SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 



SCHEDULE 14A INFORMATION

 



Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ____)

 

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Definitive Proxy Statement
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Soliciting Material Pursuant to §240.14a-12

 



WRIGHT MEDICAL GROUP N.V.

(Name of Registrant as Specified in Its Charter)

 




(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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PRELIMINARY PROXY MATERIAL—SUBJECT TO COMPLETION







 

 

 










2020 Annual General Meeting

of Shareholders Proxy Statement

 


 

PRELIMINARY PROXY MATERIAL—SUBJECT TO COMPLETION


 

 

FROM OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER

 

Wright Medical Group N.V.

Prins Bernhardplein 200

1097 JB Amsterdam

The Netherlands

(+ 31) 20 521-4777

 

September 18, 2020

 

Dear Shareholders:

 

On behalf of the board of directors, we cordially invite you to attend the 2020 Annual General Meeting of Shareholders of Wright Medical Group N.V. to be held on Wednesday, October 28, 2020, beginning at 2:00 p.m. (Central European Time) at the offices of Stibbe N.V. located at Beethovenplein 10 – 1077 WM, Amsterdam, the Netherlands.

 

Information about our Annual General Meeting, the agenda items and the various matters on which our shareholders will vote is included in the notice of meeting and proxy statement that follow.

 

It is important that your shares be represented at the Annual General Meeting, regardless of the number of shares you hold and whether or not you plan to attend the meeting in person. Regardless of whether you plan to attend the meeting in person, we encourage you to exercise your right to vote by following the instructions for voting on the Notice Regarding the Availability of Proxy Materials or, if you received a paper or electronic copy of our proxy materials, by completing, signing, dating and returning your proxy card or by Internet or telephone voting as described on your proxy card before the closing of these voting facilities at 4:00 p.m. (Eastern Time) on October 27, 2020. If you attend the Annual General Meeting and prefer to vote in person, you may withdraw your proxy at that time.

 

Our Annual Report to Shareholders, including our annual report on Form 10-K for the fiscal year ended December 29, 2019, is being provided to you together with these proxy materials for your review. A copy of our related Dutch statutory annual accounts, as prepared in accordance with Dutch law, is available on our website at www.wright.com.

 

On behalf of the board of directors and management, it is our pleasure to express our appreciation for your continued support.

 

Sincerely,

 

   
David D. Stevens Robert J. Palmisano
Chairman President and Chief Executive Officer

 

We intend to make this proxy statement and our 2019 Annual Report to Shareholders available on the Internet and to commence mailing of the notice to all shareholders entitled to vote at the Annual General Meeting beginning on or about September 18, 2020. We will mail paper copies of these materials, together with a proxy card, within three business days of a request properly made by a shareholder entitled to vote at the Annual General Meeting.

 


 

 

 

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

TO THE SHAREHOLDERS OF WRIGHT MEDICAL GROUP N.V.:

 

Notice is hereby given that the Annual General Meeting of Shareholders of Wright Medical Group N.V. will be held on Wednesday, October 28, 2020, beginning at 2:00 p.m. (Central European Time) at the offices of Stibbe N.V. located at Beethovenplein 10 – 1077 WM, Amsterdam, the Netherlands.

 

The agenda for the Annual General Meeting is as follows:

 

1. Opening.

 

2. Report of our board of directors on the fiscal year ended December 29, 2019 (for discussion only).

 

3. Appointment of one executive director and eight non-executive directors and notification to the shareholders of the contemplated appointment of Robert J. Palmisano as executive director and David D. Stevens, Gary D. Blackford, J. Patrick Mackin, John L. Miclot, Kevin C. O’Boyle, Amy S. Paul, Richard F. Wallman and Elizabeth H. Weatherman as non-executive directors to serve until the 2021 Annual General Meeting or until his or her earlier death, resignation or removal (Voting Proposal No. 1).

 

4. Directors’ remuneration for the fiscal year ended December 29, 2019 (for discussion only).

 

5. Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 27, 2020 (Voting Proposal No. 2).

 

6. Appointment of KPMG N.V. as the auditor for our Dutch statutory annual accounts for the fiscal year ending December 27, 2020 (Voting Proposal No. 3).

 

7. Adoption of our Dutch statutory annual accounts for the fiscal year ended December 29, 2019 (Voting Proposal No. 4).

 

8. Release of each member of our board of directors from liability with respect to the exercise of his or her duties during the fiscal year ended December 29, 2019 (Voting Proposal No. 5).

 

9. Renewal of the authority of our board of directors to repurchase up to 10% of our issued share capital (including depositary receipts issued for our shares) until April 28, 2022 on the open market, through privately negotiated transactions or in one or more self-tender offers for a price per share (or depositary receipt) not less than the nominal value of a share and not higher than 110% of the market price of a share (or depositary receipt) at the time of the transaction (Voting Proposal No. 6).

