirley*
|
|
$ 850,000
|
|
X
|
|
100%
|
|
=
|
|
$ 850,000
|
|
X
|
|
72.2%
|
|
613,700
|
|
100%
|
|
=
|
|
$ 613,700
|
*
|
The business payout percentage is a weighted average consisting of 70% business segment and 30% Colfax corporate.
|
Bonus Calculation – Individual Performance Factor
In addition to the target bonus percentages and financial
and operational metrics discussed above, the third and final factor under our AIP is the IPF, as described above. The individual
performance factors for each executive were determined after evaluating each NEO’s performance, including the collective
achievements detailed on page 32 above. For 2020, IPFs for our NEOs were held at 1.0.
Long-Term Incentives
The goal of our long-term incentive plan is to align the
compensation of executives with the interests of stockholders by encouraging sustained long-term improvement in operational and
financial performance and long-term increase in stockholder value. Long-term incentives also serve as retention instruments and
provide equity-building opportunities for executives. Beginning in 2020, annual equity awards generally consisted of 50% PRSUs,
25% stock options, and 25% time-vesting RSUs. The Compensation Committee believes this further aligns the long-term interests of
management and stockholders and promotes increased equity ownership among our executive officers.
2020 Performance Vesting of Outstanding PRSUs
In 2017, we transitioned to using a full three-year performance
period for measuring PRSUs.
In 2019, in connection with the acquisition of DJO, Mr. Shirley
received an annual equity award consisting in part of DJO PRSUs.
The DJO PRSUs were subject to achieving certain adjusted
EBITDA targets at DJO, measured over a two-year period. The DJO PRSUs further provided that 50% of the PRSUs may be earned (but
not vest) if a specified adjusted EBITDA target was achieved during 2020. This target was not achieved during 2020 and the DJO
PRSUs were not earned. As a result, none of the performance goals for the DJO PRSUs were achieved during the two-year performance
period and the awards were forfeited.
In March 2021, the Compensation Committee certified the performance
results of certain PRSUs granted to Messrs. Hix, Kambeyanda and Pryor in 2018. The 2018 PRSUs were subject to the Company achieving
three-year improvements in adjusted operating margin and investor return performance relative to the S&P MidCap 400 Industrials
Index, with each metric weighted 50% in determining the award payout. At the end of the three-year performance period, the Company
performance resulted in an investor return performance payout percentage of 73.46% of target and an adjusted operating margin payout
of 200.0% of target.
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- 2021 Proxy Statement
|
34
|
|
|
|
Annual Grants under Omnibus Incentive Plan
On February 24, 2020, the Compensation Committee granted
annual awards under the 2016 Omnibus Incentive Plan with a target aggregate value as set forth in the table below. Messrs. Trerotola,
Hix, Pryor and Kambeyanda received 50% of their annual grant in the form of PRSUs, 25% in the form of RSUs and 25% in the form
of stock options. Mr. Shirley received 50% of his annual grant in the form of PRSUs and 50% in the form of RSUs.
Annual Grant Recipient
|
Total Aggregate
Value of Grant
($)
|
Mr. Trerotola
|
5,775,000
|
Mr. Hix
|
2,000,000
|
Mr. Pryor
|
1,850,000
|
Mr. Kambeyanda
|
1,500,000
|
Mr. Shirley
|
2,400,000
|
Stock options and RSUs vest in three equal annual installments
beginning on the first anniversary of the grant date and PRSUs cliff vest at the end of the three-year measurement period to the
extent of achievement of the relative TSR performance metric based on the following payout scale:
|
3-Year TSR
Percentile Rank*
|
|
Resulting
Shares Earned
(% of target)
|
Below Threshold
|
<30th
|
|
0%
|
Threshold
|
30th
|
|
50%
|
Target
|
55th
|
|
100%
|
Maximum
|
80th
|
|
200%
|
*
|
Linear interpolation between achievement points.
|
As shown in the table above, the target payout is subject
to achieving the relative TSR performance metric at the 55th percentile, which underscores the Company’s commitment
to delivering and incentivizing above-median performance and returns to stockholders.
Additional Compensation Information
Other Elements of Compensation–Non-Qualified Deferred
Compensation and Perquisites
The Company
does not maintain an active pension plan and instead makes matching contributions to a tax-qualified 401(k) plan and Non-Qualified
Deferred Compensation Plan. We established the Non-Qualified Deferred Compensation Plan, which provides participants the opportunity
to defer a percentage of their compensation without regard to the compensation limits imposed by the Internal Revenue Code under
our 401(k) plan, to allow our senior-level executives to contribute toward retirement on a tax-effective basis in a manner that
is consistent with other Colfax employees who are not limited by the Internal Revenue Code limits. For additional details concerning
the Non-Qualified Deferred Compensation Plan, please see the Non-Qualified Deferred Compensation Table and the accompanying narrative
disclosure. The Company also maintains the DJO Global Executive Deferred Compensation Plan (the
“DJO Nonqualified Plan”), which was acquired in connection with the acquisition of DJO. The DJO Nonqualified Plan was
frozen to new participants and future deferrals on December 31, 2019. Mr. Shirley holds an account balance in this plan.
Aside from the benefits provided to Mr. Trerotola at
the time of his hire, which include (i) an automobile allowance of $20,000 per year and (ii) personal use of a private aircraft
chartered by the Company and/or personal financial planning services (or any combination thereof) in an aggregate amount not to
exceed $100,000 in compensation income (i.e., imputed income under tax rules) for any calendar year, we provide minimal perquisites
to our executives, including up to $10,000 in financial and tax planning services for senior executives, business-related items
such as relocation assistance, which may be grossed up consistent with competitive market recruitment practices, and benefits provided
in non-U.S. locations in accordance with local practice.
Employment Agreements
Mr. Trerotola
is party to an employment agreement with the Company. Mr. Trerotola’s employment agreement has an initial three-year
term, subject to automatic one-year term extensions thereafter, unless we or Mr. Trerotola provides written notice in advance
to terminate the automatic extension provision. Mr. Trerotola’s base salary may not be reduced below the amount previously
in effect. In addition, Mr. Trerotola is entitled to participate in our Annual Incentive Plan with a target bonus amount
no less than 120% of his base salary then in effect. Mr. Trerotola’s agreement also provides severance benefits as well
as change in control benefits only if a termination for “good reason” or other than for “cause” occurs
within two years following the change in control (i.e., “double trigger” provisions).
Mr. Pryor is party to an employment agreement with the
Company. Mr. Pryor’s employment agreement has an initial two-year term, subject to automatic one-year term extensions
thereafter, unless
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- 2021 Proxy Statement
|
35
|
|
|
|
our Board or Mr. Pryor provides written notice in advance
to terminate the automatic extension provision. Mr. Pryor’s base salary may not be reduced below the amount previously
in effect without his written agreement. In addition, Mr. Pryor is entitled to participate in our Annual Incentive Plan with
a target bonus amount no less than 50% of his base salary then in effect. Mr. Pryor’s agreement also provides severance
benefits.
Mr. Hix’s letter agreement, entered into upon
his hire, provides for severance benefits that are substantially comparable, in all material respects, to those provided for in
our employment agreements.
Mr. Kambeyanda is party to a letter agreement with the
Company that specifies his starting annual salary and a target bonus of at least 70% under the AIP. This agreement also provides
for a transition bonus made in connection with his hire that is to be paid in installments over his first five years of employment
(with $330,000 payable in each of 2017 and 2018, and $130,000 payable in each of 2019, 2020 and 2021). This letter agreement also
provides that Mr. Kambeyanda is eligible for our Executive Officer Severance Plan.
Mr. Shirley
is party to a service agreement with DJO, which he entered into prior to our acquisition of the DJO business in 2019 and which
was assumed as part of the acquisition. The agreement provides for a four-year initial term, with automatic one-year term extensions
commencing November 14, 2020, unless we or Mr. Shirley provides written
notice in advance to terminate the automatic extension provision. The agreement provides that Mr. Shirley’s base salary
is a specified amount and that he is entitled to such increases as determined by the Board. In addition, Mr. Shirley is entitled
to receive an annual bonus of 100% of his base salary. The employment agreement also provides severance benefits, but does not
provide enhanced change in control benefits.
In addition, each of our NEOs other than Mr. Trerotola
is party to a change in control agreement with the Company. Under the change in control agreements, severance payable upon a change
in control is only received upon the executive officer’s termination without cause or resignation for good reason within
two years following, or the three months preceding, the change in control. The change in control agreements are designed to retain
these executive officers and ensure their continued dedication to the Company notwithstanding a possible change in control.
Additional details regarding the material terms of these
agreements are summarized under “Employment Agreements, Change in Control Agreements and Executive Officer Severance Plan”
on page 43 and “Potential Payments Upon Termination or Change in Control” on page 45 and a summary of the material
terms and eligibility requirements for the Executive Officer Severance Plan is provided under “Potential Payments Upon Termination
or Change in Control.”
Stock Ownership Policy and Stock Holding Requirements
Our stock ownership policy further aligns the long-term financial
interests of Company executives with those of our stockholders while also serving as a risk mitigation tool. Each executive at
a vice president level or higher must retain at least one-half of vested equity awards, less shares withheld or sold for tax withholding
obligations, until the executive has accumulated shares of our common stock or other qualifying forms of equity having the value
described below. The ownership value thresholds are as follows:
Leadership Position
|
Value of Shares
|
President and CEO
|
6x base salary
|
EVP/SVP
|
3x base salary
|
VP
|
1x base salary
|
All of the Company’s NEOs have achieved these ownership
targets as of the date of this Proxy Statement.
CEO Recommendations
During 2020,
Mr. Trerotola provided recommendations to the Compensation Committee with respect to the compensation levels for our executive
officers, other than for himself. These recommendations were based on his assessment of the executive officer’s relative
experience, overall performance, and impact on the achievement of our financial and operational goals and strategic objectives,
combined with perspective from the competitive review data. While the Compensation Committee took
these recommendations under advisement, it independently evaluated the pay recommendations for each executive officer and made
all final compensation decisions in accordance with its responsibilities as set forth in the Compensation Committee Charter. As
a result of the pandemic and the resulting economic downturn, management recommended, and the Compensation Committee agreed, that
previously agreed upon increases would not be provided.
Role of Compensation Consultants and Peer Data Review
Our Compensation
Committee also obtains perspective from competitive data reviewed by FW Cook, the independent advisor to the Compensation Committee
on matters of executive compensation. The Compensation Committee annually reviews the list of peer companies previously recommended
by FW Cook to confirm that such continues to reflect the peers used by financial
analysts and governance advisors covering Colfax and to represent our growth trajectory, revenue, market capitalization and overall
scope and nature of operations. The peer group referenced in 2020 was as follows:
|
- 2021 Proxy Statement
|
36
|
|
|
|
Colfax Peer Group
|
|
|
AMETEK, Inc.
|
IDEX Corporation
|
STERIS plc
|
The Cooper Companies, Inc.
|
ITT Inc.
|
Teleflex Incorporated
|
Crane Co.
|
Kennametal Inc.
|
The Timken Company
|
Dover Corporation
|
Lincoln Electric Holdings, Inc.
|
Varian Medical Systems
|
Flowserve Corporation
|
Pentair plc
|
Xylem Inc.
|
Haemonetics Corporation
|
Regal Beloit Corporation
|
Zimmer Biomet Holdings, Inc.
|
Hill-Rom Holdings, Inc.
|
Rexnord Corporation
|
|
Hubbell Incorporated
|
Snap-on Incorporated
|
|
Competitive review data drawn from this group was utilized
by the Compensation Committee as one of many reference points to assist in its compensation decisions, and for certain NEOs, competitive
review data drawn from this group was used to “benchmark” the amount of compensation paid to such NEOs.
