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DIRECTOR COMPENSATION
The current compensation and benefit program for non-employee directors is designed to achieve the following goals: compensation should fairly pay directors for work required for a company of our size and scope; compensation should align directors’ interests with the long-term interests of our other stockholders; and the structure of the compensation should be simple, transparent and easy for stockholders to understand. The Director Compensation Table below includes the following compensation elements for 2022: annual cash retainers; deferred compensation program for non-employee directors (the “Director Deferred Program”); and annual equity awards.
Annual Cash Retainers
The Chair of the Board currently receives an annual cash retainer of $140,000. Each of the other non-employee directors (other than Messrs. Schmidt and Wise) receives an annual cash retainer of $70,000. As discussed above in the “Board of Directors and Corporate Governance—Proposal 1 Election of Directors Proposal—Nominees for Election” section, Messrs. Schmidt and Wise were designated to the Board by the Carlyle Stockholder pursuant to the Stockholders Agreement. Accordingly, Messrs. Schmidt and Wise do not receive an annual cash retainer for their service on the Board in their personal capacity due to their employment and affiliation with the Carlyle Stockholder. Instead, the Carlyle Stockholder receives total annual remuneration of $140,000 for Messrs. Schmidt and Wise’s service on the Board.
The Chair of each of the Audit Committee, Compensation Committee, Nominating and Governance Committee and Science and Technology Committee receives an additional annual cash retainer of $25,000, $20,000, $15,000 and $15,000, respectively. All annual cash retainer fees are pro-rated and paid on a quarterly basis.
Deferred Compensation Program for Non-employee Directors
In December 2010, the Board adopted the Director Deferred Program that began in 2011. Participating directors may elect on a yearly basis (for the yearly period between the Company’s annual meetings of stockholders) to receive 50% or 100% of the cash value of the director’s (1) annual retainer fee and (2) compensation for service as a Chair of any of the Board’s standing committees (collectively, the “Covered Fees”) in the form of restricted stock units (“RSUs”), which are fully vested on the grant date, plus an additional premium on such percentage of the Covered Fees in the form of additional RSUs, which are subject to a one-year vesting requirement (the “Director Premium RSUs”). The additional premium applicable to the Director Premium RSUs is determined based on the length of time of the deferral period (between the grant date and the date the shares of common stock underlying the RSUs are to be issued) selected by the participating director as follows: (1) if one (1) year from the grant date, a premium of 10% on the amount of the Covered Fees deferred; (2) if two (2) years from the grant date, a premium of 20% on the amount of the Covered Fees deferred; or (3) if four (4) years from the grant date, a premium of 30% on the amount of the Covered Fees deferred. The RSUs are currently granted under the Company’s Amended and Restated 2018 Equity Incentive Plan (the “2018 Plan”) (or applicable successor plan) as of the date of the applicable annual meeting of stockholders, and the number of shares awarded as RSUs is calculated based on the closing price of our common stock on the date of the applicable annual meeting.
The non-employee directors listed below made the following elections under the 2022 Director Deferred Program and were granted the following amounts of Covered Fees RSUs (as defined below) and Director Premium RSUs. Ms. Dilsaver and Mr. Smith were not eligible to participate in the 2022 Director Deferred Program because their service on the Board commenced after the election period. Ms. Ordoñez and Mr. Slacik were not eligible to participate in the 2022 Director Deferred Program because they retired from the Board before the election period. Messrs. Schmidt and Wise are not eligible to participate in the Director Deferred Program for the reason discussed above. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Amount Deferred | | Deferral Period | | Covered Fees RSUs
(#) | | Director Premium RSUs
(#) |
| Kenneth F. Buechler, Ph.D. | | 100 | % | | 4 years | | 1,659 | | | 497 | |
| Edward L. Michael | | 100 | % | | 4 years | | 963 | | | 289 | |
| Mary Lake Polan, M.D., Ph.D., M.P.H. | | 100 | % | | 4 years | | 749 | | | 224 | |
| Ann D. Rhoads | | 100 | % | | 2 years | | 1,017 | | | 203 | |
| Matthew W. Strobeck, Ph.D. | | — | % | | N/A | | N/A | | N/A |
| Kenneth J. Widder, M.D. | | 100 | % | | 4 years | | 910 | | | 273 | |
| Joseph D. Wilkins Jr. | | — | % | | N/A | | N/A | | N/A |
| | | | | | | | |
Annual Equity Awards
The Board provides an annual equity award to non-employee directors. On June 6, 2022, the Compensation Committee approved an increase in the annual grant date value from $190,000 to $210,000 in light of the consummation of the Combinations. In approving this increase, the Compensation Committee engaged and consulted with Compensia, Inc. (“Compensia”), who advised that the increased value of equity awards was consistent with the 50th percentile of our peer group. Accordingly, on June 6, 2022, a grant of 2,248 RSUs was made to each non-employee director (other than Ms. Ordoñez and Messrs. Schmidt, Slacik and Wise). The RSUs vest on the first anniversary of the grant date. Ms. Ordoñez and Mr. Slacik did not receive equity awards because they retired from the Board on May 16, 2022 (the date of Quidel’s 2022 special meeting of stockholders). Messrs. Schmidt and Wise are not eligible to receive equity awards for the reason discussed above.
Director Compensation Table
The following table sets forth information relating to the compensation of our directors for the fiscal year ended January 1, 2023, other than our CEO who receives no additional compensation as a director:
| | | | | | | | | | | | | | | | | | | |
| Name | Fees Earned or Paid in Cash
(1) | | Stock Awards
(2) | | | | Total |
| Kenneth F. Buechler, Ph.D. | $ | 123,264 | | | $ | 256,356 | | | | | $ | 379,620 | |
| Evelyn S. Dilsaver | $ | 39,890 | | | $ | 209,941 | | | | | $ | 249,831 | |
| Edward L. Michael | $ | 75,863 | | | $ | 236,930 | | | | | $ | 312,793 | |
| Kathy P. Ordoñez | $ | 18,904 | | | $ | — | | | | | $ | 18,904 | |
| Mary Lake Polan, M.D., Ph.D., M.P.H. | $ | 58,795 | | | $ | 230,860 | | | | | $ | 289,655 | |
| Ann D. Rhoads | $ | 73,041 | | | $ | 228,899 | | | | | $ | 301,940 | |
| Charles P. Slacik | $ | 26,466 | | | $ | — | | | | | $ | 26,466 | |
| Robert R. Schmidt | $ | 52,500 | | | $ | — | | | | | $ | 52,500 | |
| Christopher M. Smith | $ | 39,890 | | | $ | 209,941 | | | | | $ | 249,831 | |
| Matthew W. Strobeck, Ph.D. | $ | 58,795 | | | $ | 209,941 | | | | | $ | 268,736 | |
| Kenneth J. Widder, M.D. | $ | 71,123 | | | $ | 235,436 | | | | | $ | 306,559 | |
| Joseph D. Wilkins Jr. | $ | 58,795 | | | $ | 209,941 | | | | | $ | 268,736 | |
| Stephen H. Wise | $ | 52,500 | | | $ | — | | | | | $ | 52,500 | |
(1)This column reports the amount of Covered Fees, including cash payments and Covered Fees deferred in exchange for RSUs (“Covered Fees RSUs”). As discussed above, Messrs. Schmidt and Wise do not receive an annual cash retainer for their service on the Board in their personal capacity due to their employment and affiliation with the Carlyle Stockholder. Instead, the Carlyle Stockholder receives total annual remuneration of $140,000 for Messrs. Schmidt and Wise’s service on the Board. In 2022, the Carlyle Stockholder received a pro-rated annual remuneration amount of $105,000 for Messrs. Schmidt and Wise’s service on the Board, effective May 27, 2022. Such amount is reflected in this column for Messrs. Schmidt and Wise, but paid directly to the Carlyle Stockholder. The amounts for Mses. Dilsaver and Ordoñez and Messrs. Slacik and Smith have been pro-rated for the respective time periods they served as directors in 2022.
(2)This column represents the grant date fair value with respect to the RSUs and Director Premium RSUs granted in 2022. For additional information on the valuation assumptions with respect to the 2022 grants, see the “—Annual Equity Awards” section above and Note 11 of our Consolidated Financial Statements in the Annual Report. At January 1, 2023, the aggregate number of RSUs, including Director Premium RSUs, held by each non-employee director was: Dr. Buechler 16,608 shares; Ms. Dilsaver 2,316 shares; Mr. Michael 6,161 shares; Dr. Polan 11,431 shares; Ms. Rhoads 4,023 shares; Mr. Smith 2,248 shares; Dr. Strobeck 3,897 shares; Dr. Widder 5,887 shares; and Mr. Wilkins Jr. 2,248 shares. At January 1, 2023, the aggregate number of stock options held by each non-employee director was: Dr. Buechler 41,020 shares; Mr. Smith 207,983 shares; Dr. Strobeck 259 shares; and Dr. Widder 22,440 shares. At January 1, 2023, Mr. Smith held an aggregate of 8,404 shares of restricted stock awards. Ms. Ordoñez and Messrs. Slacik, Schmidt and Wise did not hold any outstanding equity awards as of such date.
2023 Director Compensation
Consistent with the Compensation Committee’s annual review of our director compensation program, the Compensation Committee reviewed the amount of compensation paid to our non-employee directors. In connection with its review of our director compensation program, the Compensation Committee engaged an independent compensation consultant and considered the consultant’s advice, as well as other information. Upon the conclusion of this process, the Compensation
Committee determined, and recommended to the Board, that there would be no change to director compensation in 2023 from the previous year.
Director Stock Ownership Guidelines
We believe that each director should have a meaningful equity investment in our Company. Our stock ownership guidelines require non-employee directors to retain and hold shares of our common stock equal to five times their respective annual cash retainer. Our CEO, who is an employee director, is required to retain and hold shares of our common stock equal to six times his annual base salary. Directors have five years from the later of (1) their election to the Board or, in the case of our CEO, his hire or promotion and (2) May 27, 2022 (the closing date of the Combinations) to satisfy the stock ownership guidelines. All of our directors meet these stock ownership guidelines or are in compliance with the guidelines by retaining shares of common stock until compliance is reached. For more information on our stock ownership guidelines, see the “Executive Compensation—Compensation Discussion and Analysis—Stock Ownership Guidelines” section.
EXECUTIVE OFFICERS
Our current executive officers are Douglas C. Bryant, Joseph M. Busky, Robert J. Bujarski, Michelle A. Hodges, Michael S. Iskra and Werner Kroll, Ph.D. Randall J. Steward served as our Chief Financial Officer (“CFO”) until May 27, 2022. The ages and positions of our current executive officers are listed below, followed by a discussion of their business experience. There are no family relationships among any of our directors or executive officers.
Douglas C. Bryant, 65, has served as our CEO since March 2009 and as our President since December 2022 and from March 2009 to May 2022. He also served as the Chair of the Board from May 2022 to December 2022. Prior to joining us, Mr. Bryant served as Executive Vice President and Chief Operating Officer at Luminex Corporation, managing its Bioscience Group, Luminex Molecular Diagnostics (Toronto), manufacturing, R&D, technical operations and commercial operations. From 1983 to 2007, Mr. Bryant held various worldwide commercial operations positions with Abbott Laboratories, including, among others: Vice President of Abbott Vascular for Asia/Japan, Vice President of Abbott Molecular Global Commercial Operations and Vice President of Abbott Diagnostics Global Commercial Operations. Earlier in his career with Abbott, Mr. Bryant served as Vice President of Diagnostic Operations in Europe, the Middle East and Africa and Vice President of Diagnostic Operations Asia Pacific. Mr. Bryant received his B.A. in Economics from the University of California at Davis.
Joseph M. Busky, 55, became our CFO in May 2022. Prior to joining us, Mr. Busky served as Chief Financial Officer of Ortho from July 2020 to May 2022 and of Vyaire Medical, Inc., a global medical device company, from 2018 to 2020, as Chief Executive Officer of Qualtek, an infrastructure solutions company, from 2017 to 2018, and as Chief Financial Officer of FDH Velocitel from 2015 to 2017. He also previously held leadership roles at InnerWorkings, Inc. and Siemens Medical Solutions Diagnostics/Dade Behring Holdings, Inc. Mr. Busky received his M.B.A. with a Finance concentration, as well as his B.B.A. in Accounting, from Loyola University. He also holds a CPA certification in Maryland from the American Institute of Certified Public Accountants.
Robert J. Bujarski, J.D., 54, became our Executive Vice President (“EVP”) in December 2022 and has served as our Chief Operating Officer since September 2020. Previously, Mr. Bujarski served as President from May 2022 to December 2022, Senior Vice President, North America Commercial Operations from July 2019 to September 2020, Senior Vice President, General Counsel from March 2007 to September 2020, Senior Vice President, Business Development from August 2009 to July 2019 and General Counsel and Vice President from July 2005 to March 2007. Mr. Bujarski was an associate attorney with the law firm of Gibson, Dunn & Crutcher LLP in its transactions practice group from October 2001 to July 2005. Mr. Bujarski received his B.A. and J.D. from the University of Arizona.
Michelle A. Hodges, J.D., 63, became our Senior Vice President (“SVP”), General Counsel in December 2020. Prior to joining us, Ms. Hodges was a corporate lawyer with the law firm of Gibson, Dunn & Crutcher LLP from December 1996 to November 2020, including most recently as a partner from 2005. Ms. Hodges received her B. Hort. Sci. degree from Massey University, New Zealand, and her J.D. and M.B.A. from UCLA.
Michael S. Iskra, 53, became our EVP in December 2022 and has served as our Chief Commercial Officer since May 2022. Prior to joining us, Mr. Iskra served as Ortho’s Executive Vice President of Commercial Excellence & Strategy from mid-2020 to May 2022. Mr. Iskra was the President, North America for Ortho from 2015 to mid-2020. From 2014 to 2015, he served as Senior Vice President of Business Development at Healthways. Prior to that, he was Chief Operating Officer, from 2010 to 2012, and Chief Executive Officer, in 2013, for Simplex Healthcare. From 2007 to 2010, he was the Executive Vice President and General Manager at CCS Medical. Prior to 2007, he spent 14 years at Bayer/Siemens Diagnostics in various sales and marketing roles. Mr. Iskra received his B.A. from the University of Delaware.
Werner Kroll, Ph.D., 66, became our SVP, Research and Development in May 2014. Prior to joining us, Dr. Kroll was Vice President and Global Head Research and Innovation for Novartis Molecular since 2009. Prior to holding that position, he held a variety of senior positions from 2005 to 2009 at Novartis. Dr. Kroll has also held senior positions at Bayer from 1991 to 2005. Dr. Kroll received his Ph.D. and a Diploma in Chemistry from the University of Marburg.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Throughout this Proxy Statement, the individuals who served as our CEO and CFO at any time during fiscal year 2022, as well as the other individuals listed in the Summary Compensation Table below, are referred to as the “Named Executive Officers” or “NEOs.” For 2022, our NEOs are as follows: Douglas C. Bryant, President and CEO; Joseph M. Busky, CFO (effective as of May 27, 2022); Randall J. Steward, former CFO (retired as of May 27, 2022); Robert J. Bujarski, EVP and Chief Operating Officer; Michelle A. Hodges, SVP, General Counsel; and Werner Kroll, SVP, Research and Development.
Executive Summary
2022 was a transformational year for the Company and reflected our team’s powerful dynamics of hard work, focus and dedication. Our team successfully leveraged our commercial, operational and R&D strengths to capture robust demand for our diagnostic tests and instruments. Among the many outstanding performance achievements during 2022 were:
•full year 2022 revenue of $3.27 billion, an increase of 92% as reported compared to 2021, and supplemental combined revenue of $4.05 billion, an increase of 11% (excluding COVID-19 revenue) compared to 2021;
•full year 2022 GAAP net income of $548.7 million and supplemental combined adjusted EBITDA of $1.54 billion, representing a supplemental combined adjusted EBITDA margin of 38.1%;
•full year 2022 GAAP EPS of $9.56, compared to $16.43 for the prior year;
•full year 2022 supplemental combined adjusted EPS of $13.80, compared to $13.60 for the prior year;
•consummation of the Combinations, creating QuidelOrtho, a leading global provider of innovative in vitro diagnostic technologies;
•achievement of more than 240 critical integration milestones, identification of more than 100 integration projects and establishment of “future state” operational processes and efficiencies; and
•considerable progress on our strategic priorities and the development of expected growth drivers that will shape our future as COVID-19 transitions to an endemic state.