 

10. Renewal of the authority of our board of directors to issue ordinary shares or grant rights to subscribe for ordinary shares up to 20% of our issued and outstanding shares at the time of the issue until October 28, 2022 (Voting Proposal No. 7).

 

11. Renewal of the authority of our board of directors to resolve to exclude or restrict our shareholders’ pre-emptive rights under Dutch law with respect to the ordinary shares and rights to subscribe therefor that the board of directors may issue or grant pursuant to the authority in agenda item 10 above until October 28, 2022 (Voting Proposal No. 8).

 

12. Approval, on an advisory basis, of our executive compensation (Voting Proposal No. 9).

 

13. Closing.

 

Many of the agenda matters are presented to the general meeting of our shareholders as a result of our company being organized under the laws of the Netherlands. Several matters that are within the authority of the board of

 


 

directors under most U.S. state corporate laws require shareholder approval under Dutch law. Additionally, Dutch governance provisions require certain discussion topics for annual general meetings of shareholders upon which shareholders do not vote.

 

Our board of directors has determined that all holders of record of our ordinary shares as of the close of business on Wednesday, September 30, 2020, according to American Stock Transfer & Trust Company, LLC, our registrar and transfer agent, or such shareholders’ proxies, are entitled to notice of and to attend and vote at the Annual General Meeting. If you wish to attend the Annual General Meeting, however, you must notify our board of directors of your intention to do so no later than October 21, 2020, by submitting your name and number of ordinary shares beneficially owned to: James A. Lightman, Senior Vice President, General Counsel and Secretary, Wright Medical Group N.V., Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands. If you own ordinary shares through a broker, such shares are often referred to as held in “street name,” and you, as the beneficial owner of those shares, do not appear in our share register. If you own your ordinary shares through a broker and you wish to attend the Annual General Meeting, you must notify our board of directors of your intention to do so in the manner described above no later than October 21, 2020 and also provide us with appropriate evidence of ownership of and authority to vote the shares no later than October 21, 2020. Access to the Annual General Meeting is permitted only after verification of personal identification.

 

If you own ordinary shares through a broker, such shares are often referred to as held in “street name,” and you, as the beneficial owner of those shares, do not appear in our share register. If you own your ordinary shares through a broker and you wish to attend the Annual General Meeting, you must notify our board of directors of your intention to do so in the manner described above no later than October 21, 2020 and also provide us with appropriate evidence of ownership of and authority to vote the shares no later than October 21, 2020. Access to the Annual General Meeting is permitted only after verification of personal identification.

 

It is important that your shares be represented at the Annual General Meeting, regardless of the number of shares you hold and whether or not you plan to attend the Annual General Meeting in person. Regardless of whether you plan to attend the Annual General Meeting, I encourage you to exercise your right to vote by following the instructions for voting on the Notice Regarding the Availability of Proxy Materials or, if you received a paper or electronic copy of our proxy materials, by completing, signing, dating and returning your proxy card or by Internet or telephone voting as described on your proxy card before the closing of these voting facilities at 4:00 p.m. (Eastern Time) on October 27, 2020. If you attend the meeting and prefer to vote in person, you may withdraw your proxy at that time.

 

With respect to the appointment of one executive director and eight non-executive directors in Voting Proposal No. 1, our board of directors recommends a vote “FOR” the appointment of Robert J. Palmisano as executive director and each of David D. Stevens, Gary D. Blackford, J. Patrick Mackin, John L. Miclot, Kevin C. O’Boyle, Amy S. Paul, Richard F. Wallman and Elizabeth H. Weatherman as non-executive directors. With respect to the other voting proposals, our board of directors recommends a vote “FOR” each of the other voting proposals being presented to our shareholders at the Annual General Meeting.

 

* * * * *

 

  By Order of the Board of Directors,
   
  James A. Lightman
  Senior Vice President, General Counsel and Secretary
   
Amsterdam, The Netherlands  
September 18, 2020  

 


 

TABLE OF CONTENTS

 

  Page
   
PROXY STATEMENT SUMMARY 1
INFORMATION ABOUT THE ANNUAL GENERAL MEETING 11
CORPORATE GOVERNANCE 16
EXECUTIVE OFFICERS 30
VOTING PROPOSAL NO. 1 - APPOINTMENT OF DIRECTORS 34
VOTING PROPOSAL NO. 2 - RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2020 40
VOTING PROPOSAL NO. 3 - APPOINTMENT OF KPMG N.V. AS AUDITOR FOR DUTCH STATUTORY ANNUAL ACCOUNTS FOR FISCAL YEAR 2020 43
VOTING PROPOSAL NO. 4 - ADOPTION OF DUTCH STATUTORY ANNUAL ACCOUNTS 44
VOTING PROPOSAL NO. 5 - RELEASE OF CERTAIN LIABILITIES 45
VOTING PROPOSAL NO. 6 - RENEWAL OF AUTHORITY OF BOARD OF DIRECTORS TO REPURCHASE UP TO 10% OF OUR ISSUED SHARE CAPITAL UNTIL APRIL 28, 2022 46
VOTING PROPOSAL NO. 7 - RENEWAL OF AUTHORITY OF BOARD OF DIRECTORS TO ISSUE ORDINARY SHARES UNTIL OCTOBER 28, 2022 48
VOTING PROPOSAL NO. 8 - RENEWAL OF AUTHORITY OF BOARD OF DIRECTORS TO EXCLUDE OR RESTRICT SHAREHOLDERS’ PRE-EMPTIVE RIGHTS UNTIL OCTOBER 28, 2022 50
VOTING PROPOSAL NO. 9 - ADVISORY APPROVAL OF OUR EXECUTIVE COMPENSATION 52
COMPENSATION DISCUSSION AND ANALYSIS 55
EXECUTIVE COMPENSATION 76
DIRECTOR COMPENSATION 97
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 101
STOCK OWNERSHIP 102
OTHER MATTERS 105