Independence of Compensation Consultant
In March 2021, the Compensation Committee considered
the independence of FW Cook in light of the SEC rules regarding conflicts of interest involving compensation consultants and
NYSE listing standards regarding compensation consultant independence. The Compensation Committee requested and received a
letter from FW Cook addressing conflicts of interest and independence, including specific factors enumerated in both relevant
SEC rules and NYSE listing standards. The Compensation Committee discussed and considered these factors, and other factors it
deemed relevant, and concluded that FW Cook is independent and that its work during 2020 did not raise any conflict of
interest.
Compensation Program and Risk
As part of our continued appraisal of our compensation program,
management, with oversight from the Compensation Committee, annually reviews our compensation policies and practices and the design
of our overall compensation program in relation to our risk management practices and any potential risk-taking incentives. This
assessment includes a review of the primary elements of our compensation program in light of potential risks:
Compensation Program Risk Considerations
Pay Mix
|
■ Compensation program includes an appropriate mix of short-
and long-term incentives, which mitigate the risk of undue focus on short-term targets while rewarding performance in
areas that are key to our long-term success.
■ Base salaries are set at competitive levels to promote stability
and provide a component of compensation that is not at risk.
|
Performance Metrics and Goals
|
■ Distinct performance metrics are used in both our short-term
(AIP) and long-term incentive plans.
■ Our Annual Incentive Plan is designed with a payout scale
(including a maximum cap) that supports our pay-for-performance philosophy, as set forth on page 32.
|
Long-Term Incentives
|
■ The equity grant portion of our compensation program,
combined with our stock ownership guidelines and stock holding requirements, is designed to align the long-term interests
of our executives with those of our stockholders.
|
We have controls and other policies in place that serve to
limit excessive risk-taking behavior within our compensation program, including, but not limited to, the following:
Compensation Risk Mitigation Components
Compliance Risk Mitigation
|
■ Oversight of our compensation process and procedures by the
Compensation Committee, each member of which has been determined by the Board to be independent under applicable SEC rules
and NYSE listing standards;
■ Internal controls over our financial reporting, which are
maintained by management and reviewed as a part of our internal audit process and further reviewed and tested by our external
auditors, as overseen by the Audit Committee; and
■ Audit Committee oversight and review of financial results
and non-GAAP metrics used in certain components of our AIP and long-term incentives.
|
Personnel Risk Mitigation
|
■ Implementation of and training on Company-wide standards of conduct, as described
on page 19 under “Standards of Conduct.”
|
Risk Mitigation Policies
|
■ Provisions in the Company’s insider trading policy prohibiting
hedging transactions that would allow the holder to limit or eliminate the risk of a decrease in the value of the Company’s
securities;
■ A policy prohibiting pledging of Company shares after February
17, 2014; and
■ A clawback policy applicable to all executive officers.
|
|
- 2021 Proxy Statement
|
37
|
|
|
|
The Compensation Committee reviews with management the results
of its assessment annually. Based on its most recent review, the Compensation Committee concluded that the risks arising from Company
compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company.
Additionally, the Compensation Committee also reviews the
Company’s strategies and policies related to human capital management, including with respect to matters such as diversity,
inclusion, pay equity, corporate culture, talent development and retention.
Hedging Ban
Any director, officer or employee of the Company is prohibited
from engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging
and monetization transactions, such as zero-cost collars, equity swaps, exchange funds and forward sale contracts, that allow the
holder to limit or eliminate the risk of a decrease in the value of the Company’s securities.
Pledging Policy
Our Board has adopted a policy that prohibits any director
or executive officer from pledging as security under any obligation any shares of Colfax common stock that he or she directly or
indirectly owns and controls (other than shares already pledged as of February 17, 2014). Any shares of Colfax common stock that
were pledged prior to February 17, 2014 do not count toward meeting our stock ownership requirements.
Clawback Policy
The Compensation Committee has adopted a clawback policy
applicable to our executive officers. Under the policy, in the event the Company is required to restate its financial results due
to material non-compliance with any financial reporting requirement under the securities laws as generally applied, the Board will
review all bonus payments made, including all bonus payments under our Annual Incentive Plan, and all performance-based equity
compensation that was earned or vested on the basis of having met or exceeded financial results during the three years prior to
the date that the Company determines such restatement is required.
If the Board determines that such payments or the amount
of awards earned/vested would have been lower had they been determined or calculated based on such restated results, the Board
will, to the extent permitted by governing law, seek to recoup for the benefit of the Company the value of such excess payments
made to and/or equity awards earned by executive officers. The Board maintains discretion, to the extent permitted under applicable
law, not to seek such recoupments if the Board determines, in the exercise of its fiduciary duties, that under the specific circumstances
it would not be appropriate to seek to recover such amounts. The Company may effect such recoupment by requiring executive officers
to pay such amount(s) to the Company, by set-off, by reducing future compensation, or by such other means or combination of means
as the Board determines to be appropriate.
Equity Grant Practice
The Compensation Committee has the authority to grant equity
awards. The Company does not time the grant of equity awards around material, non-public information. Grant dates are determined
either as of the date of Compensation Committee approval or on the date of a specific event, such as the date of hire or promotion,
for certain executive officers. The target grant value is translated into a number of shares underlying each grant using a valuation
formula that, for PRSUs and RSUs, incorporates a 20-day average closing price up to and including the grant date, to avoid the
potential volatility impact of using a single-day closing price.
The Compensation Committee has delegated authority to our
CEO and Chief Human Resources Officer for non-annual grants of equity awards to associates who are non-executive officers. The
aggregate grant date value of such equity awards may not exceed $4,000,000 during the fiscal year period. Such awards are subject
to further restrictions on individual size, and awards must be made pursuant to the terms of award agreement forms previously approved
by the Board or the Compensation Committee. The effective grant date of these awards is on the first trading day on or after the
date of hire or promotion for newly hired employees following review and approval by the CEO or Chief Human Resources Officer,
as applicable. The Compensation Committee receives a report of any grants made pursuant to this delegated authority at each regularly
scheduled meeting.
Rule 10b5-1 Trading Plans by Executive Officers
Certain of our executive officers have adopted written stock
trading plans in accordance with Rule 10b5-1 under the Exchange Act and our insider trading policy. A Rule 10b5-1 Trading Plan
is a written document that pre-establishes the amount (or ratio), prices, and dates (or range of possible dates) of future purchases
or sales of our common stock. These plans are entered into during an open window period in accordance with the terms of our insider
trading policy. From time to time, certain NEOs have entered into such plans (i) to sell the percentage of vested shares necessary
to satisfy applicable tax withholding obligations upon the vesting and delivery of PRSUs and RSUs, or (ii) to exercise options
that are approaching the end of their term.
|
- 2021 Proxy Statement
|
38
|
|
|
|
|
COMPENSATION COMMITTEE REPORT
|
The Compensation Committee participated in the preparation
of the Compensation Discussion and Analysis, reviewing successive drafts and discussing the drafts with management. Based on its
review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in the Company’s 2021 Proxy Statement and in the Company’s Annual Report on Form
10-K for 2020 by reference to the Proxy Statement.
|
Compensation Committee of the Board of Directors
|
|
|
|
Rhonda Jordan, Compensation Committee Chair
Philip Okala
Rajiv Vinnakota
Sharon Wienbar
|
|
- 2021 Proxy Statement
|
39
|
|
|
|
|
EXECUTIVE COMPENSATION
|
Summary Compensation Table
Name
and
Principal Position
|
|
Year
|
|
Salary
($)(1)
|
|
Bonus
($)(2)
|
|
Stock
Awards
($)(3)
|
|
Option
Awards
($)(4)
|
|
Non-Equity
Incentive Plan
Compensation
($)(5)
|
|
Change
in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(6)
|
|
All
Other
Compen-
sation
($)(7)
|
|
Total
($)
|
|
Matthew Trerotola
|
|
2020
|
|
1,029,364
|
|
—
|
|
4,429,992
|
|
1,443,739
|
|
1,099,690
|
|
—
|
|
277,101
|
|
8,279,886
|
|
President and Chief Executive
Officer
|
|
2019
|
|
1,071,346
|
|
—
|
|
2,724,996
|
|
2,724,996
|
|
1,480,600
|
|
—
|
|
428,088
|
|
8,430,026
|
|
|
2018
|
|
1,049,000
|
|
—
|
|
—
|
|
—
|
|
1,676,000
|
|
—
|
|
422,927
|
|
3,147,927
|
|
Christopher Hix
|
|
2020
|
|
626,250
|
|
—
|
|
1,534,148
|
|
499,994
|
|
390,000
|
|
—
|
|
70,255
|
|
3,120,897
|
|
Executive Vice President, Finance
and Chief Financial Officer
|
|
2019
|
|
591,731
|
|
—
|
|
1,999,987
|
|
999,998
|
|
476,000
|
|
—
|
|
75,644
|
|
4,149,158
|
|
|
2018
|
|
570,962
|
|
—
|
|
999,987
|
|
1,000,002
|
|
640,000
|
|
—
|
|
29,260
|
|
3,240,211
|
|
Daniel Pryor
|
|
2020
|
|
544,356
|
|
—
|
|
1,419,104
|
|
462,491
|
|
339,000
|
|
—
|
|
75,644
|
|
2,840,595
|
|
Executive Vice President, Strategy
and Business Development
|
|
2019
|
|
560,962
|
|
—
|
|
924,995
|
|
924,999
|
|
497,200
|
|
—
|
|
68,578
|
|
2,976,734
|
|
|
2018
|
|
544,615
|
|
—
|
|
1,874,996
|
|
1,875,004
|
|
532,000
|
|
—
|
|
64,249
|
|
4,890,864
|
|
Shyam Kambeyanda
|
|
2020
|
|
575,521
|
|
130,000
|
|
1,150,592
|
|
374,996
|
|
375,000
|
|
—
|
|
24,737
|
|
2,630,846
|
|
Executive Vice President, President
and CEO of ESAB
|
|
2019
|
|
544,688
|
|
130,000
|
|
1,149,998
|
|
650,001
|
|
522,720
|
|
—
|
|
58,644
|
|
3,056,051
|
|
|
2018
|
|
505,000
|
|
330,000
|
|
599,992
|
|
599,999
|
|
460,000
|
|
—
|
|
96,121
|
|
2,591,112
|
|
Brady Shirley
|
|
2020
|
|
812,404
|
|
—
|
|
2,454,728
|
|
—
|
|
613,700
|
|
—
|
|
16,587
|
|
3,897,419
|
|
Chief Executive Officer of DJO
|
|
2019
|
|
719,231
|
|
—
|
|
2,499,995
|
|
500,003
|
|
702,100
|
|
—
|
|
22,027
|
|
4,443,356
|
|
(1)
|
In light of the impact of COVID-19 on our business, the CEO and NEOs voluntarily took a 20% reduction to their base salaries during the second quarter and a 10% reduction to their base salaries during the third quarter of 2020. Their base salaries were returned to 100% at the beginning of the fourth quarter of 2020.
|
(2)
|
For Mr. Kambeyanda, the amounts represent for 2020, 2019 and 2018 the second, third and fourth of five installment payments of his cash signing bonus.
|
(3)
|
Amounts represent the aggregate grant date fair value of grants made to each NEO, as computed in accordance with FASB ASC Topic 718. See Note 14 to our consolidated financial statements for the year ended December 31, 2020, included in our Annual Report on Form 10-K filed with the SEC on February 18, 2021. See “Long-Term Incentives” above on page 34. Assuming the maximum achievement of the performance goals applicable to the PRSUs, the grant date value of the PRSUs granted to the NEOs in 2020 would have been $5,906,656, $2,045,556, $1,892,164, $1,534,148 and $2,454,728 for Messrs. Trerotola, Hix, Pryor, Kambeyanda, and Shirley, respectively.