Supplemental combined adjusted EBITDA, supplemental combined adjusted EBITDA margin and supplemental combined adjusted EPS are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, see Appendix A to this Proxy Statement.
We believe that the compensation to our NEOs, including certain special compensation awards granted during 2022 in recognition of outstanding performance during the year and their efforts in consummating the Combinations, aligned well with both our performance in 2022 and the objectives of our executive compensation program.
Overview and Philosophy
Despite the transformational changes to the Company in 2022, the core objectives of our compensation program continued to be to (1) support our mission, values and corporate strategies by adopting a “pay-for-performance” philosophy that provides incentives to our executive officers and employees that are designed to support these core principles; (2) align the interests of management with those of our stockholders; and (3) attract, retain and motivate high quality executives. To advance these objectives, our compensation program is designed with the following principles:
•Provide an opportunity for the Company to communicate to our executive officers our performance expectations and priorities directly through the selection of financial performance measures on which executive compensation is based, and align payouts with achievement of those performance measures;
•Align compensation so that management shares in the value created from their efforts and the Company’s compensation expense is correlated to its profitability and stockholder returns;
•Balance rewards appropriately between efforts and results;
•Offer a competitive total compensation opportunity; and
•Have a significant portion of total compensation paid to our executive officers in equity and dependent upon the achievement of performance goals of the Company.
Our compensation program focuses on both short and long-term performance results of the Company and consists of three key elements: (1) base salaries, which reflect individual positions and responsibilities; (2) annual cash incentive opportunities, which are a function of the shorter-term performance of the Company; and (3) longer-term equity incentive opportunities under our equity incentive plans, generally in the form of grants of stock options and/or RSUs, which link the interests of our executive officers with our other stockholders. Each of our compensation elements is designed to simultaneously fulfill one or more of our core compensation objectives. During 2022, we augmented these key compensation elements with special compensation awards made to key employees in recognition of their outstanding leadership and performance in consummating the Combinations and integrating the combined company and for retention purposes. In 2023, we expect to continue to make special compensation awards, as appropriate, to recognize outstanding performance.
When setting compensation for 2022 and in determining compensation policies, the Compensation Committee continued its engagement of Compensia to advise on the Company’s executive compensation program. The Compensation Committee considered the advice of Compensia and continued to apply the same general compensation principles and philosophy, while making some adjustments to the Company’s executive compensation program in connection with success, integration and retention matters related to the Combinations. The Compensation Committee also considered the results of the stockholder advisory vote on executive compensation that took place at the 2021 annual meeting of stockholders. In that vote, which was advisory and not binding, our stockholders approved the compensation of our named executive officers as disclosed in the Proxy Statement for the 2021 annual meeting of stockholders with over 97.5% of votes cast in favor of the compensation of our named executive officers.
Administration
The Compensation Committee administers the Company’s executive compensation program and approves (or recommends to the Board for approval) base salaries of all executive officers, including those of the NEOs. The Compensation Committee is responsible for reporting to the Board and administering all other elements of executive compensation, including annual cash bonuses and equity awards.
Use of Independent Compensation Consultant
The Compensation Committee retains compensation consultants to assist it in assessing the competitiveness of the NEOs’ compensation. In fiscal year 2022, the Compensation Committee engaged Compensia. Pursuant to the factors set forth in Item 407 of Regulation S-K of the Exchange Act, the Compensation Committee has reviewed the independence of Compensia and conducted a conflicts of interest assessment (taking into consideration factors specified in the Nasdaq listing standards) and has concluded that Compensia is independent and its work for the Compensation Committee has not raised any conflicts of interest. No other fees were paid to Compensia except fees related to its services to the Compensation Committee.
Compensation Program Design and Key Elements Used to Achieve Compensation Objectives
In connection with determining the Company’s 2022 executive compensation program, the Compensation Committee engaged Compensia to conduct a review of the competitiveness of the Company’s 2021 executive compensation program. The design of our executive compensation program builds on the analysis and direction of Compensia, taking into account data from the annual Radford Global Life Sciences Survey (the “Radford Survey”), and incorporates review of a comparative group of publicly-traded companies with revenues and employee population profiles that are similar to us. The Radford Survey provides data from participating companies with respect to their compensation practices in numerous areas and with respect to various positions, including executive officer positions. Based on the assessment by Compensia and the Compensation Committee, the 2021 peer group was used for our 2022 compensation assessment and did not assume that the Combinations were completed. For both 2021 and 2022, the following peer group companies were used for compensation comparisons:
2021 and 2022 Peer Group:
| | | | | | | | |
| | |
Align Technology, Inc. | Integra LifeSciences Holdings Corporation |
CONMED Corporation | Masimo Corporation |
Emergent BioSolutions, Inc. | Merit Medical Systems, Inc. |
Envista Holdings Corporation | NuVasive, Inc. |
EXACT Sciences Corporation | ResMed, Inc. |
| | | | | | | | |
Haemonetics Corporation | Teleflex, Inc. |
Hill-Rom Holdings, Inc. (through acquisition in 2021) | Cooper Companies, Inc. |
Hologic, Inc. | Varian Medical Systems, Inc. (through acquisition in 2021) |
ICU Medical, Inc. | Waters Corporation |
IDEXX Laboratories, Inc. | West Pharmaceutical Services, Inc. |
Insulet Corporation | |
The Compensation Committee utilizes management and independent compensation consultants to gather market data and provide analyses of our peers’ compensation programs. The Compensation Committee does not have a philosophy of setting compensation based on specific formulaic benchmarking comparisons, but it does take into account the guidance of compensation consultants and reviews peer group data and compensation survey data in setting moderate, yet competitive compensation.
The cash components of base salary and annual cash bonus are targeted to be moderate, yet competitive in relation to base salaries and annual cash bonuses paid to executive officers in similar positions at comparable companies.
Our 2022 long-term equity incentive program for our NEOs included equity awards in the form of non-qualified stock options, time-based RSUs and/or performance-based RSUs. The vesting for both non-qualified stock options and time-based RSUs for typical annual equity awards is over a three or four-year period, with equal installments of the underlying shares of common stock vesting each year on the anniversary of the grant date, with certain exceptions. Performance-based RSUs are subject to vesting criteria based on the achievement of certain Company performance goals. Mr. Steward and Dr. Kroll received equity awards pursuant to the specific terms of their respective individual retirement programs, comprised entirely of time-based RSUs that vest over a three-year period, with one-third of the underlying shares of common stock vesting each year on the anniversary of the grant date.
Stock Option and RSU Grant Practices
As discussed above, the Company uses stock options as part of its overall compensation program. Stock options provide individuals with the right to purchase a specified number of shares of our common stock at a specific price. The Company sets the exercise price of the stock options that it awards at or above the closing price of our common stock on the grant date. Accordingly, the stock option will have value to the individual only if they continue their service to the Company during the vesting period and generally only if and to the extent that the market price of the underlying shares of common stock appreciates over the option term.
The Company also uses time-based and performance-based RSUs as part of its overall compensation program. RSUs provide individuals with the right to receive shares of our common stock upon a specified vesting schedule or vesting criteria. Accordingly, RSUs will have value to the individual only if they continue their service to the Company during the vesting period and in the case of performance-based RSUs, only if the performance vesting criteria are met. RSUs will have increased value to the individual to the extent that the market price of the underlying shares of common stock appreciates.
Awards of equity-based compensation to our executive officers, such as stock options and RSUs, are determined and approved by the Board or the Compensation Committee. Equity awards are typically granted at the time of hire for executive officers and then annually as part of the overall executive compensation review. Specific terms of the equity awards are determined based on the individual’s position in the organization, the applicable annual equity incentive program, guidance of compensation consultants, relevant compensation survey data and peer group compensation practices, as discussed above under the “—Compensation Program Design and Key Elements Used to Achieve Compensation Objectives” section.
For executive officers, new hire grants are approved by the Board or the Compensation Committee when the executive officer’s hire is approved, with the actual equity award grant issued on the first date of employment. For stock options, the exercise price is set at the closing price of our common stock on that date. Equity awards granted under our annual equity incentive program are generally made as of the date of Board or Compensation Committee approval. Such approval typically occurs prior to the end of the first quarter in each calendar year, with grants effective on the date of Board or Compensation Committee approval, and for stock options, at an exercise price at or above the closing price of our common stock on the grant date.
From 2017 to 2022, the Compensation Committee more evenly allocated annual equity awards between stock options and RSUs, with 50% of the number of shares awarded in the form of non-qualified stock options and 50% of the number of shares awarded in the form of RSUs, with the recent exception of certain NEOs as the Compensation Committee deemed appropriate, such as those subject to individual retirement programs. In addition, the Compensation Committee has determined it would be in the interest of stockholders to utilize a greater percentage of performance-based equity awards to incentivize our CEO and other senior executive officers to achieve certain Company performance goals. Accordingly, while the 2023 annual equity
awards are time-based, special equity awards made to our CEO and EVPs in January 2023 were performance-based. For any additional equity awards in 2023 and beyond, the Compensation Committee intends to grant a greater percentage of senior executive officers’ equity awards in the form of performance-based awards.
Base Salary
Base salaries are reviewed annually and are targeted to be moderate, yet competitive in relation to base salaries paid to executive officers in similar positions at comparable companies. With the exception of our CEO, whose performance is reviewed directly by the Board, performance of all other executive officers is reviewed through regular conversations on goals and achievement with our CEO in consultation with the Compensation Committee (and/or the Board).
In 2022, in connection with setting base salaries for our executive officers, the Compensation Committee considered peer group analysis and examined survey data for executives with similar responsibilities at comparable companies in the medical device/diagnostics and biotechnology industries, using analysis performed by Compensia and referring to a custom report prepared by Compensia from data contained in the 2022 Radford Survey of companies with employee population profiles that are similar to us. The base salary for each executive officer was determined by taking into account such executive officer’s experience and skills and comparable data for base salaries for executives in similar positions.
The following table sets forth annual base salaries for the NEOs as of January 2, 2022 and January 1, 2023: | | | | | | | | | | | |
Name | 2021 Base Salary | | 2022 Base Salary |
Douglas C. Bryant | $ | 875,500 | | | $ | 1,025,000 | |
President and CEO | | | |
Joseph M. Busky | $ | 512,500 | | | $ | 550,000 | |
CFO | | | |
Randall J. Steward(1) | $ | 499,550 | | | $ | 300,000 | |
Former CFO | | | |
Robert J. Bujarski | $ | 525,000 | | | $ | 600,000 | |
EVP and Chief Operating Officer | | | |
Michelle A. Hodges | $ | 450,000 | | | $ | 500,000 | |
SVP, General Counsel | | | |
Werner Kroll, Ph.D. | $ | 550,000 | | | $ | 550,000 | |
SVP, Research and Development | | | |
(1)When Mr. Steward retired from the CFO position in May 2022 upon the closing of the Combinations, he transitioned to the role of special advisor to our CEO under a Special Advisor Agreement with the Company. Amount shown for 2022 reflects Mr. Steward’s base salary under his Special Advisor Agreement.
Annual Cash Incentive Program
Our annual cash incentive program provides executive officers the opportunity to receive competitive levels of annual cash bonuses and is designed to reward them for their contributions to the Company’s annual corporate objectives. Under our annual cash incentive program, each participating executive officer is entitled to receive a cash bonus based on achievement of certain corporate goals in the particular fiscal year. Corporate performance goals and bonus payouts are calibrated to strike the appropriate balance between being reasonably achievable, and thereby motivating executives, and targeting improved performance. The balance is intended to result in the Company receiving an appropriate return on its investment in the annual cash incentive program. Corporate performance goals are selected to require sustained performance and results from executive officers. Each eligible executive officer’s potential cash bonus under the annual cash incentive program is expressed as a percentage of base salary as of the end of the fiscal year.
First Half 2022 Cash Incentive Plan
In January 2022, in anticipation of closing the Combinations, the Compensation Committee approved a cash incentive plan applicable to our executive officers and other members of senior management for the initial six-month period of the 2022 fiscal year (the “1H 2022 Cash Incentive Plan”). The Compensation Committee approved goals and targets under the plan only for the first half of 2022 based on the assumption that goals and targets for the second half of 2022 would be established after the closing of the Combinations.
Bonus payout under the 1H 2022 Cash Incentive Plan was predicated upon achievement of (1) revenue targets and (2) EBITDA targets, each as determined by the Board and/or the Compensation Committee and not taking into account the effect of the Combinations. Each component of the 1H 2022 Cash Incentive Plan included targets at minimum, plan/target and maximum payout. The minimum targets serve as the threshold level of performance upon which the incentive pool would begin
to fund for that component. Achievement of the components at plan/target earns the target cash incentive opportunity. The maximum targets serve as the point at which executive officers earn the highest possible cash incentive opportunity. Bonus payouts were calculated along a linear continuum from minimum to plan/target and from plan/target to maximum. Each component is measured separately, and the minimum target must be met in order for a portion of the bonus to be paid relative to any one of the two components. The Compensation Committee may adjust the targets to take into account acquisitions and divestitures (so that executive officers are not rewarded or penalized for the financial impact of transactions that were not anticipated when the targets were originally set) and may exercise discretion in modifying bonus payouts to take into account significant events that were not contemplated under the plan.
For purposes of the 1H 2022 Cash Incentive Plan, EBITDA is net income before interest expense, net, provision for income taxes and depreciation and amortization for the initial six-month period of 2022 attributable to Quidel adjusted to exclude: (1) acquisition and integration costs; (2) non-cash stock based compensation; and (3) impacts of certain non-cash, unusual or other items that are included in net income that the Company does not consider indicative of its ongoing operating performance.
The following table sets forth the threshold, plan/target and maximum bonus potential for each NEO (other than Mr. Busky) under the 1H 2022 Cash Incentive Plan as a percentage of such NEO’s base salary. Mr. Busky became an executive officer of the Company upon the closing of the Combinations and therefore was not eligible to participate in the 1H 2022 Cash Incentive Plan. | | | | | | | | | | | | | | | | | |
Name | Threshold | | Plan/Target | | Maximum |
Douglas C. Bryant | 31.3 | % | | 62.5 | % | | 87.5 | % |
President and CEO | | | | | |
Randall J. Steward | 18.8 | % | | 37.5 | % | | 52.5 | % |
Former CFO | | | | | |
Robert J. Bujarski | 25.0 | % | | 50.0 | % | | 70.0 | % |
EVP and Chief Operating Officer | | | | | |
Michelle A. Hodges | 18.8 | % | | 37.5 | % | | 52.5 | % |
SVP, General Counsel | | | | | |
Werner Kroll, Ph.D. | 18.8 | % | | 37.5 | % | | 52.5 | % |
SVP, Research and Development | | | |
For the 1H 2022 Cash Incentive Plan, bonus payouts were based 60% on achievement of revenue targets and 40% on achievement of EBITDA targets. The table below sets forth the threshold, target and maximum goals and actual results for the 1H 2022 Cash Incentive Plan.
| | | | | | | | | | | | | | | | | | | | | | | |
| Financial Metric (In millions) | Threshold | | Plan/Target | | Maximum | | Actual |
| Revenue | $ | 890.0 | | | $ | 936.7 | | | $ | 1,030.0 | | | $ | 1,402.0 | |
| EBITDA | $ | 466.0 | | | $ | 518.0 | | | $ | 622.0 | | | $ | 814.5 | |
In August 2022, the Compensation Committee approved bonus payouts to executive officers for achievement of all targets under the 1H 2022 Cash Incentive Plan at the maximum level for all NEOs listed above. These payout amounts were based on achievement of (1) revenue targets at the maximum level and (2) EBITDA targets at the maximum level. The bonus payouts to Messrs. Bryant, Steward and Bujarski, Ms. Hodges and Dr. Kroll were $896,875, $262,264, $420,000, $262,500 and $288,750, respectively.