 

 

 

References in this proxy statement to:

 

“Wright,” “company,” “we,” “our” or “us” refer to Wright Medical Group N.V. and our subsidiaries;

“Wright ordinary shares,” “ordinary shares” or “shares” in this proxy statement refer to our ordinary shares, par value €0.03 per share;

“Annual General Meeting” or “AGM” refer to the 2020 Annual General Meeting of Shareholders, unless another year is specified;

a particular year refer to the applicable fiscal year, unless we indicate otherwise;

“Wright/Tornier merger” or the “merger” in this proxy statement refer to the merger between Wright Medical Group, Inc. and Tornier N.V. completed on October 1, 2015; and

“legacy Wright” and “legacy Tornier” refer to Wright Medical Group, Inc. and Tornier N.V., respectively, before completion of the Wright/Tornier merger.

 

Information on our website and any other website referenced herein is not incorporated by reference into, and does not constitute a part of, this proxy statement.

 

i


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements in this proxy statement are “forward-looking statements” within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the safe harbor created by those sections. Forward-looking statements are based on our current expectations of future events, and are generally identified by words such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions or future dates. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or implied. The most significant factors known to us that could materially adversely affect our business, operations, industry, financial position or future financial performance are described in our most recent Annual Report on Form 10-K filed with the United States Securities and Exchange Commission, or SEC, on February 24, 2020, in “Part I, Item 1A, Risk Factors,” which is being provided to you together with this proxy statement, along with our subsequent SEC reports. You should not place undue reliance on any forward-looking statement, which speaks only as of the date made, and should recognize that forward-looking statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described in our Annual Report on Form 10-K, including in “Part I, Item 1A. Risk Factors,” and subsequent SEC reports, as well as others that we may consider immaterial or do not anticipate at this time. The risks and uncertainties described in our Annual Report on Form 10-K and subsequent SEC reports are not exclusive and further information concerning our company and our business, including factors that potentially could materially affect our operating results or financial condition, may emerge from time to time. We undertake no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. We advise you, however, to consult any further disclosures we make on related subjects in our future Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we file with or furnish to the SEC.

 


 

PROXY STATEMENT SUMMARY

 

This executive summary provides an overview of the information included in this proxy statement. We recommend that you review the entire proxy statement and our 2019 Annual Report to Shareholders before voting.

 

2020 ANNUAL GENERAL MEETING

 

 

DATE AND TIME

 

Wednesday, October 28, 2020

2:00 p.m. (CET)

 

LOCATION

 

The offices of Stibbe N.V. located at Beethovenplein 10 – 1077 WM, Amsterdam, the Netherlands

 

RECORD DATE

 

Holders of record of our ordinary shares at the close of business on September 30, 2020 are entitled to notice of, to attend, and to vote at the 2020 Annual General Meeting or any continuation, postponement, or adjournment thereof.

 

Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting to be held on Wednesday, October 28, 2020

 

This proxy statement and our annual report on Form 10-K for the fiscal year ended December 29, 2019 are available at www.proxyvote.com. In addition, such documents also are available at our offices located at Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands and on our website at www.wright.com.

VOTING PROPOSALS    
     
Voting proposal Board’s vote
recommendation
Page
No. 1 – Appointment of directors FOR 34
No. 2 – Ratification of appointment of independent registered public accounting firm FOR 40
No. 3 – Appointment of auditor for Dutch statutory annual accounts FOR 43
No. 4 – Adoption of Dutch statutory annual accounts FOR 44
No. 5 – Release of certain liabilities FOR 45
No. 6 – Renewal of authority of board of directors to repurchase shares FOR 46
No. 7 – Renewal of authority of  board of directors to issue ordinary shares FOR 48
No. 8 –  Renewal of authority of  board of directors to exclude or restrict shareholders’ pre-emptive rights FOR 50
No. 9 – Advisory approval of executive compensation FOR 52

 

Wright Medical Group N.V. – 2020 Proxy Statement           1

 


 

pending acquisition by Stryker

 

On November 4, 2019, we entered into a definitive purchase agreement (Purchase Agreement) with Stryker Corporation (Stryker) and its subsidiary, Stryker B.V. Under the terms of the Purchase Agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash (the Offer). The Offer is currently scheduled to expire at 5:00 p.m., Eastern Time, on September 30, 2020, but may be extended in accordance with the terms of the Purchase Agreement. The closing of the transaction is subject to receipt of applicable regulatory approvals, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders (which condition has been met), completion of the Offer, and other customary closing conditions. If the Stryker transaction is completed prior to the Annual General Meeting, the Annual General Meeting will not take place.