|
(4)
|
Amounts represent the aggregate grant date fair value of grants made to each NEO, as computed in accordance with FASB ASC Topic 718. See Note 14 to our consolidated financial statements for the year ended December 31, 2020, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 18, 2021. For 2020 grants, options were valued by the Black Scholes-based option value based on the closing price of our common stock on the date of grant. The exercise price for stock option awards equals the closing price of our common stock on the date of grant. See “Long-Term Incentives” above on page 34.
|
(5)
|
Amounts represent the payouts pursuant to our Annual Incentive Plan. For a discussion of the performance metrics on which the 2020 Annual Incentive Plan was based, including the weighting for each performance metric and the actual percentage achievement of the financial performance targets, see “Annual Incentive Plan” above on page 32.
|
(6)
|
Amounts set forth in this column for 2020 consist of the following:
|
|
|
|
Name
|
|
Company
401(k)/Deferred
Compensation
Plan
Match and
Contribution
($)(a)
|
|
Auto
Allowance
($)(b)
|
|
Financial
Services
($)(c)
|
|
Aircraft
Usage
($)(d)
|
|
Supplemental
Long-Term
Disability
Premiums
($)(e)
|
|
Group
Term Life
Insurance
($)(f)
|
|
($)(g)
|
|
($)
|
|
Total
($)
|
|
|
Mr. Trerotola
|
|
150,598
|
|
20,769
|
|
10,555
|
|
91,264
|
|
948
|
|
2,967
|
|
—
|
|
—
|
|
277,101
|
|
|
Mr. Hix
|
|
52,495
|
|
—
|
|
12,462
|
|
—
|
|
948
|
|
4,350
|
|
—
|
|
—
|
|
70,255
|
|
|
Mr. Pryor
|
|
62,494
|
|
—
|
|
10,000
|
|
—
|
|
948
|
|
2,202
|
|
—
|
|
—
|
|
75,644
|
|
|
Mr. Kambeyanda
|
|
17,100
|
|
—
|
|
4,500
|
|
—
|
|
948
|
|
2,139
|
|
50
|
|
—
|
|
24,737
|
|
|
Mr. Shirley
|
|
10,092
|
|
—
|
|
—
|
|
—
|
|
948
|
|
5,547
|
|
—
|
|
—
|
|
16,587
|
|
|
(a)
|
Amounts represent the aggregate Company match and Company contribution made by Colfax during 2020 to such NEO’s 401(k) plan account and Non-Qualified Deferred Compensation Plan account. See the Nonqualified Deferred Compensation table and accompanying narrative for additional information on the Non-Qualified Deferred Compensation Plan.
|
|
(b)
|
For Mr. Trerotola, amount represents an annual cash allowance for car-related expenses pursuant to his employment contract.
|
|
(c)
|
Amount represents amounts for financial planning services as reimbursed by the Company during 2020. For Messrs. Trerotola and Hix, amounts include the Company’s reimbursement in 2020 of $555 and $2,462, respectively, for financial planning expenses incurred during 2019.
|
|
(d)
|
Amount represents Company expenses incurred for private plane usage in 2020. The Company is billed directly for the charter flight services used for Mr. Trerotola’s personal travel. The imputed income to Mr. Trerotola for these flights as calculated under the tax rules was $6,932, based on the SIFL rates promulgated by the Internal Revenue Service. The Company does not gross-up or make whole Mr. Trerotola for the income imputed to his use of chartered flights.
|
|
(e)
|
Amount represents premiums for supplemental long-term disability insurance.
|
|
(f)
|
Amount represents premiums for a life insurance benefit equal to 1.5 times salary, capped at $1,125,000.
|
|
(g)
|
Amount represents value of a gift card.
|
|
- 2021 Proxy Statement
|
40
|
|
|
|
Grants of Plan-Based Awards for 2020
The following table sets forth information with respect to grants
of plan-based awards to our named executive officers during 2020:
|
|
|
|
|
|
Estimated
Possible Payouts Under
Non-Equity
Incentive
Plan Awards(1)
|
|
Estimated
Future Payouts
Under
Equity Incentive
Plan Awards(2)
|
|
All Other
Stock
Awards:
Number of
shares of
stock
|
|
All
Other
Option
Awards:
Number of
Securities
Underlying
|
|
Exercise
or Base
Price of
Option
|
|
Grant
Date
Fair Value
of Stock
and
|
|
Name
|
|
Award
Type
|
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
or
units
(#)(3)
|
|
Options
(#)(4)
|
|
Awards
($/Sh)
|
|
Option
Awards ($)(5)
|
|
Matthew
L. Trerotola
|
|
Annual Incentive Plan
|
|
—
|
|
673,125
|
|
1,346,250
|
|
3,365,625
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
PRSUs
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
39,200
|
|
78,400
|
|
156,800
|
|
|
|
|
|
|
|
2,953,328
|
|
|
RSUs
|
|
2/24/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,200
|
|
|
|
|
|
1,476,664
|
|
|
Stock Options
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
119,416
|
|
37.67
|
|
1,443,739
|
|
Christopher
M. Hix
|
|
Annual Incentive Plan
|
|
|
|
260,000
|
|
520,000
|
|
1,300,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
PRSUs
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
13,575
|
|
27,151
|
|
54,302
|
|
—
|
|
—
|
|
—
|
|
1,022,778
|
|
|
RSUs
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
13,575
|
|
|
|
|
|
511,670
|
|
|
Stock Options
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
41,356
|
|
37.67
|
|
499,994
|
|
Daniel
A. Pryor
|
|
Annual Incentive Plan
|
|
—
|
|
226,000
|
|
452,000
|
|
1,130,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
PRSUs
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
12,557
|
|
25,115
|
|
50,230
|
|
—
|
|
—
|
|
—
|
|
946,082
|
|
|
RSUs
|
|
2/24/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,557
|
|
|
|
|
|
473,022
|
|
|
Stock Options
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
38,254
|
|
37.67
|
|
462,491
|
|
Shyam
Kambeyanda
|
|
Annual Incentive Plan
|
|
—
|
|
250,000
|
|
500,000
|
|
1,250,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
PRSUs
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
10,181
|
|
20,363
|
|
40,726
|
|
—
|
|
—
|
|
—
|
|
767,074
|
|
|
RSUs
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10,181
|
|
—
|
|
—
|
|
383,518
|
|
|
Stock Options
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
31,017
|
|
37.67
|
|
374,996
|
|
Brady
Shirley
|
|
Annual Incentive Plan
|
|
—
|
|
425,000
|
|
850,000
|
|
2,125,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
PRSUs
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
16,291
|
|
32,852
|
|
65,164
|
|
—
|
|
—
|
|
—
|
|
1,227,364
|
|
|
RSUs
|
|
2/24/2020
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
32,852
|
|
—
|
|
—
|
|
1,227,364
|
|
(1)
|
Amounts represent the possible payouts under our Annual Incentive Plan. Threshold estimated possible payouts incorporate a 0.5 IPF, target estimated possible payouts incorporate a 1.0 IPF and maximum estimated possible payouts incorporate the 250% maximum payout cap under the Annual Incentive Plan. For a discussion of the performance metrics and actual results and payouts under the plan for fiscal 2020 see the Compensation Discussion and Analysis and the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above, respectively.
|
(2)
|
Amounts represent potential shares issued under performance-based restricted stock unit awards. The PRSUs may be earned at the end of the performance period upon certification by the Compensation Committee of the performance level that has been met. The PRSUs cliff vest at the end of the three-year performance period, if earned. Once vested, at least 50% of the shares delivered pursuant to the PRSUs (net of shares withheld or sold for taxes) must be held for an additional one-year period.
|
(3)
|
Amounts represent restricted stock units. The RSUs vest in three equal annual installments beginning on the first anniversary of the grant date.
|
(4)
|
Amounts represent stock option awards that vest ratably over three years, beginning on the first anniversary of the grant date, based on continued service.
|
(5)
|
The amounts shown in this column represent the full grant date fair value of grants made to each NEO, as computed in accordance with FASB ASC Topic 718. PRSUs are valued based upon the probable outcome of the performance conditions associated with these awards as of the grant date and such calculation is consistent with the estimate of aggregate compensation cost recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures.
|
|
- 2021 Proxy Statement
|
41
|
|
|
|
Outstanding Equity Awards at 2020 Fiscal
Year-End
The following table shows, as of December 31, 2020, the number
of outstanding stock options, performance-based restricted stock unit awards and restricted stock unit awards held by the named
executive officers:
|
|
Option
Awards
|
|
Stock
Awards
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date(1)
|
|
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)(2)
|
|
Market
Value
of Shares or
Units of Stock
That Have Not
Vested
($)(3)
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)(4)
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(5)
|
Matthew L. Trerotola
|
|
538,600
|
|
—
|
|
39.54
|
|
7/23/2022
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
373,042
|
|
186,521
|
|
23.74
|
|
1/3/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
103,454
|
|
206,910
|
|
26.88
|
|
2/24/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
119,416
|
|
37.67
|
|
2/23/2027
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
82,119
|
|
3,140,231
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
292,524
|
|
11,186,118
|
Christopher M. Hix
|
|
124,611
|
|
—
|
|
26.56
|
|
6/30/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
71,609
|
|
—
|
|
40.47
|
|
2/12/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
64,474
|
|
32,238
|
|
33.41
|
|
3/7/2025
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
37,964
|
|
75,931
|
|
26.88
|
|
2/24/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
41,356
|
|
37.67
|
|
2/23/2027
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
33,170
|
|
1,268,421
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
146,780
|
|
5,612,867
|
Daniel A. Pryor
|
|
118,010
|
|
—
|
|
52.02
|
|
2/15/2022
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
114,613
|
|
—
|
|
26.51
|
|
11/15/2022
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
73,715
|
|
—
|
|
40.47
|
|
2/12/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
120,889
|
|
60,446
|
|
33.41
|
|
3/7/2025
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
35,117
|
|
70,236
|
|
26.88
|
|
2/24/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
38,254
|
|
37.67
|
|
2/23/2027
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
12,557
|
|
480,180
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
174,772
|
|
6,683,281
|
Shyam Kambeyanda
|
|
24,644
|
|
—
|
|
24.96
|
|
5/12/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
42,123
|
|
—
|
|
40.47
|
|
2/12/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
38,684
|
|
19,343
|
|
33.41
|
|
3/7/2025
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
24,677
|
|
49,355
|
|
26.88
|
|
2/24/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
31,017
|
|
37.67
|
|
2/23/2027
|
|
|
|
|
|
|
|
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
19,978
|
|
763,959
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
96,070
|
|
3,673,717
|
Brady Shirley
|
|
18,982
|
|
37,966
|
|
26.88
|
|
2/24/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
52,226
|
|
1,997,122
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
32,582
|
|
1,245,936
|
(1)
|
The vesting date of unvested stock option awards is set forth beside each option expiration date in the following chart. Note that the vesting date provided reflects when the options fully vest. Stock option awards vest ratably over three years beginning on the first anniversary of the grant date except as follows: For Mr. Trerotola, options granted on July 24, 2015 and January 4, 2016 vest in equal amounts on the third, fourth and fifth anniversaries of the grant date. For Mr. Pryor, the options granted on February 16, 2015 vest in equal amounts on the third, fourth and fifth anniversaries of the grant date.