First Half 2022 Ortho Performance-based Pay Awards
As discussed above, Mr. Busky became an executive officer of the Company upon the closing of the Combinations and therefore was not eligible to participate in the 1H 2022 Cash Incentive Plan. Instead, Mr. Busky was eligible to participate in Ortho’s performance-based pay (“PBP”) program for the first half of 2022, under which cash bonuses were awarded based on achievement of certain specified corporate performance measures. In May 2022, the 2022 annual target bonus amounts and target performance metrics under the PBP program were approved by the compensation committee of Ortho’s board of directors (the “Ortho Compensation Committee”). The PBP program was designed to reward Ortho’s executive officers for contributions made to help Ortho meet its annual performance goals. The amount actually received was dependent on overall company performance and individual performance during the applicable period.
Under the terms of the PBP program for the first half of 2022, Mr. Busky’s formulaic PBP award was based on a percentage of his base salary prorated for the first half of 2022 and ranged from 3.8% as his minimum threshold, 75% as his
target level performance achievement and 100% as his maximum level performance achievement. For the first half of 2022, Mr. Busky was not entitled to receive a guaranteed PBP award. The Ortho Compensation Committee set the maximum formulaic PBP awards at levels that it determined were necessary to maintain competitive compensation practices and to properly motivate executive officers by rewarding them for Ortho’s performance and their contributions to that performance.
Although the target bonus amounts and target performance metrics under the PBP program were established in May 2022 by the Ortho Compensation Committee, following the closing of the Combinations, the Compensation Committee had discretion to adjust the amount of Mr. Busky’s PBP award upward or downward based on its overall subjective assessment of his performance, business impact, contributions, leadership, attainment of individual objectives, as well as other related facts and circumstances, including, but not limited to, the Compensation Committee’s efforts to integrate the combined company’s annual cash incentive program for executive officers.
The following table sets forth Mr. Busky’s formulaic PBP award levels for the first half of 2022 for threshold and target-level performance and his maximum PBP award opportunity:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | PBP Minimum | | PBP Target | | PBP Maximum |
| Name | Annual Salary (1) | | % of Salary | | Amount | | % of Salary | | Amount | | % of Salary | | Amount |
Joseph M. Busky | $ | 272,740 | | | 3.8 | % | | $ | 10,364 | | | 75 | % | | $ | 204,555 | | | 100 | % | | $ | 272,740 | |
CFO | | | | | | | | | | | | | |
(1)Reflects Mr. Busky’s 2022 base salary pro-rated for the first half of 2022.
The PBP award for Mr. Busky was based on the sum of a payout percentage for each of Adjusted EBITDA, revenue and individual performance. In sum, 50% of Mr. Busky’s PBP payout was based on Adjusted EBITDA performance, 30% was based on Ortho’s revenue performance and 20% was based on individual performance. Individual performance is generally a subjective determination of Mr. Busky’s achievements and contributions to Ortho.
For purposes of Ortho’s PBP program for the first half of 2022, Adjusted EBITDA is net income (loss) before interest expense, net, provision for income taxes and depreciation and amortization for the initial six-month period attributable to Ortho adjusted to exclude: (1) variances attributable to fluctuations in foreign exchange rates (i.e., constant currency basis); (2) acquisition and integration costs; (3) non-cash stock based compensation; and (4) impacts of certain non-cash, unusual or other items that are included in net income that the Company does not consider indicative of its ongoing operating performance.
For the first half of 2022, aside from the individual performance component, the Adjusted EBITDA and revenue performance goals, based solely on the financial performance of Ortho during the first half of 2022, were as follows:
| | | | | | | | | | | |
Financial Metric (In millions) | Target | | Actual |
Adjusted EBITDA | $ | 269.0 | | | $ | 255.6 | |
Revenue | $ | 1,015.0 | | | $ | 1,007.9 | |
For determination of the PBP award for the first half of 2022, achievement between 99-101% of Ortho’s Adjusted EBITDA target or revenue target yielded a 100% payout percentage for that component. Ortho also set threshold and maximum percentages of achievement against its Adjusted EBITDA and revenue targets. The minimum performance achievement threshold to receive a payment under the PBP plan for the Adjusted EBITDA component was 90% and for the revenue component was 95%. Performance achievement of 110.5% for Adjusted EBITDA and 105.5% for revenue yielded the maximum payout of 200% of the target award for each component. The individual performance component could have fluctuated from 0% to 200% based on the qualitative assessment of Mr. Busky by our CEO and the Compensation Committee.
For Adjusted EBITDA or revenue performance in between the threshold and 99% of target or performance in between 101% of target and maximum levels, the Ortho Compensation Committee set a “Leverage Ratio” to determine the payout level for that component, whereby the payout level increased or decreased proportionately (on a linear basis) for every one percentage point that achievement exceeded or fell below target range level. The maximum payout percentage for each component was 200% and could decrease to a minimum payout percentage of 0% for each component.
For the first half of 2022, Ortho had Adjusted EBITDA of $256 million and revenue of $1,008 million. The results were 96.7% and 96.7% of the respective target amounts, resulting in payouts at a level of 96.7% and 96.7% for these PBP components, respectively. Individual performance achievement for Mr. Busky was 100% based on a subjective determination of his performance and contributions to Ortho in the first half of 2022 when compared against individual goals that were set for Mr. Busky for 2022. The following table summarizes Mr. Busky’s PBP award for the initial six-month period of 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | EBITDA (50%) | | Revenue (30%) | | Individual (20%) | | |
| Name | Target Bonus Amount | | % of Target Payout | | Amount | | % of Target Payout | | Amount | | Achievement | | Amount
(1) | | Total Bonus Amount |
Joseph M. Busky | $ | 204,555 | | | 96.7 | % | | $ | 98,902 | | | 96.7 | % | | $ | 59,341 | | | 100 | % | | $ | 39,561 | | | $ | 197,804 | |
CFO | | | | | | | | | | | | | | | |
(1)Amounts shown reflect an adjustment to the individual performance component of 96.7%.
Second Half 2022 Cash Incentive Plan
In August 2022, the Compensation Committee approved a cash incentive plan applicable to our executive officers and other members of senior management for the second six-month period of the 2022 fiscal year (the “2H 2022 Cash Incentive Plan”). Bonus payout under the 2H 2022 Cash Incentive Plan was predicated upon achievement of (1) revenue targets and (2) Adjusted EBITDA targets, each as determined by the Board and/or the Compensation Committee. Each component of the 2H 2022 Cash Incentive Plan included targets at minimum, plan/target and maximum payout. The minimum targets serve as the threshold level of performance upon which the incentive pool would begin to fund for that component. Achievement of the components at plan/target earns the target cash incentive opportunity. The maximum targets serve as the point at which executive officers earn the highest possible cash incentive opportunity. Bonus payouts were calculated along a linear continuum from minimum to plan/target and from plan/target to maximum. The minimum target for Adjusted EBITDA must be met to initiate the payment of the two components. The Compensation Committee may adjust the targets to take into account acquisitions and divestitures (so that executive officers are not rewarded or penalized for the financial impact of transactions that were not anticipated when the targets were originally set) and may exercise discretion in modifying bonus payouts to take into account significant events that were not contemplated under the plan.
For purposes of the 2H 2022 Cash Incentive Plan, Adjusted EBITDA is net income before interest expense, net, provision for income taxes and depreciation and amortization for the second six-month period of 2022 attributable to the Company adjusted to exclude: (1) variances attributable to fluctuations in foreign exchange rates (i.e., constant currency basis); (2) acquisition and integration costs; and (3) impacts of certain non-cash, unusual or other items that are included in net income that the Company does not consider indicative of its ongoing operating performance.
The following table sets forth the threshold, plan/target and maximum bonus potential for each NEO under the 2H 2022 Cash Incentive Plan as a percentage of such NEO’s base salary (other than Mr. Steward who retired from the CFO position in May 2022 upon the closing of the Combinations, and was not eligible to participate in the 2H 2022 Cash Incentive Plan):
| | | | | | | | | | | | | | | | | |
| Name | Threshold | | Plan/Target | | Maximum |
Douglas C. Bryant | 31.3 | % | | 62.5 | % | | 93.8 | % |
President and CEO | | | | | |
Joseph M. Busky | 18.8 | % | | 37.5 | % | | 56.3 | % |
CFO | | | | | |
Robert J. Bujarski | 25.0 | % | | 50.0 | % | | 75.0 | % |
EVP and Chief Operating Officer | | | | | |
Michelle A. Hodges | 18.8 | % | | 37.5 | % | | 56.3 | % |
SVP, General Counsel | | | | | |
Werner Kroll, Ph.D. | 18.8 | % | | 37.5 | % | | 56.3 | % |
SVP, Research and Development | | | | | |
For the 2H 2022 Cash Incentive Plan, bonus payouts were based 50% on achievement of revenue targets and 50% on achievement of Adjusted EBITDA targets. The table below sets forth the threshold, target and maximum goals and actual results for the 2H 2022 Cash Incentive Plan.
| | | | | | | | | | | | | | | | | | | | | | | |
| Financial Metric (In millions) | Threshold | | Plan/Target | | Maximum | | Actual |
| Revenue | $ | 1,421.4 | | | $ | 1,496.2 | | | $ | 1,571.1 | | | $ | 1,688.8 | |
| Adjusted EBITDA | $ | 338.6 | | | $ | 376.3 | | | $ | 413.9 | | | $ | 485.6 | |
In February 2023, the Compensation Committee approved bonus payouts to executive officers for achievement of all targets under the 2H 2022 Cash Incentive Plan at 148.1% of their target opportunities for all NEOs listed above. These payout amounts were based on achievement of (1) revenue targets at the plan/target level and (2) Adjusted EBITDA targets at the plan/
target level. The bonus payouts to Messrs. Bryant, Busky and Bujarski, Ms. Hodges and Dr. Kroll were $948,766, $307,967, $444,300, $277,688 and $305,456, respectively.
Deferred Bonus Program
Each NEO is eligible to elect to participate in the Company’s Employee Deferred Bonus Compensation Program (the “Employee Deferred Program”) with respect to any bonus payouts received under the 1H 2022 Cash Incentive Plan, 2H 2022 Cash Incentive Plan, 2023 Cash Incentive Plan (as defined below) and future cash incentive plans, except for (1) Mr. Busky with respect to the 1H 2022 Cash Incentive Plan and 2H 2022 Cash Incentive Plan because his service with the Company commenced after the election period and (2) Mr. Steward with respect to the 2023 Cash Incentive Plan and future cash incentive plans because he retired from the CFO position in May 2022 upon the closing of the Combinations and subsequently has been serving as a special advisor to our CEO. Under the Employee Deferred Program, participating officers may elect to receive 50% or 100% of the cash value of their respective bonus payout (the “Covered Bonus”) (payable (if applicable) per the terms and conditions of the applicable cash incentive plan) in the form of fully vested RSUs (the “Converted RSUs”), plus an additional premium on such percentage of the Covered Bonus in the form of additional RSUs, which are subject to a one-year vesting requirement (the “Premium RSUs”). The additional premium applicable to the Premium RSUs is determined based on the length of time of the deferral period (between the grant date and the date the shares of common stock underlying the Converted RSUs are to be issued) selected by the participating officer as follows: (1) if one (1) year from the grant date, a premium of 10% on the amount deferred of the Covered Bonus; (2) if two (2) years from the grant date, a premium of 20% on the amount deferred of the Covered Bonus; or (3) if four (4) years from the grant date, a premium of 30% on the amount deferred of the Covered Bonus.
The NEOs made the following elections under the Employee Deferred Program for 2022 and 2023, which are irrevocable:
| | | | | | | | | | | | | | | | | | | | | | | |
Name | 2022 | | 2023 |
Amount Deferred | | Deferral Period | | Amount Deferred | | Deferral Period |
| Douglas C. Bryant | 100 | % | | 4 years | | — | | | — | |
| President and CEO | | | | | | | |
| Joseph M. Busky | N/A | | N/A | | — | | | — | |
| CFO | | | | | | | |
| Randall J. Steward | — | | | — | | | N/A | | N/A |
| Former CFO | | | | | | | |
| Robert J. Bujarski | — | | | — | | | 50 | % | | 4 years |
| EVP and Chief Operating Officer | | | | | | | |
| Michelle A. Hodges | — | | | — | | | 50 | % | | 4 years |
| SVP, General Counsel | | | | | | | |
| Werner Kroll, Ph.D. | — | | | — | | | — | | | — | |
| SVP, Research and Development | | | | | | | |
The Converted RSUs are fully vested on the grant date. The Premium RSUs are fully vested on the first anniversary of the grant date. Subject to the terms and conditions in the grant award agreement, the shares of common stock underlying Converted RSUs will be issued as soon as administratively practicable after the earliest of: (1) the end of the deferral period selected by the participating officer; (2) the participating officer’s separation from the Company; and (3) a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company (a “Change in Control”). The shares of common stock underlying the Premium RSUs have the same applicable issuance periods as outlined in the foregoing sentence for Converted RSUs with acceleration of the one-year vesting requirement in connection with a Change in Control; provided, however, that if a participating officer’s service is terminated for any reason (outside of a Change in Control) prior to the one-year vesting requirement, the Premium RSUs will be forfeited and canceled as of the date of such termination of service.
Longer-term Equity Incentive Awards
Longer-term equity incentive awards in the form of stock options and/or RSUs are intended to align the interests of our executive officers with those of our other stockholders and promote retention of our executive officers by using continued service, and in the case of certain awards, the achievement of specified performance levels, as a requirement to receive the value of the awards. The number of shares of common stock underlying stock option and/or RSU grants is related to the executive officer’s level of responsibility and allows executives to share in the value they help create. Generally, the Compensation Committee does not consider an executive officer’s stock holdings or outstanding equity awards in determining
the number of equity awards to be granted; however, the Compensation Committee does consider the total number of outstanding shares of our common stock, the relative dilution to stockholders, as well as our gross equity burn rate, issued equity overhang and total equity overhang in determining the number of equity awards to be granted. The Compensation Committee believes that our executive officers should be fairly compensated each year relative to market pay levels of the Company’s peer group. The Compensation Committee views longer-term equity incentive awards as a primary compensation means for retaining executives.
In January 2022, prior to the consummation of the Combinations, the Compensation Committee approved the 2022 long-term equity incentive program (the “2022 Equity Incentive Plan”). Under the 2022 Equity Incentive Plan, each NEO (other than Mr. Busky) received equity awards in the form of non-qualified stock options and time-based RSUs as set forth below. Mr. Busky became an executive officer of the Company upon the closing of the Combinations and therefore did not receive any equity awards under the 2022 Equity Incentive Plan.
| | | | | | | | | | | | | | | | | |
Name | Non-qualified Stock Options (# shares) | | Time-based RSUs (# shares) | | Dollar Value of Aggregate Award |
| Douglas C. Bryant | 27,043 | | 27,043 | | $ | 4,199,507 | |
| President and CEO | | | | | |
| Randall J. Steward | — | | 14,512 | | $ | 1,499,960 | |
| Former CFO | | | | | |
| Robert J. Bujarski | 12,876 | | 12,878 | | $ | 1,999,721 | |
| EVP and Chief Operating Officer | | | | | |
| Michelle A. Hodges | 6,438 | | 6,439 | | $ | 999,860 | |
| SVP, General Counsel | | | | | |
| Werner Kroll, Ph.D. | — | | 10,642 | | $ | 1,099,957 | |
| SVP, Research and Development | | | | | |
The amounts of the equity awards were determined based on the executive compensation analysis and review performed by Compensia, which take into account data from the Radford Survey and peer group compensation practices, as discussed in the “—Compensation Program Design and Key Elements Used to Achieve Compensation Objectives” section above. Consistent with 2021, the Compensation Committee determined to weight the number of shares awarded for long-term equity awards between stock options and RSUs, which the Compensation Committee believed was in alignment with peer group practices. In 2022, for Messrs. Bryant and Bujarski and Ms. Hodges, approximately 50% of the equity award shares were provided in the form of non-qualified stock options and approximately 50% of the equity award shares were provided in the form of time-based RSUs. The vesting for the non-qualified stock options is over a four-year period, with 25% of the underlying shares of common stock vesting each year on the anniversary of the grant date. The stock options have an exercise price equal to the closing price of our common stock on the grant date. For Messrs. Bryant and Bujarski and Ms. Hodges, the vesting for the time-based RSUs is over a four-year period, with 25% of the underlying shares of common stock vesting each year on the anniversary of the grant date. Mr. Steward and Dr. Kroll received equity awards pursuant to the specific terms of their respective individual retirement programs, comprised entirely of time-based RSUs that vest over a three-year period, with one-third of the underlying shares of common stock vesting each year on the anniversary of the grant date. See the “—Employment, Severance and Change in Control Arrangements” section.