 

2019 BUSINESS HIGHLIGHTS

 

 

Below are highlights of our 2019 financial, operational and strategic achievements, culminating with our November 2019 entry into a definitive agreement to be acquired by Stryker Corporation.

 

 

FINANCIAL

 
$921 million

Net Sales 

Achieved $921 million in net sales, a 10% over 2018.

ü

Adjusted EBITDA Margin

Achieved our long-standing adjusted EBITDA margin goal by the end of fourth quarter of 2019.

 

OPERATIONAL

#1  

Shoulder market

No. 1 Position in Shoulder Market

By the end of 2019, we achieved our goal of being #1 in the global shoulder market.

ü

Launched New Digital Organization

In May 2019, we announced the creation of a new digital organization to focus on executing Wright’s digital surgery strategy.

 

STRATEGIC

ü

Pending Acquisition by Stryker Corporation

On November 4, 2019, we entered into a definitive agreement to be acquired by Stryker Corporation.

 

Wright Medical Group N.V. – 2020 Proxy Statement           2


 

CORPORATE GOVERNANCE

 

 

HIGHLIGHTS

 

ü One tier of directors – one executive director and eight non-executive directors ü Internal board rules similar to U.S. corporate bylaws or corporate governance guidelines
ü Annual election of directors ü Nearly 100% meeting attendance by directors
ü Majority independent directors ü Robust stock ownership guidelines and retention requirements
ü Independent board chairman ü Extensive executive succession planning efforts
ü Four standing board committees: audit, compensation, nominating, corporate governance and compliance and strategic transactions ü Annual review of corporate governance documents
ü Fully independent board committees ü Annual and thorough board and board committee evaluations
ü Recent board refreshment efforts ü No poison pill or the Dutch equivalent

 

BOARD AND COMMITTEE SELF-ASSESSMENTS

 

The board of directors recognizes that a thorough evaluation process is an important element of corporate governance and enhances the effectiveness of the full board of directors and each committee. Therefore, each year, the nominating, corporate governance and compliance committee oversees a self-assessment process to ensure that the full board of directors and each committee conduct an assessment of their performance and solicit feedback for areas of improvement.

 

 

Board participates in regular periodic self-assessment process, including evaluation of skills and experience

 

Wright Medical Group N.V. – 2020 Proxy Statement           3

 


 

SHAREHOLDER ENGAGEMENT

 

We are committed to a robust and proactive shareholder engagement program. The board of directors values the perspectives of our shareholders, and feedback from shareholders on our business, corporate governance, executive compensation, and sustainability practices are important considerations for board discussions throughout the year.

 

In 2019, we contacted our top 50 institutional shareholders, representing approximately 90% of our outstanding ordinary shares, and attended over 300 meetings for investors and interested investors.

 

 

 

Shareholder feedback is thoughtfully considered and has led to modifications in our executive compensation program, governance practices and disclosures. Some of the actions we have taken in response to feedback over the last several years include:

 

ü Added performance-based awards to our annual executive officer long-term incentive award program;
ü Adopted a clawback policy;
ü Adopted a double-trigger change-in-control vesting provision in our 2017 equity and incentive plan;
ü Designed our 2017 equity and incentive plan to reflect evolving shareholder preferences; and
ü Require pre-approval of additional directorships by our board members.

 

BOARD ENGAGEMENT

 

We have not adopted a formal process for shareholder communications with our board of directors. Nevertheless, every effort has been made to ensure that the views of our shareholders are heard by our board of directors or individual directors, as applicable, and that appropriate responses are provided to shareholders in a timely manner. Shareholders and other interested parties can communicate with our board as listed below.

 

 

 

 

 

 

WRITE CALL EMAIL ATTEND

Corporate Secretary

Wright Medical Group N.V.

Prins Bernhardplein 200

1097 JB Amsterdam

The Netherlands

Investor Relations

(901) 290-5817

julie.dewey@wright.com

Annual General Meeting

Wednesday, October 28, 2020

Wright Medical Group N.V.

 

Wright Medical Group N.V. – 2020 Proxy Statement           4


 

BOARD COMPOSITION AND DIVERSITY

 

  

The board of directors understands the importance of adding diverse, experienced talent to the board in order to establish an array of experience and strategic views. The nominating, corporate governance and compliance committee is committed to refreshment efforts to ensure that the composition of the board and each of its committees encompasses a wide range of perspectives and knowledge.   Gender Diversity
  Female
Representation

22%

(Two of Nine)

 

 

 

KEY QUALIFICATIONS

 

 

The following are some of the key qualifications, skills, and experiences of the board of directors.