|
|
- 2021 Proxy Statement
|
42
|
|
|
|
|
Option Grant Date
|
Option Expiration
Date
|
Option
Full Vesting Date (options vest over
three year period except as noted above)
|
|
2/16/2015
|
2/15/2022
|
2/16/2020
|
|
7/24/2015
|
7/23/2022
|
7/24/2020
|
|
11/16/2015
|
11/15/2022
|
11/16/2018
|
|
1/4/2016
|
1/3/2023
|
1/4/2021
|
|
5/13/2016
|
5/12/2023
|
5/13/2019
|
|
7/1/2016
|
6/30/2023
|
7/1/2019
|
|
2/14/2017
|
2/12/2024
|
2/13/2020
|
|
3/8/2018
|
3/7/2025
|
3/8/2021
|
|
2/25/2019
|
2/24/2026
|
2/25/2022
|
|
2/24/2020
|
2/23/2027
|
2/24/2023
|
(2)
|
For Mr. Trerotola, the amounts represent (i) 42,919 PRSUs that were earned upon certification by the Compensation Committee that the performance metric for these awards had been met and that vested on January 4, 2021, and (ii) 39,200 RSUs that vest ratably over three years, beginning on February 24, 2021. For Mr. Hix, the amounts represent (i) 19,595 restricted stock units that are the remaining portion of the promotional award granted to Mr. Hix on December 13, 2019 that vest ratably over three years, beginning on December 13, 2020, and (ii) 13,575 RSUs that vest ratably over three years, beginning on February 24, 2021. For Mr. Kambeyanda, the amounts represent (i) 9,797 restricted stock units that are the remaining portion of the promotional award granted to Mr. Kambeyanda on December 13, 2019 that vest ratably over three years, beginning on December 13, 2020, and (ii) 10,181 RSUs that vest ratably over three years, beginning on February 24, 2021. For Mr. Shirley, the amounts represent (i) 19,644 RSUs that vest on February 25, 2021, (ii) 16,291 RSUs that vest ratably over three years, beginning on February 24, 2021, and (iii) 16,291 RSUs that vest ratably over two years, beginning on February 24, 2022.
|
(3)
|
The amounts shown in this column represent the market value of the unvested PRSUs or restricted stock units, as applicable, based on the closing price of the Company’s common stock on December 31, 2020, which was $38.24 per share, multiplied by the number of units, respectively, for each unvested award.
|
(4)
|
The amounts shown in this column reflect unearned PRSUs as of December 31, 2020. If earned, these PRSUs are then subject to an additional service-based vesting period. The amounts shown in this column reflect awards made in 2018, 2019 and 2020 and show the target amount of PRSUs that may be earned at the end of the performance period upon certification by the Compensation Committee. The amounts would cliff vest at the end of the three-year performance period, if earned. For awards granted in 2018 and 2019, once vested, at least 50% of the shares delivered pursuant to the PRSUs (net of shares withheld or sold for taxes) must be held for an additional one-year period. The PRSUs granted in 2018 vested on March 8, 2021 and the amounts represent (i) 41,051 shares earned for Mr. Hix, (ii) 76,973 shares earned for Mr. Pryor; and (iii) 24,631 shares earned for Mr. Kambeyanda. Mr. Trerotola and Mr. Shirley had no 2018 PRSU awards The PRSUs granted to Messrs. Trerotola, Hix, Pryor and Kambeyanda in 2019 are reported at maximum performance. For Mr. Shirley, PRSUs awarded in 2019 were not earned because the metrics were not met. PRSUs awarded in 2020 are reported at target performance. For 2020, these amounts are reflected in the “Grants of Plan-Based Awards for 2020” table above under the column “Estimated Future Payouts Under Equity Incentive Plan Awards” and for 2019 are reflected in the “Grants of Plan-Based Awards for 2019” table in the Proxy Statement for the 2020 Annual Meeting.
|
(5)
|
The amounts shown in this column represent the market value of the unearned PRSUs based on the closing price of the Company’s common stock on December 31, 2020, which was $38.24 per share, multiplied by the threshold number of units, respectively, for each unvested and unearned performance stock award.
|
Employment Agreements, Change in Control Agreements and Executive
Officer Severance Plan
Messrs. Trerotola and Pryor are party to our current form of employment
agreement for executive officers, which was adopted by the Company on September 15, 2010, and Mr. Hix is party to an employment
letter agreement entered into upon his hire.
Mr. Kambeyanda is party to a letter agreement that specifies his
starting annual salary and minimum target bonus. Mr. Shirley is party to a service agreement with DJO, which he entered into prior
to our acquisition of the DJO business in 2019. The agreement provides for a four-year initial term, with automatic one-year term extensions commencing
November 14, 2020, unless we or Mr. Shirley provides written notice in advance to terminate the automatic extension provision.
The agreement provides that Mr. Shirley’s base salary is a specified amount and that he is entitled to such increases as
determined by the Board. In addition, Mr. Shirley is entitled to receive an annual bonus of 100% of his base salary. The employment
agreement also provides severance benefits, but does not provide change in control benefits.
Messrs. Hix, Kambeyanda, Pryor and Shirley are party to our current
form of change in control agreement for executive officers, which was approved by the Board on October 27, 2020.
We also maintain an Executive Officer Severance Plan, which provides
for severance benefits upon a termination without cause or a resignation for good reason for executive officers who are not otherwise
contractually entitled to severance compensation. The Executive Officer Severance Plan does not provide for change in control benefits.
Mr. Kambeyanda is the only NEO subject to this plan.
Employment Agreements and Change in Control Agreements
Messrs. Trerotola and Pryor are each parties an employment agreement
based on the Company’s form of employment agreement for executive officers. Mr. Trerotola’s employment agreement
has a three-year term and Mr. Pryor’s agreement has a two-year term and, in each case, is subject to automatic extension
unless the Board or the executive provides written notice to terminate the automatic extension provision. In addition, in the case
of Mr. Trerotola, in the event we undergo a “change in control” (as described below under “Potential Payments
Upon Termination or Change in Control”) during the term of the employment agreement, the agreement will be automatically
extended to the second anniversary of the change in control. Each officer’s base salary may not be reduced below the amount
previously in effect without the written agreement of the executive.
With respect to the benefits payable to Mr. Trerotola under his
agreement upon a change in control of Colfax, the benefits are only paid upon a “double trigger,” meaning a change
in control event must occur and Mr. Trerotola must either be terminated without cause by Colfax (or its successor) or must resign
for good reason.
On October 27, 2020, the Board approved a new form of change in
control agreement for certain executive officers. Messrs. Hix, Kambeyanda, Pryor and Shirley are each parties to change in control
agreements based on this form. The change in control
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|
|
|
|
agreements supersede and replace any prior agreement between the
Company and such executive officers with respect to a “change in control” of the Company (as described below under
“Potential Payments Upon Termination or Change in Control”).
Pursuant to the change in control agreements, upon a change in
control of the Company, each executive officer will be entitled to an annual base salary, cash bonus opportunity and benefits package
equal to or greater than the base salary, cash bonus opportunity or benefits package in effect for such executive officer immediately
prior to the change in control. If during the two year period following, or the three month period preceding, a change in control
of the Company, (a) the Company terminates the executive officer’s employment other than for cause or by reason of death
or disability (as such terms are defined in the change in control agreements) or (b) the executive officer resigns for good reason
(as such term is defined in the change in control agreements), the Company will pay the executive officer an amount equal to: (i) two
times the annual base salary of such executive officer plus (ii) two times the target cash bonus opportunity of such executive
officer. Any outstanding long-term equity incentive awards held by the executive officer will continue to be treated in accordance
with the terms and conditions of the award agreements and plans pursuant to which such awards were granted.
Each change in control agreement has an initial two-year term,
subject to automatic extension for successive one-year periods unless either the Company or the executive officer gives notice
of non-renewal to the other or the agreement is otherwise terminated pursuant to its terms.
In entering into these employment and change in control agreements,
the Company wanted to ensure the continued dedication of these executive officers, notwithstanding the possibility of a change
in control, and to retain such officers in our employ after any such transaction. We believe that, should the possibility of a
change in control arise, Colfax should be able to receive and rely upon our officers’ advice as to the best interests of
the Company and without the concern that such officer might be distracted by the personal uncertainties and risks created by the
potential change in control. In the event, however, that such officer is actually terminated during the period beginning three
months prior to a change in control event or within a certain period of time following the change in control (or prior to the end
of the term of the applicable employment agreement should the change of control not be consummated), which termination may be out
of their control (i.e., by the successor company or management), we believe that the officers should be compensated for their efforts
in positioning Colfax for the possibility of an acquisition event. Additional information on certain benefits provided under the
forms of employment agreement and change in control agreement in certain terminations or in connection with a change of control
is discussed below under “Potential Payments Upon Termination or Change in Control.”
Option Exercises and Stock Vested
The following table provides
information regarding the vesting of earned PRSUs and RSUs. No stock options were exercised during 2020 by the CEO or NEOs.
The number of shares acquired upon exercise or vesting and the value realized before payment of any taxes and broker
commissions is reflected below. Value realized represents the product of the number of shares received upon exercise or
vesting and the closing market price of our common stock on the exercise or vesting date, less the exercise price for
options. Mr. Shirley and Mr. Pryor did not exercise any Company options nor did any of their Company stock awards vest in
2020.
Option Exercises and Stock Vested During
Fiscal 2020
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number
of Shares
Acquired on Exercise
(#)
|
|
Value
Realized
on Exercise
($)
|
|
Number
of Shares
Acquired on Vesting
(#)
|
|
Value Realized
on Vesting
($)
|
Matthew Trerotola
|
|
N/A
|
|
N/A
|
|
80,855
|
|
2,762,955
|
Christopher M. Hix
|
|
N/A
|
|
N/A
|
|
23,012
|
|
728,703
|
Shyam
Kambeyanda
|
|
N/A
|
|
N/A
|
|
35,537
|
|
906,686
|
Nonqualified Deferred Compensation
Effective January 1, 2016, we
established the Colfax Corporation Nonqualified Deferred Compensation Plan (the “Nonqualified Plan”) to provide
certain select members of management and other highly compensated employees, including each of the NEOs, with an opportunity
to defer a stated percentage of their base compensation or their bonus compensation without regard to the compensation limits
imposed by the Internal Revenue Code for our 401(k) plan. We established the Nonqualified Plan to allow these individuals to
contribute toward retirement on a tax-effective basis in a manner that is consistent with other Colfax employees who are not
limited by the Internal Revenue Code limits. The plan is “unfunded,” meaning there are no assets segregated for
the exclusive benefit of plan participants.
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|
|
|
|
The Nonqualified Plan allows the NEOs to defer up to 50% of their
base salaries and up to 75% of their bonus compensation. In addition, during 2020 we matched up to 4% of all excess deferrals by
the NEOs and provided a 2% Company contribution. Our NEOs vest in these Company contributions to the Nonqualified Plan on the same
terms as under the Company’s 401(k) plan.
Deferrals under the Nonqualified Plan are notionally invested
among a number of different mutual funds, insurance company separate accounts, indexed rates or other measurement funds, which
are selected periodically by the plan administrator to best match the funds offered in the qualified 401(k) plan. Each participating
NEO can allocate his deferrals among these notional fund investment options and may change elections at any time by making a change
of election with the plan administrator. Colfax notionally invests its match and contribution amounts in the same investment options
in the same amounts and allocations as the reference funds selected by the officer.