In addition to the annual long-term equity incentive program, the Compensation Committee may approve additional equity awards to executive officers as it deems necessary and appropriate to adequately compensate them for their contributions and achievements throughout the year and for retention purposes. In June 2022, in connection with the consummation of the Combinations and the commencement of Mr. Busky’s service with the Company, the Compensation Committee approved the following equity awards to Messrs. Bryant and Busky:
| | | | | | | | | | | | | | | | | | | | | | | |
| Name | Non-qualified Stock Options
(# shares) | | Time-based RSUs
(# shares) | | Performance-based RSUs
(# shares) | | Dollar Value of Aggregate Award |
Douglas C. Bryant | — | | — | | 11,894 | | $ | 1,018,959 | |
| President and CEO | | | | | | | |
Joseph M. Busky | 10,411 | | 16,174 | | — | | $ | 1,999,393 | |
| CFO | | | | | | | |
The vesting for the performance-based RSUs for Mr. Bryant is over a three-year period as follows: (1) 33% of the underlying shares of common stock will vest upon achievement of at least $60 million in cumulative cost synergies from the Combinations by December 31, 2024; (2) 33% of the underlying shares of common stock will vest upon achievement of at least $90 million in cumulative cost synergies from the Combinations by December 31, 2025; and (3) 34% of the underlying shares of common stock will vest upon achievement of cumulative worldwide sales of our Savanna® instruments of at least $380 million by December 31, 2025. If the performance goals are not achieved by the applicable vesting dates and the applicable portion of the performance-based RSUs does not vest, those unvested shares will be forfeited and will not be eligible for future vesting.
The vesting for Mr. Busky’s non-qualified stock options and time-based RSUs is over a three-year period, with one-third of the underlying shares of common stock vesting each year on the anniversary of the grant date. The stock options have an exercise price equal to the closing price of our common stock on the grant date.
Special Compensation Awards
In January 2022, in connection with the Combinations, the Compensation Committee approved the grant of (1) success cash bonus awards for each of Messrs. Bryant, Steward and Bujarski and Ms. Hodges in the following amounts: Mr. Bryant: $875,500; Mr. Steward: $499,550; Mr. Bujarski: $525,000; and Ms. Hodges: $450,000; (2) integration/retention cash bonus awards for each of Messrs. Bryant, Steward and Bujarski, Ms. Hodges and Dr. Kroll in the following amounts: Mr. Bryant: $717,500; Mr. Steward: $349,685; Mr. Bujarski: $420,000; Ms. Hodges: $315,000; and Dr. Kroll: $385,000; and (3) integration/retention equity awards for each of Messrs. Bryant and Bujarski, Ms. Hodges and Dr. Kroll in the following amounts: Mr. Bryant: $2,500,000; Mr. Bujarski: $1,400,000; Ms. Hodges: $750,000; and Dr. Kroll: $750,000. The success cash bonus awards were paid upon the closing of the Combinations and were grossed up for taxes. The first 25% of the integration/retention cash bonus awards were paid upon the closing of the Combinations, and the remaining 75% will become payable upon the first anniversary thereof subject to continued service through such date. The integration/retention equity awards were granted in the form of RSUs and will vest with respect to 50% of the award on the second anniversary of the grant date and the remaining 50% in equal annual installments (25% per year) thereafter subject to continued service through such date.
Also in connection with the Combinations, Ortho’s board of directors approved the grant of a retention bonus for Mr. Busky in the amount of $384,375. 40% of this retention bonus was paid upon the closing of the Combinations, and the remaining 60% will become payable upon the first anniversary thereof, subject to earlier payment upon termination of his employment in certain circumstances. Ortho’s board of directors also approved the grant of a transaction bonus for Mr. Busky in the amount of $384,375. This transaction bonus was paid upon the closing of the Combinations.
The success/transaction cash bonus awards were granted to recognize the significant effort that would be required by the executive officers to complete the Combinations and to reward the executive officers for achieving one of the Company’s strategic goals to expand its business and product portfolio if consummated. The Compensation Committee considered that a successful transaction would require a commitment of substantial additional time, above and beyond each executive officer’s day-to-day responsibilities, and therefore the success/transaction and integration/retention awards were intended to motivate and incentivize the executive officers to pursue the successful completion of the Combinations and to work on and support integration activities during the years following the closing of the Combinations, further aligning their interests with those of our stockholders.
The Compensation Committee and the Board believe it is appropriate to consider special compensation awards in connection with significant achievements and other special circumstances and may continue to make special compensation awards, including equity awards, similar to 2022, in order to incentivize and reward performance.
Perquisites and Other Benefits
The Compensation Committee believes that the NEOs should participate in the same benefit programs as the Company’s other employees and that special executive perquisites should be minimal. Consistent with this philosophy, the NEOs participate in the Company’s employee benefit plans on the same terms as other employees, which include medical, dental and vision insurance, disability coverage, life insurance, the ESPP and the 401(k) plan. In 2022, special executive perquisites were minimal and included a relocation allowance and certain benefits in connection with “President’s Club,” which refers to an annual trip and related events for sales and services employees who have met specified performance criteria, as well as certain executive officers, and their guests. The aggregate incremental cost associated with these items in 2022 is included in the Summary Compensation Table below and detailed in the footnotes to that table.
2023 Compensation Actions
In March 2023, the Compensation Committee approved the following merit increases to the NEOs’ base salaries:
| | | | | | | | | | | |
Name | 2022 Base Salary | | Current Base Salary |
Douglas C. Bryant | $ | 1,025,000 | | | $ | 1,060,875 | |
President and CEO | | | |
Joseph M. Busky | $ | 550,000 | | | $ | 569,250 | |
CFO | | | |
Randall J. Steward(1) | $ | 300,000 | | | $ | 300,000 | |
Former CFO | | | |
Robert J. Bujarski | $ | 600,000 | | | $ | 621,000 | |
EVP and Chief Operating Officer | | | |
Michelle A. Hodges | $ | 500,000 | | | $ | 517,500 | |
SVP, General Counsel | | | |
Werner Kroll, Ph.D. | $ | 550,000 | | | $ | 569,250 | |
SVP, Research and Development | | | |
(1)When Mr. Steward retired from the CFO position in May 2022 upon the closing of the Combinations, he transitioned to the role of special advisor to our CEO under a Special Advisor Agreement with the Company. Amounts shown for his 2022 and current base salaries reflect Mr. Steward’s base salary under his Special Advisor Agreement.
In March 2023, the Compensation Committee also approved a cash incentive plan applicable to our executive officers and other members of senior management for the 2023 fiscal year (the “2023 Cash Incentive Plan”). Bonus payout under the 2023 Cash Incentive Plan is predicated upon achievement of (1) revenue targets and (2) Adjusted EBITDA targets, each as determined by the Board and/or the Compensation Committee. The following table sets forth the threshold, plan/target and maximum bonus potential for each NEO under the 2023 Cash Incentive Plan as a percentage of such NEO’s base salary for the full year 2023 (other than Mr. Steward who retired from the CFO position in May 2022 upon the closing of the Combinations, and is not eligible to participate in the 2023 Cash Incentive Plan): | | | | | | | | | | | | | | | | | |
Name | Threshold | | Plan/Target | | Maximum |
Douglas C. Bryant | 65.5 | % | | 125.0 | % | | 187.5 | % |
President and CEO | | | | | |
Joseph M. Busky | 37.5 | % | | 75.0 | % | | 112.5 | % |
CFO | | | | | |
Robert J. Bujarski | 50.0 | % | | 100.0 | % | | 150.0 | % |
EVP and Chief Operating Officer | | | | | |
Michelle A. Hodges | 37.5 | % | | 75.0 | % | | 112.5 | % |
SVP, General Counsel | | | | | |
Werner Kroll, Ph.D. | 37.5 | % | | 75.0 | % | | 112.5 | % |
SVP, Research and Development | | | | | |
For the 2023 Cash Incentive Plan, bonus payouts will be based 50% on achievement of revenue targets and 50% on achievement of Adjusted EBITDA targets.
In December 2022, the Board approved certain changes to executive officer roles, including the appointment of Mr. Bryant to serve as the Company’s President, in addition to his role as CEO and a member of the Board, and the appointment of Mr. Bujarski to serve as an EVP, in addition to his role as Chief Operating Officer. In connection with such changes, in January 2023, the Compensation Committee granted the following performance-based RSUs to each of Messrs. Bryant and Bujarski:
| | | | | | | | | | | |
| Name | Performance-based RSUs
(# shares) | | Dollar Value of Aggregate Award |
Douglas C. Bryant | 6,091 | | $ | 521,451 | |
| President and CEO | | | |
Robert J. Bujarski | 6,091 | | $ | 521,451 | |
| EVP and Chief Operating Officer | | | |
The vesting for these performance-based RSUs is as follows: (1) 75% of the underlying shares of common stock will vest upon (a) our stock price reaching an average price of at least 150% of the closing price on December 30, 2022 for a period of at least 30 days and (b) our stock price’s relation to the EBITDA multiple of a defined diagnostic peer group and (2) 25% of the underlying shares of common stock will vest upon achievement of productivity improvements, as measured by revenue per employee, of at least 10% compared to revenue per employee as of December 31, 2022 that is maintained over a period of two consecutive quarters with a certain revenue threshold. The vesting criteria must be achieved by December 31, 2025 or the performance-based RSUs will not vest and the unvested shares will be forfeited and will not be eligible for future vesting.
In January 2023, for employee retention purposes, the Compensation Committee approved an amendment to the vesting terms of performance-based stock options that were previously granted by Ortho under the Ortho-Clinical Diagnostics Bermuda Co. Ltd. 2014 Equity Incentive Plan (the “2014 Plan”) and Ortho’s 2021 Omnibus Incentive Award Plan (the “2021 Plan”), such that the performance-based stock options granted under the 2014 Plan and 2021 Plan will vest on December 31, 2023. See the “Outstanding Equity Awards at 2022 Fiscal Year-end” table for information on the performance-based stock options granted to Mr. Busky under the 2014 Plan and 2021 Plan.
In March 2023, the Compensation Committee approved the 2023 long-term equity incentive program (the “2023 Equity Incentive Plan”). Under the 2023 Equity Incentive Plan, each NEO received equity awards in the form of non-qualified stock options and time-based RSUs as follows (other than Mr. Steward who retired from the CFO position in May 2022 upon the closing of the Combinations, and is not eligible to participate in the 2023 Equity Incentive Plan): | | | | | | | | | | | | | | | | | |
Name | Non-qualified Stock Options (# shares) | | Time-based RSUs (# shares) | | Dollar Value of Aggregate Award |
Douglas C. Bryant | 31,027 | | 31,028 | | $ | 4,199,995 | |
President and CEO | | | | | |
Joseph M. Busky | 14,775 | | 14,775 | | $ | 1,999,988 | |
CFO | | | | | |
Robert J. Bujarski | 14,775 | | 14,775 | | $ | 1,999,988 | |
EVP and Chief Operating Officer | | | | | |
Michelle A. Hodges | 7,386 | | 7,388 | | $ | 999,966 | |
SVP, General Counsel | | | | | |
Werner Kroll, Ph.D. | — | | 11,433 | | $ | 999,930 | |
SVP, Research and Development | | | | | |
The vesting periods for the non-qualified stock options and time-based RSUs are each over a three-year period, with one-third of the underlying shares of common stock vesting each year on the anniversary of the grant date. Dr. Kroll received equity awards pursuant to the specific terms of his individual retirement program, comprised entirely of time-based RSUs. See the “—Employment, Severance and Change in Control Arrangements” section.
In March 2023, the Compensation Committee approved a housing allowance perquisite for each of Messrs. Bryant and Busky and Dr. Kroll in 2023 in the amount of $180,000, $72,000 and $36,000, respectively.
Stock Ownership Guidelines
To further align the interests of our directors and officers with those of our other stockholders, the Board adopted stock ownership guidelines. Under these guidelines, our CEO and each non-employee director, Section 16 officer, other SVP and Vice President (“VP”) are required to retain and hold at least 50% of all shares of common stock acquired from any equity award held as of May 27, 2022 (the closing date of the Combinations) or granted by the Company thereafter (after subtracting the number of shares sold to pay for option exercise costs or relevant federal and state taxes). The foregoing stock retention rule applies until stock ownership meeting the following criteria is achieved:
•CEO − 6 times then-current annual base salary;
•Section 16 officers − 2 times then-current annual base salary;
•SVPs (non-Section 16 officers) and VPs − 1 times then-current annual base salary; and
•Non-employee directors − 5 times then-current annual cash retainer.
The value of an individual’s shares of common stock for purposes of calculating progress toward the stock ownership guidelines is the greater of (1) the then-current fair market value of the stock, or (2) the individual’s cost basis in the stock. Shares of common stock counted in calculating the stock ownership guidelines include shares beneficially owned outright, whether from open market purchases, purchases through the Company’s employee stock purchase plan, shares retained after option exercises and shares received pursuant to restricted stock awards and RSU awards once the awards covering such shares have vested. In addition, in the case of vested, unexercised, in-the-money stock options, the in-the-money value of the stock options will be included in the stock ownership guidelines calculation. Also, the vested RSUs held pursuant to the Company’s Deferred Compensation Programs are included in the stock ownership guidelines calculation. Individuals have five years from the later of (1) their election, hire or promotion and (2) May 27, 2022 to satisfy the stock ownership guidelines. All of our directors and executive officers meet these stock ownership guidelines or are in compliance with the guidelines by retaining shares of common stock until compliance is reached.
Restrictions on Trading Securities (Including Hedging and Pledging)
Our Insider Trading Compliance Policy (the “Insider Trading Policy”) prohibits employees and directors from engaging in speculative transactions involving our securities. Accordingly, hedging transactions involving our securities are prohibited, including, but not limited to, the purchase of stock on margin, short sales, buying or selling puts or calls, and any other similar transactions or arrangements that have an economic consequence of establishing downside price protection. The Insider Trading Policy also prohibits employees and directors from pledging our securities as collateral to secure loans, except cashless exercises of stock options under the Company’s equity incentive plans or situations approved in advance by the authorizing officer under the Insider Trading Policy. No such approvals have been provided to allow any current employee or director to pledge our securities.
Pay Recoupment (Clawback) Policy
The Board approved a clawback policy (the “Clawback Policy”) in May 2022 that covers all compensation awarded, granted or paid to, or that is otherwise vested or earned by, our Section 16 officers based wholly or in part on the attainment of any financial, operating or individual performance measure or our stock price or total shareholder return, including annual bonuses and other short- and long-term cash, equity and equity-based incentive awards (the “Incentive Compensation”). Under the Clawback Policy, if (1) we are required to restate our financial statements due to our material non-compliance with any financial reporting requirement under the securities laws that is caused by the fraudulent or intentional illegal misconduct of a Section 16 officer and (2) the Incentive Compensation awarded or paid would have been lower had the achievement of the applicable performance measure been calculated based on the restated financial results, the Compensation Committee may, in its discretion, require the Section 16 officer to reimburse all or any portion of the amount of excess Incentive Compensation awarded, granted or paid to such Section 16 officer during the three-year period preceding the date of such restatement. We believe the Clawback Policy enhances the accountability of our executive officers and significantly mitigates the risks associated with our executive compensation program. In light of recent SEC rule making regarding clawbacks, we will review our policy and make any necessary changes to timely comply with the final Nasdaq listing standards implementing the SEC rule.