 

Senior Leadership/ Management Financial Expertise Industry Expertise Sales and Marketing Expertise
Strategic Planning/M&A Investor Relations International Experience Regulatory/ Clinical/ Quality/ Compliance Experience
Public Company Board Experience Experience in High-Growth Businesses Technology/Cybersecurity Experience Reimbursement

 

Wright Medical Group N.V. – 2020 Proxy Statement           5


 

BOARD AND COMMITTEE COMPOSITION

 

 

The board of directors has an audit committee, a compensation committee, a nominating, corporate governance and compliance committee, and a strategic transactions committee. Below are our directors and their committee memberships.

 

Director Board Audit Compensation Nominating,
corporate
governance
and
compliance
Strategic
transactions
Robert J. Palmisano        
David D. Stevens Chair    
Gary D. Blackford     Chair  
J. Patrick Mackin      
John L. Miclot   Chair  
Kevin C. O’Boyle Chair    
Amy S. Paul    
Richard F. Wallman      
Elizabeth H. Weatherman     Chair

 

BOARD NOMINEES

 

 

Below are the directors nominated for election by shareholders at the Annual General Meeting for a one-year term. The board of directors recommends a vote “FOR” each of these nominees.

 

All director nominees listed below served during the fiscal year ended December 29, 2019, and attended at least 75% of the sum of all board meetings and committee meetings, as applicable.

 

Director Age Serving since Independent Current board committees
Robert J. Palmisano 75 2015 No(1) N/A
David D. Stevens 66 2015 Yes Nominating, Corporate Governance and Compliance and Strategic Transactions
Gary D. Blackford 63 2015 Yes Nominating, Corporate Governance and Compliance
J. Patrick Mackin 53 2018 Yes Compensation
John L. Miclot 61 2015 Yes Compensation and Strategic Transactions
Kevin C. O’Boyle 64 2010 Yes Audit and Strategic Transactions
Amy S. Paul 68 2015 Yes Compensation and Nominating, Corporate Governance and Compliance
Richard F. Wallman 69 2008 Yes Audit
Elizabeth H. Weatherman 60 2006 Yes Audit and Strategic Transactions

 

(1) Robert J. Palmisano serves as executive director, a role that is inherently not independent. In addition to serving as executive director, Mr. Palmisano serves as President and Chief Executive Officer.

 

Wright Medical Group N.V. – 2020 Proxy Statement           6



EXECUTIVE COMPENSATION PHILOSOPHY

 

 

Our executive compensation program is generally designed to:

 

Reinforce our corporate mission, vision and values;
   
Attract and retain executives important to the success of our Company;
   
Align the interests of our executives with the interests of our shareholders; and
   
Reward executives for the achievement of Company performance objectives, the creation of shareholder value in the short- and long-term, and their contributions to the success of our Company.

 

EXECUTIVE COMPENSATION BEST PRACTICES

 

 

Our compensation practices include many best practices that support our executive compensation objectives and principles and benefit our shareholders.

 

What we do What we don’t do
Structure our executive officer compensation so that a significant portion of pay is at risk x No automatic salary increases
Emphasize long-term performance in our equity-based incentive awards x No repricing of stock options unless approved by shareholders
Use a mix of performance measures and caps on payouts x No excessive perquisites
Require minimum vesting periods on equity awards x No new single-trigger change in control arrangements
Require double-trigger for equity acceleration upon a change in control x No tax gross-ups, other than limited CEO and relocation tax gross-ups
Maintain a competitive compensation package x No change in control excise tax gross-ups
Have robust stock ownership guidelines and stock retention requirements for executive officers x No hedging or pledging of Wright securities
Maintain a clawback policy x No short sales or derivative transactions in Wright shares, including hedges
Hold an annual say-on-pay vote x No current payment of dividends on unvested awards

 

HOW WE PAY

 

 

Our executive compensation program consists of the following principal elements:

 

Base salary;
   
Short-term annual incentive compensation; and
   
Long-term incentive compensation.

 

Wright Medical Group N.V. – 2020 Proxy Statement           7



2019 EXECUTIVE COMPENSATION ACTIONS

 

 

2019 compensation actions and incentive plan outcomes based on performance are summarized below:

 

Pay element 2019 actions
Base Salary

●      Our CEO received no base salary increase.

●      Messrs. Berry and Cordell received upward market adjustments of 10.0% and 7.3%, respectively, to compensate them for assuming increased roles and responsibilities in connection with their new Executive Vice President positions and bring them closer to target market positioning within our peer group in their new positions.

●      Messrs. Lightman and Regan received base salary merit increases of 4.4%.