Simultaneously with the
executive’s election to defer amounts under the Nonqualified Plan, the executive must elect the time and form of
payment for the deferred amounts, which may generally be either a lump sum distribution or in quarterly installments payable
over a period of one to ten years following a specified date (that must be at least one year following the end of the year to
which the officer’s deferral election relates) or at least six months following the officer’s separation
from service. Limited changes to deferral elections are permitted in accordance with the terms of the Nonqualified Plan. If
no election is made, the benefit will be paid in a lump sum on the last day of the month which occurs six months after the
executive’s separation from service. Deferred amounts may alternatively be paid out in a lump sum in the event of an
executive’s death or disability or in the event of an unforeseeable financial emergency, Furthermore, in the event the
executive’s account balance at the time of his or her separation from service is less than $15,000, payment of the
account balance will be made in a lump sum on or before the later of (i) December 31 of the calendar year of separation, or
(ii) the date 2.5 months after the executive’s separation from service.
The Company also maintains the Colfax Corporation Excess Benefit
Plan (the “Excess Benefit Plan”) which was frozen to new participants and future new deferrals on December 31, 2015.
Like the Nonqualified Plan, the Excess Benefit Plan is an unfunded non-qualified deferred compensation plan in which Mr. Pryor
holds an account balance. Like the Nonqualified Plan, amounts deferred under the Excess Benefit Plan are notionally invested in
offered measurement funds as selected by the plan participant and will be distributed in accordance with participant elections
and the terms of the Excess Benefit Plan following a participant’s separation from service, death or disability.
The Company also maintains the DJO Global Executive Deferred Compensation
Plan (the “DJO Nonqualified Plan”), which was acquired in connection with the acquisition of DJO. The DJO Nonqualified
Plan was frozen to new participants and future deferrals on December 31, 2019. Like the Nonqualified Plan, the DJO Nonqualified
Plan is an unfunded non-qualified deferred compensation plan. Mr. Shirley holds an account balance in this plan. Like the Nonqualified
Plan, amounts deferred under the DJO Nonqualified Plan are notionally invested in offered measurement funds as selected by the
plan participant and will be distributed in accordance with participant elections. Deferred amounts may generally be paid out in
either a lump sum distribution or in annual installments payable over a period of two to ten years following a specified date or
the officer’s separation from service (subject to any required 6-month delay). Deferred amounts will alternatively be paid
out in a lump sum in the event of an executive’s death.
Nonqualified Deferred Compensation
Name
|
|
Executive
Contributions
in Last FY
($)(1)
|
|
Registrant
Contributions
in Last FY
($)(2)
|
|
Aggregate
Earnings
in Last FY
($)(3)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last FYE
($)
|
Matthew L. Trerotola
|
|
113,071
|
|
133,498
|
|
69,850
|
|
—
|
|
1,387,489
|
Christopher M. Hix
|
|
19,050
|
|
35,395
|
|
11,981
|
|
—
|
|
343,015
|
Daniel A. Pryor
|
|
58,810
|
|
45,394
|
|
38,472
|
|
—
|
|
1,273,421
|
Shyam Kambeyanda
|
|
—
|
|
4,384
|
|
20,211
|
|
—
|
|
353,327
|
Brady
Shirley
|
|
—
|
|
—
|
|
1,785
|
|
—
|
|
71,470
|
(1)
|
With respect to each applicable NEO, amounts represent deferred salary and deferred bonus amounts that are reported in the Summary Compensation Table above under the applicable column.
|
(2)
|
All amounts reported in this column for each applicable NEO are reported in the “All Other Compensation” column of the Summary Compensation Table above.
|
(3)
|
No amounts reported in this column for each applicable NEO are reported in the Summary Compensation Table above.
|
Potential Payments Upon Termination or Change in Control
The information below describes relevant
employment agreement, change in control agreement, severance plan and equity plan provisions for payments upon termination or a
change in control and sets forth the amount of compensation that could have been received by each of the NEOs in the event such
executive’s employment had terminated under the various applicable triggering events described below as of December 31, 2020.
The benefits discussed below are in addition to those generally available to all salaried employees, such as distributions under
the 401(k) plan, health care benefits and disability benefits or vested amounts payable under the Nonqualified Plan and Excess
Benefit Plan described above. In addition, these benefits do not take into
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45
|
|
|
|
account any arrangements that we may provide
in connection with an actual separation from service or a change in control. Due to the number of different factors that affect
the nature and amount of any benefits provided in connection with these events, actual amounts payable to any of the NEOs should
a separation from service or change-in-control occur during the year will likely differ, perhaps significantly, from the amounts
reported below. Factors that could affect such amounts include the timing during the year of the event, the Company’s stock
price, and the target amounts payable under annual and long-term incentive arrangements that are in place at the time of the event.
Employment Agreements
Pursuant to the terms of the employment agreements
with each of Messrs. Trerotola, Pryor and Shirley, each executive is entitled to the following severance payments or benefits in
the event his employment is terminated by us without “cause” or the executive resigns for “good reason,”
in the case of Messrs. Trerotola and Pryor, or as a result of a “constructive termination,” in the case of Mr. Shirley
(each as described below):
■
|
For Mr. Trerotola, (i) the payment of his base salary then in effect for 24 months following termination, (ii) an amount equal to 200% of his target annual incentive bonus for the year of termination paid in equal installments over the 24 months following termination, and (iii) COBRA coverage for 24 months or until he becomes eligible for coverage by another company or is no longer eligible for COBRA;
|
■
|
For Mr. Pryor, a lump sum payment equal to one times Mr. Pryor’s base salary in effect and his target annual incentive compensation for the year of termination (or, if greater, the average of the two highest actual annual incentive payments made to the executive during the last three years);
|
■
|
For each of Messrs. Trerotola and Pryor, a lump sum payment equal to the executive’s pro rata annual incentive compensation for the year of termination subject to the performance criteria having been met for that year under the Annual Incentive Plan; and
|
■
|
For Mr. Shirley, (i) a lump sum payment equal to one and a half times the sum of Mr. Shirley’s base salary in effect and his target annual incentive compensation for the year of termination and (ii) a pro rata portion of Mr. Shirley’s annual bonus that would have been earned for the year of termination.
|
In the event we terminate Mr. Trerotola’s
employment without “cause,” or Mr. Trerotola terminates his employment for “good reason” within three months
prior to a “change in control event” (as described below), or two years after a “change in control”, the
terms of his employment agreement would entitle him to the following severance payments or benefits:
■
|
a lump sum payment equal to two times his base salary in effect and his target annual incentive compensation for the year of termination (or, if greater, the average of the two highest actual incentive payments made to him during the last three years);
|
■
|
a lump sum payment equal to his pro rata annual incentive compensation for the year of termination subject to the performance criteria having been met for that year under the Annual Incentive Plan; and
|
■
|
all equity awards will immediately vest, with any performance objectives applicable to performance-based equity awards deemed to have been met at the greater of (i) the target level at the date of termination, and (ii) actual performance at the date of termination.
|
Mr. Shirley’s agreement does not provide
for any additional payments or benefits in the event of a change in control or a termination in connection with a change in control.
However, he is party to a change in control agreement, as further described under “Change in Control Agreements” below.
In each case described above, the executive’s
right to the severance payments and benefits is conditioned on the executive’s execution of a waiver and release agreement
in favor of Colfax. In addition, each employment agreement contains standard confidentiality covenants, non-disparagement covenants,
non-competition covenants and non-solicitation covenants.
Under Mr. Trerotola’s and Mr. Pryor’s
agreements, in the event that any payment or benefit to the executives pursuant to the employment agreements or otherwise constitute
excess parachute payments under Section 280G of the Internal Revenue Code such that they would trigger the excise tax provisions
of the Internal Revenue Code, such payments are to be reduced so that the excise tax provisions are not triggered, but only upon
determination that the after-tax value of the termination benefits calculated with the restriction described above exceed the value
of those calculated without such restriction.
Mr. Trerotola’s and Mr. Pryor’s
agreements further provide that, in the event it is determined that the willful actions of the executive have resulted in a material
misstatement or omission in any report or statement filed by Colfax with the SEC, or material fraud against Colfax, Colfax is entitled
to recover all or any portion of any award or payment made to the executive.
For purposes of the employment agreements,
the following terms generally have the following meanings:
■
|
“cause”
means conviction of a felony or a crime involving moral turpitude, willful commission of any act of theft, fraud,
embezzlement or misappropriation against Colfax or its subsidiaries or willful and continued failure of the executive to
substantially perform his or her duties;
|
■
|
“change
in control” means:
|
|
–
|
a transaction or series of transactions pursuant to which any person acquires beneficial ownership of more than 50% of the voting power of the common stock of Colfax then outstanding;
|
|
–
|
during any two-year consecutive period, individuals who at the beginning of the period constitute the Board (together with any new directors approved by at least two-thirds of the directors at the beginning of the period or subsequently approved) cease to constitute a majority of the Board;
|
|
–
|
a merger, sale of all or substantially all of the assets of Colfax or certain acquisitions of the assets or stock by Colfax of another entity in which there is a change in control of Colfax; or
|
|
–
|
a liquidation or dissolution of Colfax.
|
■
|
“change in control
event” means the earlier to occur of a “change in control” or the execution of an agreement by Colfax
providing for a change in control.
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■
|
“constructive
termination” means:
|
|
–
|
Colfax’s failure
to pay or cause to be paid the executive’s base salary or annual bonus, if any, when due;
|
|
–
|
a reduction in the executive’s base salary or target annual bonus;
|
|
–
|
any diminution in the executive’s title or any substantial and sustained diminution in the executive’s duties;
|
|
–
|
a relocation of the executive’s primary work location more than 50 miles without the executive’s prior written consent; or
|
|
–
|
Colfax provides notice to the executive that it is electing not to extend the executive’s employment term.
|
■
|
“good
reason” means:
|
|
–
|
upon or following a change in control, the assignment to the executive of duties materially inconsistent with his position or any alteration of the executive’s duties, responsibilities and authorities, and then only if such adjustments or assignments are not the result of the conclusion by a significantly larger successor entity and its board of directors that such executive’s role needs to be altered;
|
|
–
|
the requirement for the executive to relocate his principal place of business at least 35 miles from his current place of business;
|
|
–
|
Colfax’s failure to obtain agreement from any successor to fully assume its obligations to the executive under the terms of the agreement; or
|
|
–
|
any other failure by Colfax to perform its material obligations under, or breach of Colfax of any material provision of, the employment agreement.
|
Trerotola Pro-Rata Vesting Provisions
In addition, Mr. Trerotola’s CEO Performance
Stock Unit Agreements provide that if he is terminated by the Company without “cause” (and not on account of disability)
or resigns for “good reason” his outstanding performance-based equity awards shall vest pro-ratably only if the performance
objectives are achieved as of the end of the performance period.
Hix Letter Agreement
Mr. Hix is subject to a letter agreement
entered into with the Company upon his hire. Pursuant to that letter agreement, severance in an amount equal to the sum of his
base salary and target bonus is to be provided in the event of a termination without “cause” or for “good reason.”
In the event of termination in connection with a “change in control,” Mr. Hix would be entitled to the benefits provided
under his change in control agreement, as described below.
Change in Control Agreements
Pursuant to the terms of the change in control
agreements with each of Messrs. Hix, Kambeyanda, Pryor and Shirley, in the event of a change in control, the executive will continue
to be paid an annual base salary at a rate not less than such executive’s current fixed or base compensation and will be
given a bona fide opportunity to earn his annual cash bonus opportunity for the year. In the event the executive’s employment
is terminated by us without “cause” or he resigns for “good reason” (each as described below) during the
two year period following, or the three month period preceding, a change in control, such executive is entitled to a lump
sum payment equal to (i) two times the executive’s base salary plus (ii) two times his target annual cash bonus opportunity
for the year.