Employment and Severance Agreements
We have entered into change in control agreements with certain of our NEOs in order to foster their objectivity in making decisions with respect to any pending or threatened change in control transaction and to alleviate certain risks and uncertainties with regard to our NEOs’ financial and professional security that may be created by a pending or threatened change in control transaction. The details of the change in control agreements and any employment, retirement or severance arrangements entered into with our NEOs are provided in the “—Employment, Severance and Change in Control Arrangements” section.
Tax Deductibility of Compensation
In general, Section 162(m) of the U.S. Internal Revenue Code (the “Code”) precludes publicly held corporations from deducting for U.S. federal income tax purposes in excess of $1,000,000 per year in compensation per person paid to certain executives designated as “covered employees” under Section 162(m) of the Code (generally, the Company’s CEO, CFO and its three highest paid executive officers other than its CFO).
While we consider the tax effect (including with respect to the expected lack of deductibility under amended Section 162(m)) of our compensation decisions, the principal consideration behind our selection of executive compensation elements continues to be whether the element can facilitate achievement of our executive compensation program objectives.
Summary Compensation Table
The following table sets forth information relating to fiscal years 2022, 2021 and 2020 compensation of our CEO, CFO, former CFO and our three other most highly compensated persons serving as executive officers as of January 1, 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Salary
(2) | | Bonus
(3) | | Stock Awards
(4) | | Option Awards
(5) | | Non-equity Incentive Plan Compensation
(6) | | All Other Compensation
(7) | | Total |
| Douglas C. Bryant | | 2022 | | $ | 1,010,625 | | | $ | 1,054,875 | | | $ | 6,867,650 | | | $ | 1,404,343 | | | $ | 1,845,641 | | | $ | 904,957 | | | $ | 13,088,091 | |
| President and CEO | | 2021 | | $ | 856,702 | | | — | | | $ | 2,348,764 | | | $ | 1,783,166 | | | $ | 547,188 | | | $ | 10,396 | | | $ | 5,546,216 | |
| 2020 | | $ | 777,738 | | | — | | | $ | 3,342,366 | | | $ | 1,857,289 | | | $ | 1,190,000 | | | $ | 10,316 | | | $ | 7,177,709 | |
| Joseph M. Busky | | 2022 | | $ | 316,712 | | | $ | 538,125 | | | $ | 1,499,977 | | | $ | 499,416 | | | $ | 380,571 | | | $ | 20,595 | | | $ | 3,255,396 | |
| CFO(1) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Randall J. Steward | | 2022 | | $ | 385,193 | | | $ | 586,971 | | | $ | 1,499,960 | | | — | | | $ | 262,264 | | | $ | 423,359 | | | $ | 3,157,747 | |
| Former CFO(1) | | 2021 | | $ | 488,824 | | | — | | | $ | 1,323,331 | | | — | | | $ | 234,164 | | | $ | 10,096 | | | $ | 2,056,415 | |
| 2020 | | $ | 494,495 | | | — | | | $ | 1,499,904 | | | — | | | $ | 509,250 | | | $ | 9,874 | | | $ | 2,513,523 | |
| Robert J. Bujarski | | 2022 | | $ | 591,346 | | | $ | 630,000 | | | $ | 2,731,081 | | | $ | 668,651 | | | $ | 864,300 | | | $ | 529,663 | | | $ | 6,015,041 | |
| EVP and Chief Operating Officer | | 2021 | | $ | 514,135 | | | — | | | $ | 1,129,890 | | | $ | 406,851 | | | $ | 246,094 | | | $ | 10,396 | | | $ | 2,307,366 | |
| 2020 | | $ | 512,402 | | | — | | | $ | 793,295 | | | $ | 387,533 | | | $ | 540,750 | | | $ | 10,166 | | | $ | 2,244,146 | |
| Michelle A. Hodges | | 2022 | | $ | 478,462 | | | $ | 528,750 | | | $ | 1,415,515 | | | $ | 334,325 | | | $ | 540,188 | | | $ | 248,565 | | | $ | 3,545,805 | |
| SVP, General Counsel | | 2021 | | $ | 399,577 | | | — | | | $ | 2,401,765 | | | $ | 219,056 | | | $ | 210,938 | | | $ | 10,096 | | | $ | 3,241,432 | |
| | | | | | | | | | | | | | | |
| Werner Kroll, Ph.D. | | 2022 | | $ | 550,000 | | | $ | 96,250 | | | $ | 1,849,937 | | | — | | | $ | 594,206 | | | $ | 10,702 | | | $ | 3,101,095 | |
| SVP, Research and Development | | 2021 | | $ | 490,014 | | | — | | | $ | 1,499,998 | | | — | | | $ | 257,813 | | | $ | 10,396 | | | $ | 2,258,221 | |
| 2020 | | $ | 421,856 | | | — | | | $ | 1,649,909 | | | — | | | $ | 428,063 | | | $ | 10,166 | | | $ | 2,509,994 | |
(1)Mr. Busky became our CFO effective as of May 27, 2022. During 2022, Mr. Steward served as our CFO from January 1, 2022 through May 27, 2022.
(2)The amounts shown reflect the base salaries earned by the NEOs during the applicable year. The amount for Mr. Busky has been pro-rated for the time period he served as our CFO in 2022.
(3)The amounts shown reflect (a) the success/transaction cash bonus awards that were paid to Messrs. Bryant, Busky, Steward and Bujarski and Ms. Hodges upon the closing of the Combinations, (b) 25% of the integration/retention cash bonus awards that were paid to Messrs. Bryant and Bujarski, Ms. Hodges and Dr. Kroll upon the closing of the Combinations and (c) 40% of the integration/retention cash bonus award that was paid to Mr. Busky upon the closing of the Combinations. See the “—Compensation Discussion and Analysis—Special Compensation Awards” section for information on these bonus awards.
(4)This column represents the grant date fair value of time-based and performance-based RSUs granted during fiscal years 2022, 2021 and 2020, as well as (a) for 2022, the Premium RSUs associated with the 2022 Employee Deferred Program, (b) for 2021, the Premium RSUs associated with the 2021 Employee Deferred Program and (c) for 2020, the Premium RSUs associated with the 2020 Employee Deferred Program, as described in Note (2) of the “Nonqualified Deferred Compensation” table. RSUs are valued based on the closing price of our common stock on the grant date. For additional information with respect to the 2022 grants, refer to Notes 10 and 11 of our Consolidated Financial Statements in the Annual Report. See the “Grants of Plan-Based Awards in Fiscal Year 2022” table for information on RSUs granted in 2022. The performance-based RSUs granted in 2022 provide for a single level of payout and thus there is no maximum to report.
(5)This column represents the grant date fair value of stock options granted during fiscal years 2022, 2021 and 2020. The grant date fair value of stock options is determined using the Black-Scholes option pricing model. For additional information on the valuation assumptions with respect to the 2022 grants, refer to Note 11 of our Consolidated Financial Statements in the Annual Report. See the “Grants of Plan-Based Awards in Fiscal Year 2022” table for information on stock options granted in 2022.
(6)This column represents the approved awards to each NEO under the 1H 2022 Cash Incentive Plan, 2H 2022 Cash Incentive Plan, Ortho’s PBP program for the first half of 2022, the 2021 Cash Incentive Plan and the 2020 Cash Incentive Plan, as applicable. Each NEO (other than Mr. Busky) could also elect to participate in the 2022 Employee Deferred Program, the 2021 Employee Deferred Program and the 2020 Employee Deferred Program with respect to any payments received under the 1H 2022 and 2H 2022 Cash Incentive Plans, the 2021 Cash Incentive Plan and the 2020 Cash Incentive Plan, respectively. Mr. Busky was not eligible to participate in these Employee Deferred Programs because his service with the Company commenced after the election periods. The cash bonus under the 1H 2022 Cash
Incentive Plan and Ortho’s PBP program for the first half of 2022 was paid in August and September 2022 and the cash bonus under the 2H 2022 Cash Incentive Plan was paid in March 2023. The cash bonus under the 2021 Cash Incentive Plan was paid in early 2022. The cash bonus under the 2020 Cash Incentive Plan was paid in early 2021. The amounts shown are inclusive of the cash component and deferred Covered Bonus component of the electing officer’s award, but do not include the Premium RSUs component which is included as a component of the amounts in the “Stock Awards” column for the year in which such Premium RSUs were granted.
(7)During the year ended January 1, 2023, (a) certain NEOs (as shown below) received tax gross-ups, including those associated with their success cash bonus awards in connection with the Combinations, (b) perquisites and other personal benefits for Mr. Bryant consisted of benefits he received in connection with President’s Club and for Mr. Busky consisted of a relocation allowance, (c) the Company made contributions under our 401(k) plan to certain NEOs (as shown below), (d) the Company funded a long-term disability plan in an amount equal to 60% of the applicable NEO’s annual salary, a benefit that is available to all employees, and (e) the Company funded a group term life insurance plan in an amount equal to two times the NEO’s annual salary, a benefit that is provided to all employees. All other compensation consists of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tax Gross-ups | | Perquisites and Other Personal Benefits | | 401(k) Contributions | | Long-term Disability | | Group Term Life Insurance |
| Douglas C. Bryant | $ | 876,234 | | | $ | 18,021 | | | $ | 9,150 | | | $ | 990 | | | $ | 562 | |
| Joseph M. Busky | — | | | $ | 20,000 | | | — | | | — | | | $ | 595 | |
| Randall J. Steward | $ | 412,870 | | | — | | | $ | 9,150 | | | $ | 990 | | | $ | 349 | |
| Robert J. Bujarski | $ | 518,961 | | | — | | | $ | 9,150 | | | $ | 990 | | | $ | 562 | |
| Michelle A. Hodges | $ | 237,863 | | | — | | | $ | 9,150 | | | $ | 990 | | | $ | 562 | |
| Werner Kroll, Ph.D. | — | | | — | | | $ | 9,150 | | | $ | 990 | | | $ | 562 | |
Grants of Plan-Based Awards in Fiscal Year 2022
The following table sets forth all plan-based awards granted to our NEOs during fiscal year 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Grant Date | | Estimated Future 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
(#)(3) | | All Other Option Awards: Number of Securities Underlying Options
(#)(4) | | Exercise or Base Price of Option Awards
($/sh)(5) | | Grant Date Fair Value of Stock and Option Awards
($)(6) |
Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | |
| Douglas C. Bryant | | 1/31/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 27,043 | | | 27,043 | | | $ | 103.36 | | | $ | 4,199,507 | |
| | 1/31/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 24,187 | | | — | | | — | | | $ | 2,499,968 | |
| | 1/31/2022 | | $ | 320,313 | | | $ | 640,625 | | | $ | 896,875 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 8/22/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 13,362 | | | — | | | — | | | $ | 1,144,723 | |
| | 8/22/2022 | | $ | 320,313 | | | $ | 640,625 | | | $ | 960,938 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 8/22/2022 | | — | | | — | | | — | | | — | | | 11,894 | | | — | | | — | | | — | | | — | | | $ | 1,018,959 | |
| | 12/31/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 13,929 | | | — | | | — | | | $ | 1,210,987 | |
| Joseph M. Busky | | 5/17/2022 | | $ | 10,364 | | | $ | 204,555 | | | $ | 272,740 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 6/1/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 16,174 | | | 10,411 | | | $ | 92.74 | | | $ | 1,999,393 | |
| | 8/22/2022 | | $ | 103,125 | | | $ | 206,250 | | | $ | 309,375 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Randall J. Steward | | 1/31/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 14,512 | | | — | | | — | | | $ | 1,499,960 | |
| | 1/31/2022 | | $ | 93,666 | | | $ | 187,331 | | | $ | 262,264 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Robert J. Bujarski | | 1/31/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 12,878 | | | 12,876 | | | $ | 103.36 | | | $ | 1,999,721 | |
| | 1/31/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 13,545 | | | — | | | — | | | $ | 1,400,011 | |
| | 1/31/2022 | | $ | 150,000 | | | $ | 300,000 | | | $ | 420,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 8/22/2022 | | $ | 150,000 | | | $ | 300,000 | | | $ | 450,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Michelle A. Hodges | | 1/31/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 6,439 | | | 6,438 | | | $ | 103.36 | | | $ | 999,860 | |
| | 1/31/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 7,256 | | | — | | | — | | | $ | 749,980 | |
| | 1/31/2022 | | $ | 93,750 | | | $ | 187,500 | | | $ | 262,500 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 8/22/2022 | | $ | 93,750 | | | $ | 187,500 | | | $ | 281,250 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Werner Kroll, Ph.D. | | 1/31/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 10,642 | | | — | | | — | | | $ | 1,099,957 | |
| | 1/31/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 7,256 | | | — | | | — | | | $ | 749,980 | |
| | 1/31/2022 | | $ | 103,125 | | | $ | 206,250 | | | $ | 288,750 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 8/22/2022 | | $ | 103,125 | | | $ | 206,250 | | | $ | 309,375 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
(1)These columns show the potential value of the payout for each NEO under the 1H 2022 Cash Incentive Plan, 2H 2022 Cash Incentive Plan and Ortho’s PBP program for the first half of 2022 (as applicable), if the threshold, target and maximum goals are satisfied for all performance measures. The business measurements, performance goals and salary and bonus multiples for determining the payout are described in the “—Compensation Discussion and Analysis—Annual Cash Incentive Program” section. Payouts were made as described in the “—Compensation Discussion and Analysis—Annual Cash Incentive Program” section and in Note (6) to the Summary Compensation Table.
(2)These columns show the potential number of awards to be paid out to Mr. Bryant related to the performance-based RSUs if the target is achieved. The performance-based RSUs for Mr. Bryant were granted in August 2022 and vest over
a three-year period as follows: (a) 33% of the underlying shares of common stock will vest upon achievement of at least $60 million in cumulative cost synergies from the Combinations by December 31, 2024; (b) 33% of the underlying shares of common stock will vest upon achievement of at least $90 million in cumulative cost synergies from the Combinations by December 31, 2025; and (c) 34% of the underlying shares of common stock will vest upon achievement of cumulative worldwide sales of our Savanna instruments of at least $380 million by December 31, 2025.
(3)This column shows the number of time-based RSUs granted in 2022 to the NEOs. Time-based RSUs for Messrs. Bryant and Bujarski and Ms. Hodges vest over a four-year period, with 25% of the underlying shares of common stock vesting each year on the anniversary of the grant date. Time-based RSUs for Messrs. Busky and Steward and Dr. Kroll vest over a three-year period, with one-third of the underlying shares of common stock vesting each year on the anniversary of the grant date. This column also includes the number of RSUs granted in 2022 to Mr. Bryant under the 2022 Employee Deferred Program, which equaled (a) the amount of his bonus deferred under the program, divided by the closing price of our common stock on February 28, 2023, multiplied by 1.3, as a premium. $926,433 (included in the “Grant Date Fair Value” column) represents compensation deferred by Mr. Bryant and is included in the “Non-equity Incentive Plan Compensation” column of the Summary Compensation Table.
(4)This column shows the number of stock options granted in 2022 to the NEOs. Stock options for Messrs. Bryant and Bujarski and Ms. Hodges vest over a four-year period, with 25% of the underlying shares of common stock vesting each year on the anniversary of the grant date. Stock options for Mr. Busky vest over a three-year period, with one-third of the underlying shares of common stock vesting each year on the anniversary of the grant date.
(5)This column shows the exercise price for the stock options granted, which was the closing price of our common stock on the grant date.
(6)This column shows the full grant date fair value under ASC Topic 718 of time-based RSUs, performance-based RSUs and stock options granted to the NEOs in 2022. For time-based RSUs and performance-based RSUs, fair value is calculated using the closing price of our common stock on the grant date. The grant date fair value is the amount that we would expense in our Consolidated Financial Statements over the award’s vesting schedule, unless the NEO leaves the Company. For stock options, fair value is calculated using the Black-Scholes value on the grant date and is the amount that we would expense in our Consolidated Financial Statements over the award’s vesting schedule, unless the NEO leaves the Company. For additional information on the valuation assumptions, refer to Note 11 of our Consolidated Financial Statements in the Annual Report.