Short-Term Annual Incentive

●       Target bonus percentages for our NEOs did not change from their 2018 levels, other than in the case of our CEO whose percentage increased by 20 percentage points to bring him closer to our target market positioning within our peer group and Messrs. Berry and Cordell whose percentages increased by 10 percentage points to compensate them for assuming increased roles and responsibilities and bring them closer to target market positioning within our peer group in their new positions.

●      CEO was increased to 120% and remained the same for our other NEOs, ranging from 50% to 65% of base salary.

●      Short-term incentive was based 100% on corporate performance goals for all NEOs except Messrs. Lightman and Regan who also had individual performance goals.

●      To encourage the retention of our employees, including our NEOs, we approved 2019 PIP payouts to all participants who remained employed at the time of such payments assuming the achievement of applicable performance metrics at the higher of target or actual performance. Since actual performance was less than target performance, all of our NEOs received payouts equal to target performance. We believe target payouts were important for retention purposes in light of our pending acquisition by Stryker. These payouts were made to our executives in December 2019 to mitigate potential adverse tax consequences to Wright and the NEOs in connection with the Stryker acquisition and in agreement with Stryker.

Long-Term Incentives

●      The long-term incentive (LTI) grant guideline for our CEO increased from 450% to 500% of base salary and the LTI grant guidelines for our other NEOs increased from 0 to 50 percentage points to align them more closely to target market positioning within our peer group.

●      LTI is delivered 1/3 in stock options, 1/3 in time-vested restricted stock unit (RSU) awards and 1/3 in performance share unit (PSU) awards.

●      Stock options and RSU awards vest over four years.

●      PSU awards vest and are paid out in shares upon the achievement of a threshold net sales growth goal over a three-year period.

●      There were no payouts of prior PSU awards during 2019 because PSU awards have a three-year performance period and were first granted in 2017.

●      In recognition of the changed circumstances created by the Stryker acquisition and to encourage retention during the pendency of the acquisition, the compensation committee determined, consistent with the terms of the Purchase Agreement with Stryker, that all outstanding PSU awards will be deemed to have achieved maximum levels of performance.

 

Wright Medical Group N.V. – 2020 Proxy Statement 8

SAY-ON-PAY VOTE

 

 

The board of directors is providing our shareholders with an advisory vote on our executive compensation commonly known as a say-on-pay vote. We last submitted a say-on-pay proposal to our shareholders at our 2019 Annual General Meeting held on June 28, 2019. At that meeting, 70.7% of the votes cast by our shareholders were in favor of our say-on-pay vote.

 

The board of directors recommends a vote “FOR” the approval of our say-on-pay proposal.

 

Renewal of LIMITED SHARE ISSUANCE AND WAIVER OF PRE-EMPTIVE RIGHTS AUTHORIZATIONS

 

 

Under Dutch law and our articles of association, we are required to seek approval of our shareholders each time we wish to issue shares from our authorized ordinary share capital, or we wish to exclude or restrict the pre-emptive rights that are afforded to our shareholders under Dutch law and our articles of association, unless our shareholders have authorized our board of directors to issue shares and exclude or restrict such pre-emptive rights.

 

This proxy statement explains two proposals which would extend the authorization of our board of directors until October 28, 2022 to issue, or grant rights to purchase or subscribe for, and to exclude or restrict pre-emptive rights on the issue of, or grant of rights to purchase or subscribe for, our unissued ordinary shares up to 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions.

 

The board of directors recommends a vote “FOR” the approval of the renewal of the authority of our board of directors to issue ordinary shares and resolve to exclude or restrict our shareholders’ pre-emptive rights under Dutch law as described later in this proxy statement.

 

other routine voting proposals

 

 

This proxy statement contains information regarding the other routine voting proposals being submitted to a vote of shareholders. With respect to these other voting proposals, the board of directors recommends a vote:

 

FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 27, 2020;

 

FOR” the appointment of KPMG N.V. as the auditor for our Dutch statutory annual accounts for the fiscal year ending December 27, 2020;

 

FOR” the adoption of our Dutch statutory annual accounts for the fiscal year ended December 29, 2019;

 

FOR” the release of each member of our board of directors from liability with respect to the exercise of his or her duties during the fiscal year ended December 29, 2019; and

 

FOR” the approval of the renewal of the authority of our board of directors to repurchase up to 10% of our issued share capital (including depositary receipts issued for our shares) until April 28, 2022 on the open market, through privately negotiated transactions or in one or more self-tender offers for a price per share (or depositary receipt) not less than the nominal value of a share and not higher than 110% of the market price of a share (or depositary receipt) at the time of the transaction.

 

Wright Medical Group N.V. – 2020 Proxy Statement 9


 

Our COMMITMENT TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRINCIPLES

 

 

We are committed to environmental, social and governance (ESG) principles. As a global organization, we recognize our important role in the communities and environment in which we work and live and are committed to not only delivering innovative and high quality products but also improving the quality of life for patients worldwide.