Each executive’s right to the severance
payments is conditioned on the executive’s execution of a general release of claims in favor of Colfax. In addition, each
change in control agreement contains standard confidentiality covenants, non-disparagement covenants, non-competition covenants
and non-solicitation covenants.
In the event that any payment or benefit
under the change in control agreements would constitute a “parachute payment” within the meaning of Section 280G of
the Internal Revenue Code and would have the effect of decreasing the after-tax amounts received by the executive, the executive
has the right to reduce or eliminate any such payment or benefit to avoid having the payment or benefit being deemed a parachute
payment.
For purposes of the change in control agreements,
the following terms have the following meanings:
■
|
“cause”
means that, prior to any termination, the executive committed:
|
|
–
|
an intentional act of fraud, embezzlement or theft in connection with his employment by Colfax or any subsidiary;
|
|
–
|
intentional wrongful damage to property of Colfax or its subsidiaries;
|
|
–
|
intentional wrongful disclosure of secret processes or confidential information of Colfax or its subsidiaries;
|
|
–
|
conviction of a criminal offense; or
|
|
–
|
intentional wrongful engagement in any competitive activity which would constitute a material breach of the duty of loyalty. and any such act is materially harmful to Colfax and its subsidiaries taken as a whole.
|
■
|
“change
in control” means any of the following:
|
|
–
|
the acquisition by any person of beneficial ownership of more than 50% of the then-outstanding common stock of Colfax or the combined voting power of the then-outstanding voting securities of Colfax, subject to certain exceptions;
|
|
–
|
individuals who constitute the Board as of the date of the change in control agreement (together with any new directors approved by the vote of at least a majority of the directors comprising the Board as of the date of the change in control agreement or subsequently approved) cease for any reason (other than death or disability) to constitute at least a majority of the Board;
|
|
–
|
the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Colfax, subject to certain exceptions; or
|
|
–
|
approval by Colfax’s stockholders of a complete liquidation or dissolution of Colfax.
|
■
|
“good
reason” means:
|
|
–
|
failure to maintain the executive in the positions with Colfax or its subsidiaries which the executive held immediately prior to the change in control or the removal of the executive as a director of Colfax, if applicable;
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|
|
|
–
|
a material reduction in the nature or scope of responsibilities or duties attached to the positions the executive held with Colfax and its subsidiaries immediately prior to the change in control, a material reduction in the executive’s base salary and annual cash bonus opportunity or the termination or material modification of the material employee benefits available to the executive immediately prior to the change in control;
|
|
–
|
the liquidation, dissolution, merger, consolidation or reorganization of Colfax or a transfer or all or a significant portion of its business and/or assets, unless the successor has assumed all of Colfax’s duties and obligations under the change in control agreement;
|
|
–
|
Colfax relocates its principal executive offices, or Colfax or any subsidiary requires the executive to have his principal location of work changed, to any location more than 50 miles from the location immediately prior to the change in control or Colfax or its subsidiaries require the executive to travel significantly more than was required prior to the change in control; or
|
|
–
|
any material breach of the change in control agreement by Colfax or any successor.
|
Executive Officer Severance Plan
Mr. Kambeyanda is a participant in our Executive
Officer Severance Plan, which provides for severance benefits upon termination without cause or for good reason for executive officers
who are not otherwise contractually entitled to severance compensation pursuant to a separate agreement with the Company. Severance
provided in the event of termination without “cause” or for “good reason” (each defined as in the form
of employment agreement) is a lump sum payment equal to one times the executive’s base salary in effect and a pro rata payment
of his or her target annual incentive compensation for the year of termination. The Executive Officer Severance Plan does not provide
for any additional change in control benefits.
Equity Awards
The vesting of outstanding equity
awards, other than performance-based awards, accelerates in full upon the death or total and permanent disability of the
grantee or, unless assumed or substituted as discussed below, upon a “corporate transaction” (as defined below).
The vesting of the outstanding PRSUs accelerates in full upon the death or total and permanent disability of the grantee only
if and when the performance criteria for such award are achieved as of the end of the performance period upon certification
of the same by the Compensation Committee, or immediately if the performance period has already ended and the Compensation
Committee has certified that the performance criteria have been achieved. The outstanding PRSUs will terminate and cease to
vest upon a “corporate transaction,” unless prior to the corporate transaction the achievement of the performance
criteria is certified by the Compensation Committee, in which case the vesting for the award will accelerate in full unless
assumed or substituted as discussed below. While these benefits are available to all of our equity plan participants equally,
pursuant to SEC requirements, we have included these acceleration benefits in the table below. In addition, in the event of
termination of service other than for death, disability or cause, any stock option awards will remain exercisable to the
extent vested for 90 days after termination of service.
A “corporate transaction” under
any outstanding equity awards is generally defined as:
■
|
the dissolution or liquidation of the Company or a merger, consolidation, or reorganization of the Company with one or more other entities in which we are not the surviving entity;
|
■
|
a sale of substantially all of our assets to another person or entity; or
|
■
|
any transaction which results in any person or entity, other than persons who are stockholders or affiliates immediately prior to the transaction, owning 50% or more of the combined voting power of all classes of our stock.
|
Accelerated vesting upon a “corporate
transaction” will not occur to the extent that provision is made in writing in connection with the corporate transaction
for the assumption or continuation of the outstanding awards, or for the substitution of such outstanding awards for similar awards
relating to the stock of the successor entity, or a parent or subsidiary of the successor entity, with appropriate adjustments
to the number of shares of stock that would be delivered and the exercise price, grant price or purchase price relating to any
such award. If an award is assumed or substituted in connection with a corporate transaction and the holder is terminated without
cause within a year following a change in control, the award will fully vest and may be exercised in full, to the extent applicable,
beginning on the date of such termination and for the one-year period immediately following such termination or for such longer
period as the compensation committee shall determine.
Estimate of Payments
The following table provides information
related to compensation payable to each NEO assuming termination of such executive’s employment on December 31, 2020, or
assuming a change of control or corporate transaction with corresponding qualifying termination occurred on December 31, 2020.
Amounts also assume the price of our common stock was $38.24, the closing price on December 31, 2020, the last trading day of the
fiscal year.
|
- 2021 Proxy Statement
|
48
|
|
|
|
Potential Payments Upon Termination
or Change of Control
Executive
|
|
Matthew
L.
Trerotola
|
|
Christopher
M. Hix
|
|
Daniel
A.
Pryor
|
|
Shyam
Kambeyanda
|
|
Brady Shirley
|
Employment Agreement/Severance
Plan Benefits:
|
|
|
|
|
|
|
|
|
|
|
Termination without
“cause” or “good reason” (for all NEOs other than Mr. Shirley) or “constructive termination”
(for Mr. Shirley)
|
|
|
|
|
|
|
|
|
|
|
Payment Over 24 Months/18 Months//Lump Sum Payment(1)
|
|
4,846,500
|
|
1,170,000
|
|
1,017,000
|
|
625,000
|
|
2,550,000
|
Pro Rata Incentive Compensation(2)
|
|
1,346,250
|
|
—
|
|
452,000
|
|
500,000
|
|
850,000
|
Termination in
connection with a “change of control”
|
|
|
|
|
|
|
|
|
|
|
Lump Sum Payment
|
|
4,846,500
|
|
2,340,000
|
|
2,034,000
|
|
2,250,000
|
|
3,400,000
|
Pro Rata Incentive Compensation(2)
|
|
1,346,250
|
|
—
|
|
—
|
|
—
|
|
—
|
Accelerated Stock Options(3)
|
|
5,123,119
|
|
1,041,859
|
|
1,111,640
|
|
671,779
|
|
431,294
|
Accelerated PRSUs(4)
|
|
8,733,289
|
|
3,104,438
|
|
3,407,184
|
|
2,093,525
|
|
4,250,758
|
Accelerated RSUs(4)
|
|
1,449,008
|
|
1,268,421
|
|
480,180
|
|
763,959
|
|
1,997,122
|
NQDC Plans/Pension(5)
|
|
1,387,489
|
|
343,015
|
|
1,273,421
|
|
353,327
|
|
71,470
|
(1)
|
For Messrs. Trerotola and Shirley, the amount is paid over the 24 months and 18 months, respectively, following termination. For the other NEOs, the amount is paid as a lump sum.
|
(2)
|
Assumes achievement at target.
|
(3)
|
In addition to accelerated vesting pursuant to Messrs. Trerotola’s and Pryor’s employment agreements, stock options accelerate upon death, total and permanent disability, and, unless assumed or substituted as discussed above, upon a “corporate transaction” as defined above.
|
(4)
|
Under Messrs. Trerotola’s and Pryor’s employment agreements, in the event of a termination in connection with a change in control, the performance objectives applicable to unearned PRSUs will be deemed to have been met at the greater of (i) the target level at the date of termination, and (ii) actual performance at the date of termination. In addition to accelerated vesting pursuant to the employment agreements, RSUs and earned but unvested PRSUs for which the performance criteria have been certified as achieved, accelerate upon death, total and permanent disability and, unless assumed or substituted as discussed above, upon a “corporate transaction” as defined above.
|
(5)
|
Amounts represent the aggregate balance of the NEO’s Excess Benefit Plan or Non-Qualified Deferred Compensation account as of December 31, 2020. For more details on these plans, see “Nonqualified Deferred Compensation” above.
|
|
- 2021 Proxy Statement
|
49
|
|
|
|
|
CEO 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 relationship of the annual total compensation of our median compensated associate and the annual total compensation
of Mr. Trerotola, our President and Chief Executive Officer. The pay ratio included in this section is a reasonable estimate calculated
in a matter consistent with Item 402(u) of Regulation S-K.
For 2020:
|
The annual total compensation of the median
compensated of all of our employees (other than our CEO) was $28,481; and
|
|
The annual total compensation of Mr. Trerotola, as
presented in the Summary Compensation Table, was $8,660,796.
|
Based on this information, for 2020 the
ratio of the annual total compensation of Mr. Trerotola, our Chief Executive Officer, to the annual total compensation of our
median compensated employee was 304 to one.
|
The SEC’s rules for identifying the
median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies
to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect
their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable
to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize
different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
To identify our median compensated
employee, as well as to determine the annual total compensation of this “median employee”:
|
We determined that, as of December 31,
2020, our employee population consisted of approximately 14,733 persons, of whom approximately 3,075 were employed in the
United States and approximately 11,658 were employed outside the United States, based on our payroll records;
|
|
We selected December 31, 2020 as the date upon which
we would identify the “median employee”;
|
|
We annualized the compensation of associates employed
by us for less than a full fiscal year;
|
|
Based on payroll data for all employees aside from
those noted as excluded above, we used annualized base salary or base pay rate to identify our median employee, who was a
full-time, hourly associate in the Czech Republic; and
|
|
Once the median employee was identified, we calculated
the elements of this employee’s compensation for 2020 in accordance with the requirements of Item 402(c)(2)(x) of Regulation
S-X, resulting in annual total compensation of $28,841 based on the exchange rate in effect as of December 31, 2020.