Outstanding Equity Awards at 2022 Fiscal Year-end
The following table sets forth information on the stock options, time-based RSUs and performance-based RSUs held by the NEOs as of January 1, 2023. This table includes unexercised and unvested stock options and unvested time-based RSUs and performance-based RSUs. Each equity grant is shown separately for each NEO. The vesting schedule for each grant is shown following this table based on the grant date. The market value of the stock awards is based on the closing price of our common stock as of December 30, 2022, which was $85.67. For additional information about the stock options and RSUs, see the “—Compensation Discussion and Analysis—Longer-term Equity Incentive Awards” section.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Grant Date | | Option Awards(1) | | Stock Awards | | | | |
| Name | | Number of Securities Underlying Unexercised Options — Exercisable
(#) | | Number of Securities Underlying Unexercised Options — Unexercisable
(#) | | Option Exercise Price
($) | | Option Expiration Date | | Stock Award Grant Date | | Number of Shares or Units of Stock That Have Not Vested
(#) | | Market Value of Shares or Units of Stock That Have Not Vested
($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($) | | | | |
| Douglas C. Bryant | 2/10/2016 | | 23,461 | | | — | | | $ | 15.40 | | | 2/10/2026 | | | | | | | | | | | | | | |
| 2/15/2017 | | 20,249 | | | — | | | $ | 21.08 | | | 2/15/2027 | | | | | | | | | | | | | | |
| 1/16/2018 | | 27,637 | | | — | | | $ | 46.41 | | | 1/16/2028 | | | | | | | | | | | | | | |
| 2/4/2019 | | 28,080 | | | 9,360 | | | $ | 59.12 | | | 2/4/2029 | | 2/4/2019 | (2) | 18,720 | | | $ | 1,603,742 | | | — | | | — | | | | | |
| 2/3/2020 | | 15,180 | | | 15,178 | | | $ | 77.16 | | | 2/3/2030 | | 2/3/2020 | (2) | 7,590 | | | $ | 650,235 | | | — | | | — | | | | | |
| | | | | | | | | | | 2/3/2020 | (3) | — | | | — | | | 15,180 | | | $ | 1,300,471 | | | | | |
| 8/24/2020 | | 7,062 | | | 3,531 | | | $ | 228.21 | | | 8/24/2030 | | 8/24/2020 | (4) | 1,461 | | | $ | 125,164 | | | — | | | — | | | | | |
| 2/1/2021 | | 2,231 | | | 6,693 | | | $ | 254.00 | | | 2/1/2031 | | 2/1/2021 | (2) | 3,347 | | | $ | 286,737 | | | — | | | — | | | | | |
| | | | | | | | | | | 2/1/2021 | (3) | — | | | — | | | 4,462 | | | $ | 382,260 | | | | | |
| 7/28/2021 | | 3,713 | | | 7,427 | | | $ | 142.45 | | | 7/28/2031 | | | | | | | | | | | | | | |
| 1/31/2022 | | — | | | 27,043 | | | $ | 103.36 | | | 1/31/2032 | | 1/31/2022 | (2) | 27,043 | | | $ | 2,316,774 | | | — | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | 1/31/2022 | (5) | 794 | | | $ | 68,022 | | | — | | | — | | | | | |
| | | | | | | | | | | 1/31/2022 | (6) | 24,187 | | | $ | 2,072,100 | | | — | | | — | | | | | |
| | | | | | | | | | | 8/22/2022 | (5) | 3,140 | | | $ | 269,004 | | | — | | | — | | | | | |
| | | | | | | | | | | 8/22/2022 | (3) | — | | | — | | | 11,894 | | | $ | 1,018,959 | | | | | |
| | | | | | | | | | | 12/31/2022 | (5) | 3,273 | | | $ | 280,398 | | | — | | | — | | | | | |
| Joseph M. Busky | 7/7/2020 | | 14,007 | | | 28,017 | | | $ | 119.06 | | | 7/7/2030 | | | | | | | | | | | | | | |
| 6/1/2022 | | — | | | 10,411 | | | $ | 92.74 | | | 6/1/2032 | | 6/1/2022 | (2) | 16,174 | | | $ | 1,385,627 | | | — | | | — | | | | | |
| Randall J. Steward | 2/15/2017 | | 3,796 | | | — | | | $ | 21.08 | | | 2/15/2027 | | | | | | | | | | | | | | |
| 1/16/2018 | | 9,596 | | | — | | | $ | 46.41 | | | 1/16/2028 | | | | | | | | | | | | | | |
| 2/4/2019 | | 7,247 | | | 2,415 | | | $ | 59.12 | | | 2/4/2029 | | 2/4/2019 | (2) | 4,831 | | | $ | 413,872 | | | — | | | — | | | | | |
| | | | | | | | | | | 2/3/2020 | (7) | 5,616 | | | $ | 481,123 | | | — | | | — | | | | | |
| | | | | | | | | | | 8/24/2020 | (4) | 292 | | | $ | 25,016 | | | — | | | — | | | | | |
| | | | | | | | | | | 2/1/2021 | (7) | 3,412 | | | $ | 292,306 | | | — | | | — | | | | | |
| | | | | | | | | | | 1/31/2022 | (7) | 14,512 | | | $ | 1,243,243 | | | — | | | — | | | | | |
| | | | | | | | | | | 1/31/2022 | (5) | 226 | | | $ | 19,361 | | | — | | | — | | | | | |
| Robert J. Bujarski | 2/5/2015 | | 8,798 | | | — | | | $ | 23.41 | | | 2/5/2025 | | | | | | | | | | | | | | |
| 2/10/2016 | | 17,596 | | | — | | | $ | 15.40 | | | 2/10/2026 | | | | | | | | | | | | | | |
| 2/15/2017 | | 14,343 | | | — | | | $ | 21.08 | | | 2/15/2027 | | | | | | | | | | | | | | |
| 1/16/2018 | | 9,212 | | | — | | | $ | 46.41 | | | 1/16/2028 | | | | | | | | | | | | | | |
| 2/4/2019 | | 5,435 | | | 1,811 | | | $ | 59.12 | | | 2/4/2029 | | 2/4/2019 | (2) | 3,623 | | | $ | 310,382 | | | — | | | — | | | | | |
| 2/3/2020 | | 3,321 | | | 3,320 | | | $ | 77.16 | | | 2/3/2030 | | 2/3/2020 | (2) | 3,320 | | | $ | 284,424 | | | — | | | — | | | | | |
| 9/14/2020 | | 1,467 | | | 1,468 | | | $ | 159.39 | | | 9/14/2030 | | 9/14/2020 | (8) | 628 | | | $ | 53,801 | | | — | | | — | | | | | |
| 2/1/2021 | | 878 | | | 2,636 | | | $ | 254.00 | | | 2/1/2031 | | 2/1/2021 | (2) | 2,637 | | | $ | 225,912 | | | — | | | — | | | | | |
| | | | | | | | | | | 10/15/2021 | (9) | 1,170 | | | $ | 100,234 | | | — | | | — | | | | | |
| 1/31/2022 | | — | | | 12,876 | | | $ | 103.36 | | | 1/31/2032 | | 1/31/2022 | (2) | 12,878 | | | $ | 1,103,258 | | | — | | | — | | | | | |
| | | | | | | | | | | 1/31/2022 | (5) | 357 | | | $ | 30,584 | | | — | | | — | | | | | |
| | | | | | | | | | | 1/31/2022 | (6) | 13,545 | | | $ | 1,160,400 | | | — | | | — | | | | | |
| Michelle A. Hodges | 12/1/2020 | | 1,052 | | | 1,053 | | | $ | 188.95 | | | 12/1/2030 | | 12/1/2020 | (10) | 476 | | | $ | 40,779 | | | — | | | — | | | | | |
| 2/1/2021 | | 473 | | | 1,419 | | | $ | 254.00 | | | 2/1/2031 | | 2/1/2021 | (2) | 1,420 | | | $ | 121,651 | | | — | | | — | | | | | |
| | | | | | | | | | | 5/25/2021 | (11) | 1,260 | | | $ | 107,944 | | | — | | | — | | | | | |
| | | | | | | | | | | 10/15/2021 | (9) | 1,170 | | | $ | 100,234 | | | — | | | — | | | | | |
| | | | | | | | | | | 11/8/2021 | (12) | 7,940 | | | $ | 680,220 | | | — | | | — | | | | | |
| 1/31/2022 | | — | | | 6,438 | | | $ | 103.36 | | | 1/31/2032 | | 1/31/2022 | (2) | 6,439 | | | $ | 551,629 | | | — | | | — | | | | | |
| | | | | | | | | | | 1/31/2022 | (5) | 204 | | | $ | 17,477 | | | — | | | — | | | | | |
| | | | | | | | | | | 1/31/2022 | (6) | 7,256 | | | $ | 621,622 | | | — | | | — | | | | | |
| Werner Kroll, Ph.D. | 1/16/2018 | | 2,303 | | | — | | | $ | 46.41 | | | 1/16/2028 | | | | | | | | | | | | | | |
| 2/4/2019 | | 1,962 | | | 1,962 | | | $ | 59.12 | | | 2/4/2029 | | 2/4/2019 | (2) | 3,925 | | | $ | 336,255 | | | — | | | — | | | | | |
| | | | | | | | | | | 2/4/2020 | (13) | 4,268 | | | $ | 365,640 | | | — | | | — | | | | | |
| | | | | | | | | | | 7/1/2020 | (14) | 981 | | | $ | 84,042 | | | — | | | — | | | | | |
| | | | | | | | | | | 2/1/2021 | (13) | 2,625 | | | $ | 224,884 | | | — | | | — | | | | | |
| | | | | | | | | | | 7/28/2021 | (15) | 2,340 | | | $ | 200,468 | | | — | | | — | | | | | |
| | | | | | | | | | | 1/31/2022 | (13) | 10,642 | | | $ | 911,700 | | | — | | | — | | | | | |
| | | | | | | | | | | 1/31/2022 | (6) | 7,256 | | | $ | 621,622 | | | — | | | — | | | | | |
(1)Generally, stock options are time-based and vest over three to four years. For stock options that were not exercisable at January 1, 2023 and were granted on August 24, 2020, July 28, 2021 or June 1, 2022 presented in the table above, one-third of the underlying shares of common stock vest each year on the anniversary of the grant date over a three-year period. For the stock options that were not exercisable at January 1, 2023 and were granted on February 3, 2020, February 1, 2021 or January 31, 2022 presented in the table above, 25% of the underlying shares of common stock vest each year on the anniversary of the grant date over a four-year period. For the stock options that were not exercisable at January 1, 2023 and were granted on February 4, 2019, September 14, 2020 or December 1, 2020 presented in the table above, the first 50% of the underlying shares of common stock vest on the second anniversary of the grant date and the remaining 50% of the underlying shares of common stock vest in equal annual installments (25% per year) thereafter through the remainder of the four-year vesting period. For the stock options that were not exercisable at January 1, 2023 and were granted on July 7, 2020 presented in the table above, 7,005 of such stock options are time-based options, which will become fully vested on July 7, 2023; the remaining 21,012 stock options are performance-based stock options that vest on such date that the Company’s stock price equals or exceeds $125.69, provided that prior to such date, the Carlyle Stockholder has attained certain cash returns on its investment.
(2)Represents time-based RSUs granted to the NEOs. RSUs granted on February 4, 2019 fully vest on the fourth anniversary of the grant date. For RSUs granted on February 3, 2020, February 1, 2021 and January 31, 2022, 25% of the RSUs vest each year on the anniversary of the grant date over a four-year period. For RSUs granted on June 1, 2022, one-third of the RSUs vest each year on the anniversary of the grant date over a three-year period.
(3)Represents performance-based RSUs granted to Mr. Bryant. Performance-based RSUs granted in February 2020 and February 2021 vest over a five-year period, subject to the achievement of performance metrics tied to net revenue growth. Performance-based RSUs granted in August 2022 vest over a three-year period as follows: (a) 33% of the underlying shares of common stock will vest upon achievement of at least $60 million in cumulative cost synergies from the Combinations by December 31, 2024; (b) 33% of the underlying shares of common stock will vest upon achievement of at least $90
million in cumulative cost synergies from the Combinations by December 31, 2025; and (c) 34% of the underlying shares of common stock will vest upon achievement of cumulative worldwide sales of our Savanna instruments of at least $380 million by December 31, 2025.
(4)Represents RSUs granted to Messrs. Bryant and Steward for their efforts and contributions to the Company’s COVID-19 testing needs. One-third of the RSUs vest each year on the anniversary of the grant date over a three-year period.
(5)Represents the Premium RSUs component related to the 2021 and 2022 Employee Deferred Programs as detailed in the “Nonqualified Deferred Compensation” table, which have vested and will vest in January 2023, August 2023 and February 2024, respectively.
(6)Represents integration/retention equity awards granted in the form of RSUs. 50% of the RSUs vest on the second anniversary of the grant date and the remaining 50% of the RSUs vest in equal annual installments (25% per year) thereafter.
(7)Represents RSUs granted to Mr. Steward as part of his individual retirement program. One-third of the RSUs vest each year on the anniversary of the grant date over a three-year period.
(8)Represents RSUs granted to Mr. Bujarski upon his appointment as the Company’s Chief Operating Officer. 25% of the RSUs vest each year on the anniversary of the grant date over a four-year period.
(9)Represents RSUs granted to Mr. Bujarski and Ms. Hodges for their efforts and contributions to the resolution of the Beckman litigation and implementation of the related transition agreements. 25% of the RSUs vest each year on the anniversary of the grant date over a four-year period.
(10)Represents RSUs granted to Ms. Hodges upon her appointment as the Company’s SVP, General Counsel. 25% of the RSUs vest each year on the anniversary of the grant date over a four-year period.
(11)Represents RSUs granted to Ms. Hodges for her extraordinary efforts and contributions related to business development matters and for retention purposes. 25% of the RSUs vest each year on the anniversary of the grant date over a four-year period.
(12)Represents RSUs granted to Ms. Hodges for her extraordinary efforts and contributions related to business development matters and for retention purposes. One-third of the RSUs vest each year on the anniversary of the grant date over a three-year period.
(13)Represents RSUs granted to Dr. Kroll as part of his individual retirement program. One-third of the RSUs vest each year on the anniversary of the grant date over a three-year period.
(14)Represents RSUs granted to Dr. Kroll for his efforts and contributions to the Company’s development of COVID-19 diagnostic products. One-third of the RSUs vest each year on the anniversary of the grant date over a three-year period.
(15)Represents RSUs granted to Dr. Kroll for his efforts and contributions to the achievement of certain key R&D milestones. One-third of the RSUs vest each year on the anniversary of the grant date over a three-year period.
Option Exercises and RSUs Vested in Fiscal Year 2022
The following table sets forth stock options that were exercised by and RSUs that vested for the NEOs during fiscal year 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Shares Acquired on Exercise
(#) | | Value Realized on Exercise
($)(1) | | Number of Shares Acquired on Vesting
(#) | | Value Realized on Vesting
($)(2) |
| Douglas C. Bryant | | — | | | — | | | 1,115 | | (3) | $ | 114,087 | |
| | | | | | 1,460 | | (4) | $ | 125,268 | |
| | | | | | 3,795 | | (5) | $ | 378,286 | |
| | | | | | 13,819 | | (6) | $ | 1,587,527 | |
| Joseph M. Busky | | — | | | — | | | — | | | — | |
| Randall J. Steward | | — | | | — | | | 1,706 | | (3) | $ | 174,558 | |
| | | | | | 292 | | (4) | $ | 25,054 | |
| | | | | | 5,616 | | (5) | $ | 559,803 | |
| | | | | | 4,798 | | (6) | $ | 551,194 | |
| | | | | | 1,033 | | (7) | $ | 91,317 | |
| Robert J. Bujarski | | — | | | — | | | 879 | (3) | $ | 89,939 | |
| | | | | | 1,660 | | (5) | $ | 165,469 | |
| | | | | | 4,606 | | (6) | $ | 529,137 | |
| | | | | | 1,033 | | (7) | $ | 91,317 | |
| | | | | | 389 | | (8) | $ | 29,677 | |
| | | | | | 313 | | (9) | $ | 26,057 | |
| Michelle A. Hodges | | — | | | — | | | 473 | | (3) | $ | 48,397 | |
| | | | | | 389 | | (8) | $ | 29,677 | |
| | | | | | 238 | | (10) | $ | 22,289 | |
| | | | | | 3,970 | | (11) | $ | 348,129 | |
| | | | | | 420 | | (12) | $ | 41,576 | |
| Werner Kroll, Ph.D. | | — | | | — | | | 1,312 | | (3) | $ | 134,244 | |
| | | | | | 4,606 | | (6) | $ | 529,137 | |
| | | | | | 4,376 | | (13) | $ | 452,697 | |
| | | | | | 4,268 | | (14) | $ | 421,977 | |
| | | | | | 1,170 | | (15) | $ | 119,773 | |
| | | | | | 981 | | (16) | $ | 95,265 | |
(1)The value realized on exercise equals the intrinsic value of the exercise, which is the gain realized in the difference from the market price of the shares sold and the exercise price of the shares purchased.