 

Sustainability is one of our core values. Environmental sustainability at Wright is built upon a philosophy of investing in our business to maximize our resiliency in the market place, while also improving the quality of life for patients worldwide and recognizing the impact of our direct and indirect operations on the environment. We are committed to protecting the environment while utilizing resources in a sustainable manner, and encouraging the responsible use and application of our products.

 

Our social consciousness is evidenced by our commitment to good corporate citizenship. Through our Wright Cares and other employee volunteer programs and grant and charitable donations, we seek to be a positive influence in the communities where we operate and our employees and their families live and work.

 

Our recent ESG initiatives have focused on:

 

sustainability efforts (e.g., incorporate sustainability concepts into the design of our products and their packaging to reduce the environmental footprint of our products);

 

humanitarianism (e.g., product donations and volunteering during work hours through our Wright Cares programs);

 

education (e.g., scholarships and tuition reimbursement programs);

 

health and wellness (e.g., days devoted to healthcare awareness and fitness challenges); and

 

access to healthcare and products (e.g., patient information programs and donations of implants, products, and supplies related to medical missions and care for the indigent).

 

Wright Medical Group N.V. – 2020 Proxy Statement 10


 

INFORMATION ABOUT THE ANNUAL GENERAL MEETING

 

The board of directors of Wright Medical Group N.V. is soliciting your proxy for use at the 2020 Annual General Meeting to be held on Wednesday, October 28, 2020. The board is soliciting proxies to give all shareholders of record an opportunity to vote on matters properly presented at the Annual General Meeting. The Annual General Meeting to which this proxy statement relates constitutes the annual general meeting of shareholders for purposes of and will satisfy applicable laws, rules and regulations of the United States, the Nasdaq Global Select Market and the Netherlands.

 

We have elected to provide access to our proxy materials on the Internet. Accordingly, we are sending an Important Notice of Availability of Proxy Materials for the Annual General Meeting (which we refer to as the Internet Notice) to most of our shareholders of record and paper or electronic copies of the proxy materials to our remaining shareholders of record. Brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar notice. All shareholders may request to receive a printed set of the proxy materials. Instructions on how to request a printed copy by mail or electronically may be found on the Internet Notice and on the website referred to in the Internet Notice, including an option to request paper copies on an ongoing basis. We will mail this proxy statement and 2019 Annual Report, together with a proxy card, to those shareholders entitled to vote at the Annual General Meeting who have properly requested paper copies of such materials, within three business days of such request.

 

When and where will the Annual GENERAL Meeting be held?

 

 

The Annual General Meeting will be held on Wednesday, October 28, 2020, at 2:00 p.m. (Central European Time), at the offices of Stibbe N.V. located at Beethovenplein 10 – 1077 WM, Amsterdam, the Netherlands Directions to attend the Annual General Meeting may be obtained by calling Investor Relations at (901) 290-5817.

 

WHAT IS THE PURPOSE OF THE ANNUAL GENERAL MEETING?

 

 

The purpose of the Annual General Meeting is to give our shareholders an opportunity to consider and act upon the matters set forth in this proxy statement:

 

Voting proposal Item of business
Voting Proposal No. 1 Appointment of Directors
Voting Proposal No. 2 Ratification of the Appointment of KPMG LLP as Independent Registered Public Accounting Firm for Fiscal Year 2020
Voting Proposal No. 3 Appointment of KPMG N.V. as Auditor for Dutch Statutory Annual Accounts for Fiscal Year 2020
Voting Proposal No. 4 Adoption of Dutch Statutory Annual Accounts  
Voting Proposal No. 5 Release of Certain Liabilities
Voting Proposal No. 6 Renewal of Authority of the Board of Directors to Repurchase Ordinary Shares Until April 28, 2022
Voting Proposal No. 7 Renewal of Authority of the Board of Directors to Issue Ordinary Shares Until October 28, 2022
Voting Proposal No. 8 Renewal of Authority of the Board of Directors to Exclude or Restrict Shareholders’ Pre-Emptive Rights Until October 28, 2022
Voting Proposal No. 9 Advisory Approval of our Executive Compensation

 

Wright Medical Group N.V. – 2020 Proxy Statement 11


ARE THERE matters to be voted on that are not included in this proxy statement?

 

 

We currently are not aware of any business that will be presented at the Annual General Meeting other than as described in this proxy statement. If, however, any other matter is properly brought at the Annual General Meeting, or any continuation, postponement, or adjournment thereof, your proxy includes discretionary authority on the part of the individuals appointed to vote your shares or act on those matters in accordance with their best judgment.

 

How do i attend the annual general meeting?

 

 

If you wish to attend the Annual General Meeting, you must notify our board of directors of your intention to do so no later than October 21, 2020, by submitting your name and the number of Wright ordinary shares beneficially owned to: James A. Lightman, Senior Vice President, General Counsel and Secretary, Wright Medical Group N.V., Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands. If you own your ordinary shares through a broker and you wish to attend the Annual General Meeting, you must notify our board of directors of your intention to do so in the manner described above no later than October 21, 2020 and also provide us with appropriate evidence of ownership of and authority to vote the shares no later than October 21, 2020. Access to the Annual General Meeting is permitted only after verification of personal identification.