|
|
- 2021 Proxy Statement
|
50
|
|
|
|
|
EQUITY COMPENSATION PLAN INFORMATION
|
The following table summarizes Colfax Corporation’s equity
plan information as of December 31, 2020:
Plan Category
|
|
Number of securities
to be issued
upon exercise of
outstanding options,
warrants, and rights
(a)
|
|
|
Weighted-average
exercise price
of outstanding
options, warrants,
and rights (b)(1)
|
|
|
Number of securities
remaining available for
future
issuance under
equity compensation
plans (excluding
securities reflected in
column (a))(c)
|
Equity compensation plans approved by Company stockholders
|
|
|
7,163,261
|
|
|
$
|
33.92
|
|
|
|
4,245,953
|
Stock options
|
|
|
4,599,067
|
|
|
$
|
33.92
|
|
|
|
|
Restricted stock units
|
|
|
1,101,392
|
|
|
|
—
|
|
|
|
|
Performance-based restricted stock units
|
|
|
1,462,802
|
(2)
|
|
|
—
|
|
|
|
|
Equity compensation plans not approved by Company stockholders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
TOTAL
|
|
|
7,163,261
|
|
|
$
|
33.92
|
|
|
|
4,245,953
|
(1)
|
The weighted average exercise price
does not take into account the shares issuable upon outstanding restricted stock units and performance-based restricted stock
units vesting, which have no exercise price.
|
(2)
|
This number assumes shares will be issued at the
maximum vesting amount for outstanding performance-based restricted stock units.
|
|
- 2021 Proxy Statement
|
51
|
|
|
|
|
DELINQUENT SECTION 16(A) REPORTS
|
Section 16(a) of the Exchange Act requires
our officers (as defined under Section 16(a) of the Exchange Act), directors and persons who own greater than 10% of a registered
class of our equity securities to file reports of ownership and changes in ownership with the SEC. Based on our records and other
information, we believe that each of our officers, directors and certain beneficial owners of our common stock complied with all
Section 16(a) filing requirements applicable to them during 2020 on a timely basis, except for the late filing of one late Form
4 by Mr. Shirley with respect to one transaction.
|
- 2021 Proxy Statement
|
52
|
|
|
|
Proposal
3
|
Approval of Named Executive Officers’ Compensation, on
a Non-Binding Advisory Basis (“Say-on-Pay”)
|
We are asking our stockholders to cast an
advisory vote at our Annual Meeting to approve the compensation of our named executive officers, as disclosed in this Proxy Statement.
Pursuant to Section 14A of the Exchange Act, we are asking that you vote on the following advisory resolution:
RESOLVED, that the 2020 compensation
paid to the Company’s named executive officers, as disclosed pursuant to the rules of the SEC, including the Compensation
Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
Though the vote is non-binding, the Compensation
Committee and the Board of Directors value your opinion and will consider the outcome of the vote in establishing our compensation
philosophy and making future compensation decisions. At this time, we intend to seek stockholder approval of our executive compensation
program on an annual basis and thus expect the next such vote to occur at our 2022 Annual Meeting of Stockholders.
Why You Should Approve Our Executive
Compensation Program
As discussed in our Compensation Discussion
and Analysis, we believe our compensation programs and practices are appropriate and effective in implementing our compensation
philosophy, and our focus remains on linking compensation to performance while aligning the interests of management with those
of our stockholders.
Vote Required
The affirmative vote of the holders of a
majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote is required to approve
the advisory vote approving the compensation of our named executive officers.
Board Recommendation
The
Board unanimously recommends that you vote FOR Proposal 3, which is advisory approval
of Colfax’s named executive officer compensation as disclosed in this Proxy Statement. We strongly urge stockholders
to review our entire Compensation Discussion and Analysis and the accompanying tables, which provides complete information
on the compensation awarded to the named executive officers and the reasoning supporting those awards.
|
|
- 2021 Proxy Statement
|
53
|
|
|
|
|
BENEFICIAL OWNERSHIP OF OUR COMMON STOCK
|
The following table sets forth certain information
as of March 22, 2021 (unless otherwise specified), with respect to the beneficial ownership of our common stock by each person
who is known to own beneficially more than 5% of the outstanding shares of common stock, each person currently serving as a director,
each nominee for director, each named executive officer (as listed below), and all directors and executive officers as a group.
Unless otherwise indicated, to our knowledge, each person has sole dispositive and voting power over the shares in the table.
Beneficial Owner
|
|
Shares Beneficially Owned
|
|
|
Percent of Class
|
|
5% Holder and Director
|
|
|
|
|
|
|
|
|
Mitchell P. Rales
|
|
|
9,237,859
|
(1)
|
|
|
6.8
|
%
|
5% Holders
|
|
|
|
|
|
|
|
|
T. Rowe Price Associates, Inc.
|
|
|
16,546,189
|
(2)
|
|
|
12.2
|
%
|
BlackRock, Inc.
|
|
|
9,600,661
|
(3)
|
|
|
7.1
|
%
|
The Vanguard Group
|
|
|
9,032,587
|
(4)
|
|
|
6.7
|
%
|
Steven M. Rales
|
|
|
8,420,373
|
(5)
|
|
|
6.2
|
%
|
Directors
|
|
|
|
|
|
|
|
|
Patrick W. Allender
|
|
|
317,204
|
(6)(7)
|
|
|
*
|
|
Thomas S. Gayner
|
|
|
91,539
|
(7)
|
|
|
*
|
|
Rhonda L. Jordan
|
|
|
113,583
|
(7)(8)
|
|
|
*
|
|
Liam J. Kelly
|
|
|
17,365
|
(7)
|
|
|
*
|
|
A. Clayton Perfall
|
|
|
85,961
|
(7)(9)
|
|
|
*
|
|
Philip A. Okala
|
|
|
878
|
(7)
|
|
|
*
|
|
Didier Teirlinck
|
|
|
39,414
|
(7)
|
|
|
*
|
|
Rajiv Vinnakota
|
|
|
33,116
|
(7)
|
|
|
*
|
|
Sharon Wienbar
|
|
|
47,380
|
(7)
|
|
|
*
|
|
Named Executive Officer and Director
|
|
|
|
|
|
|
|
|
Matthew L. Trerotola
|
|
|
1,513,655
|
(10)
|
|
|
*
|
|
Named Executive Officers
|
|
|
|
|
|
|
|
|
Christopher M. Hix
|
|
|
434,290
|
(10)
|
|
|
*
|
|
Daniel A. Pryor
|
|
|
766,948
|
(10)(11)
|
|
|
*
|
|
Shyam Kambeyanda
|
|
|
233,643
|
(10)
|
|
|
*
|
|
Brady Shirley
|
|
|
63,133
|
(10)
|
|
|
*
|
|
All of our directors and executive officers as a group (17 persons)
|
|
|
13,033,583
|
(10)
|
|
|
9.6
|
%
|
*
|
Represents beneficial ownership of
less than 1%
|
(1)
|
Includes 910,507 shares of common stock held by
Mr. Mitchell P. Rales’ Revocable Trust and IRA, 6,000,000 shares of common stock held by limited liability companies
of which Mr. Mitchell P. Rales is the trustee of the sole member, 19,388 shares of common stock held by Capital Yield Corporation,
of which Mr. Mitchell P. Rales and Mr. Steven M. Rales are the sole stockholders, 679,264 shares of common stock held
by the Mitchell P. Rales Family Trust, 28,700 shares of common stock held in trust for his daughters and 1,600,000 shares
of common stock underlying tangible equity units (“TEUs”) that may be settled into shares of common stock by the
holder at any time. The number of shares of common stock underlying Mr. Mitchell P. Rales’ TEUs is based on the amount
that may be acquired if the prepaid stock purchase contracts were settled prior to the second scheduled trading day immediately
preceding January 15, 2022. The actual number of shares of common stock the reporting person may acquire will depend on when
the prepaid stock purchase contracts are settled. Mr. Mitchell P. Rales has sole voting power and sole dispositive power
with respect to 7,618,471 shares of common stock and the 1,600,000 shares of common stock underlying TEUs, and shared voting
power and shared dispositive power with respect to 19,388 shares of common stock. 6,000,000 shares of Colfax common stock
are pledged to secure a line of credit. This entity and Mr. Mitchell P. Rales are in compliance with this line of credit.
The business address of Mr. Mitchell P. Rales, and the limited liability company, is 11790 Glen Road, Potomac, MD 20854.
|
(2)
|
The amount shown and the following information
is derived from a Schedule 13G/A filed February 16, 2021 by T. Rowe Price Associates, Inc. (“Price Associates”),
which sets forth Price Associates’ beneficial ownership as of December 31, 2020. According to the Schedule 13G/A, Price
Associates has sole voting power over 6,417,757 shares and sole dispositive power over 16,546,189 shares. The business address
of Price Associates is 100 E. Pratt Street, Baltimore, MD 21202.
|
(3)
|
The amount shown and the following information
is derived from a Schedule 13G/A filed February 5, 2021 by BlackRock, Inc. (“BlackRock”), which sets forth BlackRock’s
beneficial ownership as of December 31, 2020. According to the Schedule 13G/A, BlackRock has sole voting power over 9,248,315
shares and sole dispositive power over 9,600,661 shares. The business address of BlackRock is BlackRock, Inc. 55 East 52nd
Street, New York, NY 10055.
|
|
- 2021 Proxy Statement
|
54
|
|
|
|
(4)
|
The amount shown and the following
information is derived from a Schedule 13G/A filed February 10, 2021 by The Vanguard Group (“Vanguard”), which
sets forth Vanguard’s beneficial ownership as of December 31, 2020. According to the Schedule 13G/A, Vanguard has shared
voting power of 64,568 shares, sole dispositive power over 8,889,016 shares, and shared dispositive power over 143,571 shares.
The business address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355.
|
(5)
|
Includes 8,400,985 shares of common stock held
by Mr. Steven M. Rales’ Revocable Trust and 19,388 shares of common stock held by Capital Yield Corporation, of which
Mr. Mitchell P. Rales and Mr. Steven M. Rales are the sole stockholders. Mr. Steven M. Rales has sole voting power and sole
dispositive power with respect to 8,400,985 shares of common stock and shared voting power and shared dispositive power with
respect to 19,388 shares of common stock. The business address of Steven M. Rales is 2200 Pennsylvania Avenue, N.W., Suite
800 W, Washington, D.C. 20037-1701.
|
(6)
|
Includes 23,648 shares owned by the JWA Irrevocable
Trust #1, 27,504 shares held by the JWA GRAT #4, 57,978 shares held by the JWA GRAT #5, 90,129 shares held by the JWA
Irrevocable Trust #2, and 20,000 shares held by an irrevocable trust, of which Patrick Allender is a trustee. Mr. Allender
disclaims beneficial ownership of all shares held by the JWA irrevocable trusts and the JWA GRATs, except to the extent of
his pecuniary interest therein.
|
(7)
|
Beneficial ownership by directors (other than Mitchell
P. Rales) includes: (i) for each of Messrs. Allender and Gayner and Ms. Jordan, 34,785 DRSUs or DSUs that have vested or will
vest within 60 days of March 22, 2021 and will be delivered following the conclusion of service on the Board and 31,732 shares
that such individuals have the right to acquire upon the exercise of director stock options that have vested or will vest
within 60 days of March 22, 2021, (ii) for Mr. Kelly, 3,260 DRSUs or DSUs that have vested or will vest within 60 days of
March 22, 2021 and will be delivered following the conclusion of service on the Board and 7,741 shares that Mr. Kelly has
the right to acquire upon the exercise of director stock options that have vested or will vest within 60 days of March 22,
2021, (iii) for Mr. Perfall, 22,573 DRSUs or DSUs that have vested or will vest within 60 days of March 22, 2021 and will
be delivered following the conclusion of service on the Board and 31,732 shares that Mr. Perfall has the right to acquire
upon the exercise of director stock options that have vested or will vest within 60 days of March 22, 2021, (iv) for Mr. Okala,
878 shares that Mr. Okala has the right to acquire upon the exercise of director stock options that have vested or will vest
within 60 days of March 22, 2021 (v) for Mr. Teirlinck, 12,311 DRSUs or DSUs that have vested or will vest within 60 days
of March 22, 2021 and will be delivered following the conclusion of service on the Board and 18,139 shares that Mr. Teirlinck
has the right to acquire upon the exercise of director stock options that have vested or will vest within 60 days of March
22, 2021, (vi) for Mr. Vinnakota, 12,277 DRSUs or DSUs that have vested or will vest within 60 days of March 22, 2021 and
will be delivered following the conclusion of service on the Board and 31,732 shares that Mr. Vinnakota has the right to acquire
upon the exercise of director stock options that have vested or will vest within 60 days of March 22, 2021, (vii) for Ms.