(2)The value realized on vesting equals the closing price of our common stock on the vesting date (the date the restrictions lapsed) multiplied by the number of shares with respect to which restrictions lapsed on such date.
(3)During 2022, restrictions lapsed with respect to 1,115, 1,706, 879, 473 and 1,312 shares of RSUs held by Messrs. Bryant, Steward and Bujarski, Ms. Hodges and Dr. Kroll, respectively. The closing price of our common stock on the vesting date was $102.32 per share.
(4)During 2022, restrictions lapsed with respect to 1,460 and 292 shares of RSUs held by Messrs. Bryant and Steward, respectively. The closing price of our common stock on the vesting date was $85.80 per share.
(5)During 2022, restrictions lapsed with respect to 3,795, 5,616 and 1,660 shares of RSUs held by Messrs. Bryant, Steward and Bujarski, respectively. The closing price of our common stock on the vesting date was $99.68 per share.
(6)During 2022, restrictions lapsed with respect to 13,819, 4,798, 4,606 and 4,606 shares of RSUs held by Messrs. Bryant, Steward and Bujarski and Dr. Kroll, respectively. The closing price of our common stock on the vesting date was $114.88 per share.
(7)During 2022, restrictions lapsed with respect to 1,033 and 1,033 shares of RSUs held by Messrs. Steward and Bujarski, respectively. The closing price of our common stock on the vesting date was $88.40 per share.
(8)During 2022, restrictions lapsed with respect to 389 and 389 shares of RSUs held by Mr. Bujarski and Ms. Hodges, respectively. The closing price of our common stock on the vesting date was $76.29 per share.
(9)During 2022, the restrictions lapsed with respect to 313 shares of RSUs held by Mr. Bujarski. The closing price of our common stock on the vesting date was $83.25 per share.
(10)During 2022, restrictions lapsed with respect to 238 shares of RSUs held by Ms. Hodges. The closing price of our common stock on the vesting date was $93.65 per share.
(11)During 2022, restrictions lapsed with respect to 3,970 shares of RSUs held by Ms. Hodges. The closing price of our common stock on the vesting date was $87.69 per share.
(12)During 2022, restrictions lapsed with respect to 420 shares of RSUs held by Ms. Hodges. The closing price of our common stock on the vesting date was $98.99 per share.
(13)During 2022, restrictions lapsed with respect to 4,376 shares of RSUs held by Dr. Kroll. The closing price of our common stock on the vesting date was $103.45 per share.
(14)During 2022, restrictions lapsed with respect to 4,268 shares of RSUs held by Dr. Kroll. The closing price of our common stock on the vesting date was $98.87 per share.
(15)During 2022, restrictions lapsed with respect to 1,170 shares of RSUs held by Dr. Kroll. The closing price of our common stock on the vesting date was $102.37 per share.
(16)During 2022, restrictions lapsed with respect to 981 shares of RSUs held by Dr. Kroll. The closing price of our common stock on the vesting date was $97.11 per share.
Nonqualified Deferred Compensation
The following table sets forth compensation deferred by each NEO during fiscal year 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Executive Contributions in Last FY
(1) | | Registrant Contributions in Last FY
(2) | | Aggregate Earnings in Last FY
(3) | | Aggregate Withdrawals/Distributions in Last FY
(4) | | Aggregate Balance at Last FYE
(5) |
| Douglas C. Bryant | | $ | 1,802,151 | | | $ | 553,559 | | | $ | (511,486) | | | — | | | $ | 3,464,365 | |
| Joseph M. Busky(6) | | — | | | — | | | — | | | — | | | — | |
| Randall J. Steward | | — | | | — | | | $ | (24,023) | | | — | | | $ | 116,340 | |
| Robert J. Bujarski | | — | | | — | | | $ | (344,958) | | | — | | | $ | 706,192 | |
| Michelle A. Hodges | | — | | | — | | | $ | (21,653) | | | — | | | $ | 104,860 | |
| Werner Kroll, Ph.D. | | — | | | — | | | $ | (216,713) | | | $ | (120,128) | | | $ | 305,500 | |
(1)Represents the amount of incentive compensation deferred under the 2022 Employee Deferred Program by each NEO. The amount is included as a component of “Non-equity Incentive Plan Compensation” for 2022 in the Summary Compensation Table.
(2)Represents the 10%, 20% or 30% premium above the deferred incentive compensation amount as described above. Such amounts are included as a component of “Stock Awards” for 2022 in the Summary Compensation Table.
(3)Represents the change in value of the deferred incentive compensation for each NEO relating to the 2019 Employee Deferred Program, 2020 Employee Deferred Program, 2021 Employee Deferred Program and 2022 Employee Deferred Program (collectively, the “Deferred Bonus Programs”).
(4)Represents the market value of the stock on the date of distribution to Dr. Kroll in accordance with his specified distribution election.
(5)Aggregate deferrals include deferrals from the Deferred Bonus Programs. Each employee participating in the 2022 Employee Deferred Program is eligible for a Premium RSU equal to either 10%, 20% or 30% of the deferred 2022 cash incentive bonus, depending on the length of deferral elected by the employee, which vests on August 22, 2023 and February 28, 2024. Pursuant to this program, Mr. Bryant received the following RSUs on August 22, 2022 and February 28, 2023: 13,362 shares (including 3,140 shares relating to the premium component) and 13,929 shares (including 3,273 shares relating to the premium component), respectively. Such prior year deferred amounts were reported as compensation to each respective NEO for the respective prior years in the Summary Compensation Table. See Notes (1) and (2) above.
(6)Mr. Busky became an executive officer of the Company upon the closing of the Combinations and therefore was not eligible to participate in the 2022 Employee Deferred Program because his service with the Company commenced after the election period.
Employment, Severance and Change in Control Arrangements
In connection with the appointment of Mr. Bryant as our President and CEO on January 16, 2009, Mr. Bryant entered into an employment agreement with us. Mr. Bryant’s employment agreement sets forth the terms of his employment with us and provides for, among other matters: (1) a minimum base salary of $450,000 per annum, subject to upward adjustment by the Board or the Compensation Committee; and (2) an annual cash incentive bonus based on attainment of performance goals set by the Board or the Compensation Committee with a target of at least 80% of base salary and a maximum opportunity of at least up to 120% of base salary. Mr. Bryant’s base salary for 2022 was $1,025,000.
Under his employment agreement, Mr. Bryant is an “at-will” employee of the Company, which means that either Mr. Bryant or we may terminate his employment at any time for any reason. However, and except in the context of a change in control, if Mr. Bryant’s employment with us is terminated without “cause” or he terminates his employment for “good reason” (each as defined in his employment agreement) and thereafter delivers and does not revoke a general release, he is entitled to a severance payment equal to eighteen (18) months of his then-current base salary and payment of health insurance premiums for a period of eighteen (18) months following termination. Amounts payable to Mr. Bryant upon a change in control of the Company are generally governed by his change in control agreement, dated as of January 16, 2009, which is described below.
Messrs. Busky, Steward and Bujarski, Ms. Hodges and Dr. Kroll are each “at will” employees of the Company with compensation arrangements that include, among other items: (1) a base salary for 2022 of $550,000, $300,000, $600,000, $500,000 and $550,000, respectively; and (2) eligibility for an annual cash incentive bonus in accordance with our Cash Incentive Plans (other than Mr. Steward who retired from the CFO position in May 2022 upon the closing of the Combinations, and is no longer eligible to participate in our Cash Incentive Plans). In addition, except in the context of a change in control, if we terminate Mr. Bujarski’s employment without cause, he would be entitled to a severance payment equal to six months of his annual base salary.
As a former Ortho executive officer, Mr. Busky is also eligible for severance benefits under the Ortho Severance Pay Plan (the “Severance Plan”), as supplemented by the Enhanced Minimum Severance Letter, entered into between Mr. Busky and Ortho in June 2020 (the “Enhanced Minimum Severance Letter,” and together with the Severance Plan, the “Ortho Severance Documents”). Under the Severance Plan, benefits are payable to employees upon a position elimination, reduction in force or such other reasons the Severance Plan administrator deems appropriate, subject to an employee’s execution and non-revocation of a release agreement. Severance benefits for Mr. Busky under the Ortho Severance Documents include six months’ base salary pay, paid in substantially equal installments. In addition, prior to the closing of the Combinations, the Ortho Compensation Committee approved an Omnibus Amendment to Award Agreements (the “Omnibus Amendment”), pursuant to which Mr. Busky’s unvested stock options granted under the Ortho equity incentive plans prior to the closing of the Combinations will become vested and exercisable in full upon Mr. Busky’s employment termination without cause. As a result of the Omnibus Amendment, Mr. Busky’s unvested stock options granted under the Ortho equity incentive plans would accelerate in vesting if he is terminated without cause, at which point he would be entitled to receive payment in cash equal to $7.14 per share in respect of such vested stock options under the terms of the Business Combination Agreement.
Mr. Steward and Dr. Kroll each entered into individual retirement programs with us in November 2019 and February 2020, respectively. These programs were entered into and approved by the Board and the Compensation Committee as part of our succession planning and to incentivize Mr. Steward to continue employment as CFO through at least March 31, 2022 and Dr. Kroll to continue employment as SVP, Research and Development through at least March 31, 2023. On February 1, 2022, the Company and Mr. Steward entered into an amendment to his individual retirement program, which extended the term of his employment as CFO beyond March 31, 2022 through the earlier of the consummation of the Combinations or termination of the Business Combination Agreement. Effective April 4, 2023, the Company and Dr. Kroll entered into an amended and restated individual retirement program, primarily to extend the term of his employment as SVP, Research and Development beyond March 31, 2023 through March 31, 2025 or an earlier transition date.
In connection with Mr. Steward’s individual retirement program (as amended) and the consummation of the Combinations, the Company and Mr. Steward entered into a Special Advisor Agreement pursuant to which Mr. Steward was engaged as a full-time employee, serving as a non-officer special advisor to our CEO commencing on May 27, 2022 at a pay rate of $300,000 per year for a term that is expected to expire in March 2024. Under his Special Advisor Agreement, Mr. Steward’s outstanding equity awards will continue to vest and be governed by the applicable equity incentive plan and award agreements through March 2024.
For each calendar year that Mr. Steward was employed by the Company as its CFO, he received RSUs with a value on the grant date of $1,300,000 with one-third of the underlying shares of common stock vesting each year on the anniversary of the grant date, subject to Mr. Steward’s continued employment with the Company in any capacity. These RSUs constituted the
sole equity incentive compensation that Mr. Steward was entitled to receive on or after January 1, 2020 until he retired as CFO in May 2022.
For each calendar year that Dr. Kroll continued to be employed by the Company as its SVP, Research and Development, from 2020 through 2022, he received RSUs with a value on the grant date of a minimum of $1,000,000 with one-third of the underlying shares of common stock vesting each year on the anniversary of the grant date, subject to Dr. Kroll’s continued employment with the Company as its SVP, Research and Development. Under Dr. Kroll’s amended and restated individual retirement program, in 2023, 2024 and 2025, Dr. Kroll will receive stock options and/or RSUs with a total then-current grant value of $1,000,000 in each of such years; provided that Dr. Kroll continues to be employed by the Company as of such date and that after 2023 such amount will be increased commensurate with increases for other SVPs. Within parameters set by the Company, Dr. Kroll will be entitled to choose the mix of stock options and RSUs that he wishes to receive for each of 2023, 2024 and 2025, and such stock options and RSUs will be subject to time-based and performance-based vesting requirements. Similar to Mr. Steward, these stock options and/or RSUs constitute the sole equity incentive compensation that Dr. Kroll is entitled to receive on or after January 1, 2023, unless the Company determines otherwise. Dr. Kroll’s amended and restated individual retirement program contemplates that if he remains employed and in good standing in his position through the target or transition date, then upon ceasing to serve in his current role, he will enter into a Special Advisor Agreement, in the form provided in his program, and be engaged as a full-time employee, serving as a non-officer special advisor for a period of one year at a reduced pay rate and his equity awards will continue to vest and be governed by the applicable equity incentive plan and award agreements.
Each of Messrs. Bryant and Bujarski, Ms. Hodges and Dr. Kroll has entered into a change in control agreement with us, which provides for the payment of severance benefits in the event of termination of employment in connection with a change in control of the Company. The severance benefits are payable if their respective employment with us is terminated within 30 days prior to or three years following a change in control, unless terminated for cause or the termination is the result of a voluntary resignation (which does not include resignations stemming from a material adverse change in responsibilities, status, compensation, authority or location of workplace) or their death or disability. The change in control agreement for each of our NEOs includes a covenant by the NEO to not solicit, recruit or hire-away our employees or solicit, influence or attempt to influence any person or entity to terminate such person’s or entity’s contractual and/or business relationship with the Company.
The severance benefits under the change in control agreements generally consist of a lump sum cash payment equal to one or two times the sum of (1) such executive’s highest annual salary rate within the three-year period ending on the date of termination, plus (2) an amount equal to the annualized average of all bonuses paid to the executive during the two-year period immediately before the date of termination. In addition, the change in control agreements provide for: payment of $25,000 to help defray the legal, tax and accounting fees and other costs associated with transitional matters; continued coverage for one or two years under our group medical insurance, group dental insurance and group vision insurance programs, unless and to the extent the executive obtains concurrent coverage through another program, in which case our coverage will be terminated or reduced as applicable; and immediate vesting and exercisability of any and all unvested stock options and RSUs held by the executive (unless previously waived or otherwise expressly agreed to by the executive).
Potential Post-employment Payments
As described above, our NEOs have employment, severance and/or change in control agreements with us. The table below illustrates the compensation that would be payable by us to each NEO in the event of a change in control of the Company or a termination of the NEO’s employment with the Company for various described reasons, sometimes referred to in this section as a “triggering event.” In accordance with applicable SEC rules, the following illustrations assume:
•that the triggering event in question, the death, disability, change in control or termination occurred on December 30, 2022, which was the last full business day prior to the last day of our 2022 fiscal year end, which fell on Sunday, January 1, 2023; and
•the calculations provided below are based on the closing price of our common stock as of December 30, 2022, which was $85.67.