Wienbar, 13,885 DRSUs or DSUs that have vested or will vest within 60 days of March 22, 2021 and will be delivered following
the conclusion of service on the Board and 22,377 shares that Ms. Wienbar has the right to acquire upon the exercise of director
stock options that have vested or will vest within 60 days of March 22, 2021, and (viii) DSUs received in lieu of annual cash
retainers and committee chairperson retainers that will be delivered following the conclusion of service on the Board as follows:
Mr. Allender—30,461, Mr. Gayner—25,022, Ms. Jordan— 22,066, Mr. Perfall— 24,209, Mr. Teirlinck—
8,964, and Ms. Wienbar— 11,118. For more information on these awards, see Director Compensation above.
|
(8)
|
Includes 18,010 shares held by a family trust,
6,191 shares held by her spouse and 799 shares held in a trust account for her spouse.
|
(9)
|
Includes 7,447 shares held by a trust.
|
(10)
|
Beneficial ownership by named executive officers
and our executive officers as a group includes shares that such individuals have the right to acquire upon the exercise of
options that have vested or will vest within 60 days of March 22, 2021. The number of shares included in the table as beneficially
owned which are subject to such options is as follows: Mr. Trerotola— 1,344,878, Mr. Hix— 382,647, Mr. Pryor—
570,660, Mr. Kambeyanda— 184,488, and Mr. Shirley—37,965, all of our current executive officers as a group—
2,554,276.
|
(11)
|
Includes 3,000 shares held by trusts for his children
and 2,312 shares held in his 401(k) account.
|
|
- 2021 Proxy Statement
|
55
|
|
|
|
|
GENERAL MATTERS
|
Outstanding Stock and Voting Rights
The Board has fixed the close of business
on March 22, 2021 (the “Record Date”) as the record date for determining the stockholders entitled to notice of, and
to vote at, the Annual Meeting. Only stockholders of record on that date will be entitled to vote. Proxies will be voted as specified
in the stockholder’s proxy. In the absence of specific instructions, proxies will be voted in accordance with the Company’s
recommendations and in the discretion of the proxy holders on any other matter which properly comes before the meeting or any
adjournment or postponement thereof. The Board has selected Mitchell P. Rales and Matthew L. Trerotola to act as proxies
with full power of substitution.
Any stockholder of record giving a proxy
has the power to revoke the proxy at any time before it is exercised by either (i) delivering a written notice of revocation
to Colfax Corporation at 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701, Attn: Corporate
Secretary, (ii) delivering prior to the Annual Meeting a properly executed and subsequently dated proxy, or (iii) virtually
attending and voting at the Annual Meeting. Attendance at the Annual Meeting will not cause your previously granted proxy to be
revoked unless you specifically so request. A beneficial stockholder who owns common stock in street name, meaning through a bank,
broker or other nominee, should contact that entity to revoke a previously given proxy.
The Company will bear the total expense
of this solicitation, including reimbursement paid to brokerage firms and others for their expenses in forwarding material regarding
the Annual Meeting to beneficial owners. Solicitation of proxies may be made personally or by mail, telephone, Internet, e-mail
or facsimile by officers and other management employees of the Company, who will receive no additional compensation for their
services.
The holders of shares of the Company’s
common stock are entitled to vote at the Annual Meeting. As of the Record Date, 135,252,369 shares of the Company’s common
stock were outstanding. Each outstanding share of the Company’s common stock entitles the holder to one vote on all matters
brought before the Annual Meeting.
A list of stockholders of record as of the
Record Date will be available for inspection during ordinary business hours at our corporate headquarters located at 420 National
Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701, for 10 days prior to the date of our Annual Meeting.
The list will also be available for inspection at the Annual Meeting.
The quorum necessary to conduct business
at the Annual Meeting consists of a majority of the shares of the Company’s stock outstanding on the Record Date and entitled
to vote at the Annual Meeting, either present in person or represented by proxy. Abstentions and broker non-votes (described below)
are counted for purposes of determining the presence or absence of a quorum. In accordance with the Company’s Amended and
Restated Bylaws (the “Bylaws”), to be elected each director nominee must receive a majority of the votes cast with
respect to that director’s election. Incumbent directors nominated for election by the Board are required, as a condition
to such nomination, to submit a conditional letter of resignation to the Chairman of the Board. In the event that a nominee for
director does not receive a majority of the votes cast at the Annual Meeting with respect to his or her election, the Board will
promptly consider whether to accept or reject the conditional resignation of that nominee, or whether other action should be taken.
The Board will then take action and will publicly disclose its decision and the rationale behind it no later than 90 days following
the certification of election results.
The affirmative vote of a majority of the
shares present in person or represented by proxy at the Annual Meeting and entitled to vote is required for ratification of the
appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year
ending December 31, 2021 and for approval of the advisory vote approving the compensation of our named executive officers.
Abstentions will have no effect on the election
of directors but will have the same effect as a vote against ratification of the appointment of Ernst & Young LLP and approval
of the advisory vote approving the compensation of our named executive officers.
Under the rules of the New York Stock Exchange
(the “NYSE”), brokerage firms may vote in their discretion on behalf of clients who have not furnished voting instructions
on the ratification of the selection of our registered public accounting firm. In contrast, the remaining proposals are “non-routine”
items. This means brokerage firms that have not received voting instructions from their clients may not vote on these proposals
(a “broker non-vote”). Broker non-votes will not be considered in determining the number of votes necessary for election
and, therefore, will have no effect on the outcome of the vote for the election of directors. Further, broker non-votes will have
no effect on the advisory vote to approve the compensation of our named executive officers.
Only stockholders as of the Record Date
are entitled to attend the Annual Meeting. To attend the Annual Meeting, stockholders of record must go to the meeting website
at www.virtualshareholdermeeting.com/CFX2021 and enter the control number found on the proxy card or the Notice previously received.
If you are a beneficial stockholder who owns common stock in street name, meaning through a bank, broker or other nominee, and
your voting instruction form or Notice indicates that you may vote those shares through the http://www.proxyvote. com website,
then you may attend the Annual Meeting using the 16-digit control number indicated on that voting instruction form or Notice.
Otherwise, stockholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at
least five days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend the Annual Meeting.
Once admitted, during the Annual Meeting, stockholders may vote, submit questions and view the list of stockholders entitled to
vote at the Annual Meeting by following the instructions available on the meeting website.
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Stockholder Proposals and Nominations
Requirements for Stockholder Proposals
to be Considered for Inclusion in our Proxy Materials. To be considered for inclusion in next year’s proxy statement
pursuant to Rule 14a-8 of the Exchange Act, stockholder proposals must be received by our Corporate Secretary at our principal
executive offices no later than the close of business on December 2, 2021.
Requirements for Stockholder Proposals
to be Brought Before an Annual Meeting. Our Bylaws provide that, for a stockholder to nominate a candidate for election to
the Board or propose any other business to be considered at an annual meeting other than through a proposal presented pursuant
to Rule 14a-8 of the Exchange Act, the stockholder must have given timely notice thereof in writing to the Secretary of the Company
at Colfax Corporation, 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701, Attn: Corporate
Secretary. To be timely for an annual meeting, the stockholder’s notice must be delivered to or mailed and received by the
Secretary not less than the close of business 90 days nor more than 120 days before the anniversary date of the preceding annual
meeting; accordingly, for the 2022 annual meeting, notice must be delivered to or mailed and received by the Secretary no later
than the close of business on February 11, 2022 and no earlier than January 12, 2022. However, if the annual meeting is set for
a date that is more than 30 days before or more than 70 days after such anniversary, the Company must receive the notice not earlier
than the 120th day prior to the annual meeting date and not later than the close of business on the later of the 90th
day prior to such annual meeting or the tenth day following the day when the Company makes a public announcement of the
annual meeting date. Such notice must provide the information required by Section 2.2 of our Bylaws with respect to each matter,
other than stockholder nominations of directors, that the stockholder proposes to bring before the annual meeting. Notice of stockholder
nominations must provide the information required by Section 3.3 of our Bylaws. Both Section 2.2 and Section 3.3 of our Bylaws
mandate certain additional information to be provided by a stockholder who wishes to introduce business or nominate a director
candidate. The chairman of the annual meeting may refuse to acknowledge or introduce any nomination or proposal if notice thereof
is not received within the applicable deadlines or does not otherwise comply with our Bylaws. If the stockholder does not provide
notice of a nomination or proposal within the applicable deadlines or does not comply with the requirements of Rule 14a-4(c) under
the Exchange Act, we may exercise discretionary voting authority under proxies that we solicit to vote in accordance with our
best judgment on any such nomination or proposal.
Delivery of Documents to Stockholders
Sharing an Address
SEC rules permit the delivery of a single
copy of a company’s annual report and proxy statement, or notice of internet availability of proxy materials, as applicable,
to any household at which two or more stockholders reside if they appear to be members of the same family. This procedure, referred
to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses.
The broker, bank or other nominee for any
stockholder who is a beneficial owner of the Company’s stock may deliver only one copy of the Company’s Annual Report
to Stockholders and Proxy Statement, or the Company’s Notice, as applicable, to multiple stockholders who share the same
address, unless that broker, bank or other nominee has received contrary instructions from one or more of the stockholders. We
will deliver promptly, upon written or oral request, a separate copy of the Company’s Annual Report to Stockholders and
Proxy Statement, or the Company’s Notice, as applicable, to any stockholder at a shared address to which a single copy of
the documents was delivered. A stockholder who wishes to receive a separate copy of the Company’s Annual Report to Stockholders
and Proxy Statement, or the Company’s Notice, as applicable, now or in the future, should submit a written request to Investor
Relations, Colfax Corporation, 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701 or call
(301) 323-9000 and ask for Investor Relations. Beneficial owners sharing an address who are receiving multiple copies of the Company’s
Annual Report to Stockholders and Proxy Statement, or the Company’s Notice, as applicable, and wish to receive a single
copy of such materials in the future will need to contact their broker, bank or other nominee to request that only a single copy
of each document be mailed to all stockholders at the shared address in the future.
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Additional Information
A copy of the Company’s Annual Report
to Stockholders for the fiscal year ended December 31, 2020 has been made available concurrently with this Proxy Statement to
all stockholders entitled to notice of and to vote at the Annual Meeting. The Annual Report is not incorporated into this Proxy
Statement and is not considered proxy-soliciting material.
The Company filed its Annual Report on
Form 10-K with the SEC on February 18, 2021. The Company will mail without charge, upon written request, a copy of its Annual
Report on Form 10-K for the fiscal year ended December 31, 2020, including financial statements but excluding exhibits. Exhibits,
if requested, will be furnished upon the payment of a fee determined by the Company, such fee to be limited to the Company’s
reasonable expenses in furnishing the requested exhibit or exhibits. Please send a written request to Investor Relations, Colfax
Corporation, 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701, or access these materials
on the Company’s website at www.colfaxcorp.com on the Investors page.
Other Matters
As of the date of this Proxy Statement,
the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of any
matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders,
proxies returned to us will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation,
in accordance with the judgment of the proxy holder.
By Order of the Board of Directors
Bradley J. Tandy
Secretary
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