In addition, in connection with any actual termination of employment, the Board or the Compensation Committee may determine to enter into an agreement providing additional benefits or amounts, or altering the terms of benefits described below, as deemed appropriate by the Board or the Compensation Committee. The illustrations exclude any vested awards deferred pursuant to our Employee Deferred Programs. The actual amounts that would be paid upon an NEO’s termination of employment can only be determined at the time of such NEO’s separation from the Company. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be higher or lower than reported below. Factors that could affect these amounts include our stock price at the time of
termination and determinations by the Board. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Potential Executive Benefits and Payments | | Voluntary Termination Total | | Retirement Total | | Involuntary, Not for Cause or Voluntary, Good Reason Termination Total | | Involuntary, for Cause Termination Total | | Change in Control (Qualifying Termination) Total |
| Douglas C. Bryant | Base Salary(1) | | — | | | — | | | $ | 1,537,500 | | | — | | | $ | 2,050,000 | |
| Short-term Incentive Bonus(2) | | — | | | — | | | — | | | — | | | $ | 3,447,704 | |
| RSU Awards-Unvested and accelerated(3) | | — | | | — | | | — | | | — | | | $ | 10,373,866 | |
| Stock Options-Unvested and accelerated(4) | | — | | | — | | | — | | | — | | | $ | 377,673 | |
| Healthcare(5) | | — | | | — | | | $ | 44,054 | | | — | | | $ | 58,738 | |
| Other Payments(6) | | — | | | — | | | — | | | — | | | $ | 25,000 | |
| Joseph M. Busky(7) | Base Salary(1) | | — | | | — | | | $ | 275,000 | | | — | | | — | |
| Short-term Incentive Bonus(2) | | — | | | — | | | — | | | — | | | — | |
| RSU Awards-Unvested and accelerated(3) | | — | | | — | | | — | | | — | | | — | |
| Stock Options-Unvested and accelerated(4) | | — | | | — | | | $ | 1,896,059 | | | — | | | — | |
| Healthcare(5) | | — | | | — | | | $ | 14,685 | | | — | | | — | |
| Other Payments(6) | | — | | | — | | | — | | | — | | | — | |
| Randall J. Steward(7) | Base Salary(1) | | — | | | — | | | — | | | — | | | — | |
| Short-term Incentive Bonus(2) | | — | | | — | | | — | | | — | | | — | |
| RSU Awards-Unvested and accelerated(3) | | — | | | — | | | — | | | — | | | — | |
| Stock Options-Unvested and accelerated(4) | | — | | | — | | | — | | | — | | | — | |
| Healthcare(5) | | — | | | — | | | — | | | — | | | — | |
| Other Payments(6) | | — | | | — | | | — | | | — | | | — | |
| Robert J. Bujarski | Base Salary(1) | | — | | | — | | | $ | 300,000 | | | — | | | $ | 1,200,000 | |
| Short-term Incentive Bonus(2) | | — | | | — | | | — | | | — | | | $ | 1,740,394 | |
| RSU Awards-Unvested and accelerated(3) | | — | | | — | | | — | | | — | | | $ | 3,268,995 | |
| Stock Options-Unvested and accelerated(4) | | — | | | — | | | — | | | — | | | $ | 76,335 | |
| Healthcare(5) | | — | | | — | | | — | | | — | | | $ | 58,738 | |
| Other Payments(6) | | — | | | — | | | — | | | — | | | $ | 25,000 | |
| Michelle A. Hodges | Base Salary(1) | | — | | | — | | | — | | | — | | | $ | 1,000,000 | |
| Short-term Incentive Bonus(2) | | — | | | — | | | — | | | — | | | $ | 1,279,876 | |
| RSU Awards-Unvested and accelerated(3) | | — | | | — | | | — | | | — | | | $ | 2,241,556 | |
| Stock Options-Unvested and accelerated(4) | | — | | | — | | | — | | | — | | | — | |
| Healthcare(5) | | — | | | — | | | — | | | — | | | $ | 28,598 | |
| Other Payments(6) | | — | | | — | | | — | | | — | | | $ | 25,000 | |
| Werner Kroll, Ph.D. | Base Salary(1) | | — | | | — | | | — | | | — | | | $ | 1,100,000 | |
| Short-term Incentive Bonus(2) | | — | | | — | | | — | | | — | | | $ | 948,269 | |
| RSU Awards-Unvested and accelerated(3) | | — | | | — | | | — | | | — | | | $ | 2,744,611 | |
| Stock Options-Unvested and accelerated(4) | | — | | | — | | | — | | | — | | | $ | 52,091 | |
| Healthcare(5) | | — | | | — | | | — | | | — | | | $ | 40,917 | |
| Other Payments(6) | | — | | | — | | | — | | | — | | | $ | 25,000 | |
(1)This amount represents two times the NEO’s highest annual salary rate within the three-year period ending on December 30, 2022. Payable in one lump sum upon termination.
(2)This amount represents two times the annualized average of all bonuses paid to the NEO in 2021 and 2022. Payable in one lump sum upon termination.
(3)This represents the value of unvested RSUs and unearned performance-based RSUs at target levels, including Premium RSUs earned pursuant to the Employee Deferred Programs as detailed in the “Nonqualified Deferred Compensation” table.
(4)This represents the intrinsic value of in-the-money unvested stock options (based on the closing price of $85.67 per share as of the last full business day prior to the end of our fiscal year 2022). Amounts for Mr. Busky represent his right to receive payment in cash equal to $7.14 per share in respect of any unvested stock options that accelerate in vesting if he is terminated without cause pursuant to the Omnibus Amendment.
(5)Per the change in control agreements, for one or two years, coverage is continued under our group medical insurance, group dental insurance and group vision insurance programs, unless and to the extent the NEO obtains concurrent coverage through another program, in which case our coverage will be terminated or reduced as applicable. In addition, if Mr. Bryant’s employment is terminated without “cause” or he terminates his employment for “good reason” (each as defined in his employment agreement) and thereafter does not revoke a general release, he is entitled to receive payment of health insurance premiums for a period of eighteen (18) months following termination.
(6)Each NEO’s change in control agreement provides for payment of $25,000 to help defray the legal, tax and accounting fees and other costs associated with transitional matters.
(7)Messrs. Busky and Steward did not have change in control agreements as of December 30, 2022.
CEO Pay Ratio
We are providing the following information regarding the relationship of the annual total compensation of our CEO and that of our “median employee,” 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. The pay ratio information provided below is a reasonable estimate calculated in a manner consistent with these pay ratio disclosure rules.
For our 2022 fiscal year:
•The estimated median of the annual total compensation of all of our employees, excluding our CEO, was $77,372;
•The annual total compensation of our CEO, as reported in the Summary Compensation Table, was $13,088,091; and
•The ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was estimated to be 169 to 1.
In determining the pay ratio information provided above, we first identified our “median employee” for the 2022 fiscal year by using the following methodology, as permitted by the SEC’s pay ratio disclosure rules:
•We selected December 31, 2022 as the date upon which we would identify our employee population and median employee and, from our tax and payroll records, we compiled a list of 6,972 total full-time, part-time, temporary and seasonal employees who were employed on that date.
•We used total cash compensation during the 2022 fiscal year as a consistently applied compensation measure to identify our median employee from the employees on the list. For this purpose, we define total cash compensation as base wages. We did not include incentive cash compensation because our incentive cash compensation program does not extend throughout the organization and would therefore not be expected to impact the determination of the median employee.
Once our median employee was identified in the manner described above, we calculated the annual total compensation of the median employee using the same methodology that we used to determine the annual total compensation of our CEO, as reported in the Summary Compensation Table above.
It should be noted that the SEC’s pay ratio disclosure rules provide reporting companies with flexibility in determining the methodology used to identify the median employee and the pay ratio. Accordingly, our methodology may differ materially from the methodology used by other companies to prepare their pay ratio disclosures, which may contribute to a lack of comparability between our pay ratio and the pay ratio reported by other companies, including those within our industry.
Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance metrics of the Company. For further information on the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the “Executive Compensation—Compensation Discussion and Analysis” section.
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| (a) | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | | (i) | |
| Year | Summary Compensation Table Total for PEO
(1) | | Compensation Actually Paid to PEO
(2) | | Average Summary Compensation Table Total for Non-PEO NEOs
(3) | | Average Compensation Actually Paid to Non-PEO NEOs
(4) | | Value of Initial Fixed $100 Investment Based On: | | Net Income (in millions)
(7) | | | Adjusted EBITDA (in millions)
(8) | |
| | | | Total Shareholder Return
(5) | | Peer Group Total Shareholder Return
(6) | | | | |
| 2022 | $ | 13,088,091 | | | $ | 6,654,018 | | | $ | 3,815,016 | | | $ | 2,506,945 | | | $ | 114.18 | | | $ | 99.81 | | | $ | 548.7 | | (9) | | $ | 1,331.0 | | (9) |
| 2021 | $ | 5,546,216 | | | $ | 3,080,082 | | | $ | 2,465,859 | | | $ | 1,985,148 | | | $ | 179.91 | | | $ | 125.33 | | | $ | 704.2 | | | | $ | 970.8 | | |
| 2020 | $ | 7,177,709 | | | $ | 27,887,022 | | | $ | 2,222,648 | | | $ | 8,787,817 | | | $ | 239.44 | | | $ | 130.04 | | | $ | 810.3 | | | | $ | 1,115.3 | | |
(1)The dollar amounts reported are the amounts of total compensation reported in our Summary Compensation Table for Mr. Bryant, who served as our President and CEO for each of the periods reflected above. In 2022, Mr. Bryant received a success cash bonus award and 25% of his integration/retention cash bonus award that was paid upon the closing of the Combinations. See the “—Compensation Discussion and Analysis—Special Compensation Awards” section for information on these bonus awards.
(2)The dollar amounts reported represent the amount of “compensation actually paid,” as computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid during the applicable year. In accordance with SEC rules, the following adjustments were made to total compensation to determine the compensation actually paid:
| | | | | | | | | | | | | | | | | | | | | | | |
| Year | Reported Summary Compensation Table Total for PEO | | Reported Value of Equity Awards(a) | | Equity Award Adjustments(b) | | Compensation Actually Paid to PEO |
| 2022 | $ | 13,088,091 | | | $ | (8,271,993) | | | $ | 1,837,920 | | | $ | 6,654,018 | |
| 2021 | $ | 5,546,216 | | | $ | (4,131,930) | | | $ | 1,665,796 | | | $ | 3,080,082 | |
| 2020 | $ | 7,177,709 | | | $ | (5,199,655) | | | $ | 25,908,968 | | | $ | 27,887,022 | |
(a)The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year.
(b)The equity award adjustments for each applicable year include, if applicable, the addition (or subtraction, as applicable) of the following:
(i)the year-end fair value of any equity awards granted in the applicable year that were outstanding and unvested as of the end of the year;
(ii)the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that were outstanding and unvested as of the end of the applicable year;
(iii)for awards that were granted and vested in the applicable year, the fair value as of the vesting date;
(iv)for awards granted in prior years that vested in the applicable year, the amount equal to the change in fair value as of the vesting date (from the end of the prior fiscal year);
(v)for awards granted in prior years that failed to meet the vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and
(vi)the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year.
The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments for our PEO are as follows:
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| Year | Year-end Fair Value of Equity Awards Granted in the Year and Unvested at the End of the Year | | Year-over-Year Change in Fair Value of Outstanding and Unvested Equity Awards | | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | | Year-over-Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | Value of Dividends or Other Earnings Paid on Stock or Option Awards Not Otherwise Reflected in Fair Value | | Total Equity Award Adjustments |
| 2022 | $ | 7,093,960 | | | $ | (3,895,214) | | | N/A | | $ | (1,360,826) | | | N/A | | N/A | | $ | 1,837,920 | |
| 2021 | $ | 2,436,411 | | | $ | (4,707,366) | | | N/A | | $ | 3,936,751 | | | N/A | | N/A | | $ | 1,665,796 | |
| 2020 | $ | 10,656,560 | | | $ | 15,099,356 | | | N/A | | $ | 153,052 | | | N/A | | N/A | | $ | 25,908,968 | |
(3)The dollar amounts reported represent the average of the amounts reported for the NEOs as a group (excluding our CEO) in the “Total” column of the Summary Compensation Table for each applicable year. The names of each of the NEOs (excluding our CEO) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, Mr. Steward, who served as our CFO until May 27, 2022, Mr. Busky, who became our CFO effective May 27, 2022, Mr. Bujarski, Ms. Hodges and Dr. Kroll; (ii) for 2021, Messrs. Steward and Bujarski, Ms. Hodges and Dr. Kroll; and (iii) for 2020, Messrs. Steward and Bujarski, Dr. Kroll and Ratan S. Borkar. In 2022, Messrs. Bujarski and Steward, Ms. Hodges and Dr. Kroll received a success cash bonus award and/or 25% of their integration/retention cash bonus award that were paid upon the closing of the Combinations. Mr. Busky also received a transaction bonus and 40% of his retention bonus that were paid upon the closing of the Combinations. See the “—Compensation Discussion and Analysis—Special Compensation Awards” section for information on these bonus awards.
(4)The dollar amounts reported represent the average amount of “compensation actually paid” to the NEOs as a group (excluding our CEO), as computed in accordance with SEC rules. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding our CEO) during the applicable year. In accordance with the SEC rules, the following adjustments were made to average total compensation for the NEOs as a group (excluding our CEO) for each year to determine the compensation actually paid, using the same methodology described in Note 2 above:
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| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | | Average Reported Value of Equity Awards | | Average Equity Award Adjustments(a) | | Average Compensation Actually Paid to Non-PEO NEOs |
| 2022 | $ | 3,815,016 | | | $ | (2,099,772) | | | $ | 791,701 | | | $ | 2,506,945 | |
| 2021 | $ | 2,465,859 | | | $ | (1,745,223) | | | $ | 1,264,512 | | | $ | 1,985,148 | |
| 2020 | $ | 2,222,648 | | | $ | (1,287,601) | | | $ | 7,852,770 | | | $ | 8,787,817 | |
(a) The amounts deducted or added in calculating the total average equity award adjustments are as follows:
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| Year | Average Year-end Fair Value of Equity Awards Granted in the Year and Unvested at the End of the Year | | Year-over-Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | | Year-over-Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | Average Value of Dividends or Other Earnings Paid on Stock or Option Awards Not Otherwise Reflected in Fair Value | | Total Average Equity Award Adjustments |
| 2022 | $ | 1,774,637 | | | $ | (620,798) | | | N/A | | $ | (362,138) | | | N/A | | N/A | | $ | 791,701 | |
| 2021 | $ | 1,257,732 | | | $ | (968,170) | | | N/A | | $ | 974,950 | | | N/A | | N/A | | $ | 1,264,512 | |
| 2020 | $ | 2,667,552 | | | $ | 4,785,750 | | | N/A | | $ | 399,468 | | | N/A | | N/A | | $ | 7,852,770 | |
(5)Cumulative Total Shareholder Return (“TSR”) is calculated based on a fixed investment of $100 from the beginning of calendar year 2020 (the earliest year in the table) through the end of the applicable year, assuming reinvestment of dividends.
(6)Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: NASDAQ Healthcare Composite Index.
(7)The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year.
(8)Adjusted EBITDA consists of net income before interest expense, net, provision for (benefit from) income taxes and depreciation and amortization and eliminates (i) certain non-operating income or expense items and (ii) impacts of certain non-cash, unusual or other items that are included in net income, which we do not consider indicative of our ongoing operating performance.
(9)In 2022, Net Income decreased to $548.7 million while adjusted EBITDA increased to $1,331.0 million, primarily due to the closing of the Combinations, which resulted in one-time increased costs in 2022, including higher depreciation and amortization expense, acquisition and integration costs and interest expenses (the “Increased Costs”). Specifically, the 2022 decrease in Net Income was impacted by the Increased Costs while the 2022 increase in adjusted EBITDA was primarily driven by the inclusion of Ortho’s adjusted EBITDA and the Increased Costs were excluded from adjusted EBITDA, as described in Note 8 above.
Financial Performance Measures
As described in greater detail in the “Executive Compensation—Compensation Discussion and Analysis” section, one of the core objectives of our executive compensation program is supporting our mission, values and corporate strategies by adopting a pay-for-performance philosophy that provides incentives to our executive officers and employees that are designed to support these core principles. The metrics that we use for both our long-term and short-term incentive awards, including our annual cash incentive programs, are selected with the objective of incentivizing our NEOs to increase the value of our enterprise for our stockholders. The most important financial performance measures used by the Company to link executive compensation actually paid to the NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows:
| | |
| Most Important Performance Measures |
| Revenue |
| Adjusted EBITDA |
| Integration/Cost Synergy Target |
Analysis of the Information Presented in the Pay versus Performance Table
While the Company utilizes several performance measures to align executive compensation with the Company’s performance, all such performance measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. In accordance with SEC rules, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance table:
Compensation Actually Paid, Company TSR and Peer Group TSR
*Compensation actually paid for 2020 was elevated due to Quidel’s extraordinary performance in 2020, during which Quidel’s total revenue increased 211% to $1,661.7 million compared to total revenue in 2019. 2020 was a transformational year for Quidel, in part due to its response to the COVID-19 pandemic by bringing critical new products to market to detect COVID-19 infections and the significant increase in its stock price compared to December 31, 2019.
Compensation Actually Paid and Net Income
Compensation Actually Paid and Adjusted EBITDA