 

WhO IS ENTITLED TO VOTE AT the Annual GENERAL Meeting?

 

 

Only shareholders of record of our ordinary shares at the close of business on September 30, 2020, or the record date, according to American Stock Transfer & Trust Company, LLC, our registrar and transfer agent, or such shareholders’ proxies, will be entitled to vote at the Annual General Meeting. As of September 10, 2020, the number of outstanding ordinary shares entitled to vote on each voting proposal at the Annual General Meeting was [129,649,925].

 

How Many Votes Do I Have?

 

 

Each Wright ordinary share entitles the holder thereof to one vote on each matter that is voted on at the Annual General Meeting.

 

Is My Vote Important?

 

 

Yes. Your vote is important regardless of how many Wright ordinary shares you own. Please take a moment to read the instructions in response to the next question below, vote your shares and submit your proxy as soon as possible to ensure that your shares are represented and voted at the Annual General Meeting.

 

How Do I Vote?

 

 

If you are the registered holder of Wright ordinary shares, you are the record holder of those shares, and you can vote at the Annual General Meeting in person or by proxy. We recommend that you vote by proxy even if you plan to attend the Annual General Meeting in person. If you attend the Annual General Meeting, you may revoke your proxy by voting in person at that time.

 

If you are a shareholder of record and are voting by proxy, your vote must be received by 4:00 p.m. (Eastern Time) on October 27, 2020 to be counted.

 

Wright Medical Group N.V. – 2020 Proxy Statement 12


 

There are three ways to vote by proxy:

 

By Internet – You can vote by Internet by going to the website www.proxyvote.com and following the instructions for Internet voting shown on your Notice Regarding the Availability of Proxy Materials or, if you received a paper or electronic copy of our proxy materials, your proxy card.

 

By Telephone – You can vote by telephone by calling toll-free 1-800-690-6903 in the United States, Canada and Puerto Rico and following the instructions.

 

By Mail – You can vote by mail by completing, signing, dating and mailing your proxy card in the envelope provided if you received a paper copy of these proxy materials. If you vote by Internet or telephone, please do not mail your proxy card.

 

By giving us your proxy, you are authorizing the individuals named on our proxy card, the proxies, to vote your shares in the manner you indicate. You may vote “FOR” or “AGAINST” or “ABSTAIN” from voting on (i)  our executive director nominee and each of our eight non-executive director nominees in Voting Proposal No. 1 and (ii) each of the other voting proposals in this proxy statement.

 

If you vote by proxy without indicating your instructions, your shares will be voted:

 

FOR” the appointment of Robert J. Palmisano as executive director and David D. Stevens, Gary D. Blackford, J. Patrick Mackin, John L. Miclot, Kevin C. O’Boyle, Amy S. Paul, Richard F. Wallman and Elizabeth H. Weatherman as non-executive directors, as recommended by our board of directors, in Voting Proposal No. 1; and

 

FOR” each of the other voting proposals in this proxy statement, as recommended by our board of directors.

 

AM I A “RECORD HOLDER” OR DO I HOLD MY SHARES IN “STREET NAME”?

 

 

A record holder holds shares in his or her name. Shares held in “street name” means that shares are held in the name of a bank or broker on a person’s behalf.

 

CAN i VOTE IF MY SHARES ARE HELD IN “STREET NAME”?

 

 

Yes. If you own Wright ordinary shares through a broker, bank or other nominee, such shares often are referred to as held in “street name,” and you, as the beneficial owner of those shares, do not appear in our share register. For shares held in street name, there is a two-step process for distributing our proxy materials and tabulating votes. Brokers inform us how many of their clients own ordinary shares in street name, and the broker forwards our proxy materials to those beneficial owners. If you receive our proxy materials from your broker, you should vote your shares by following the procedures specified on your broker’s voting instruction form. Shortly before the Annual General Meeting, your broker will tabulate the votes it has received and submit a proxy card to us reflecting the aggregate votes of the street name holders. If you plan to attend the Annual General Meeting and vote your street name shares in person, you should contact your broker to obtain a broker’s proxy card and bring it to the Annual General Meeting, as well as notify our board of directors of your intention to do so in the manner described above no later than October 21, 2020, and provide us with appropriate evidence of ownership of and authority to vote the shares no later than October 21, 2020.

 

Wright Medical Group N.V. – 2020 Proxy Statement 13


 

Can I Change My Vote or Revoke My Proxy?

 

 

Yes. You may change your vote or revoke a proxy at any time prior to its exercise at the Annual General Meeting by:

 

giving to our Senior Vice President, General Counsel and Secretary a written notice of revocation of the proxy’s authority;

 

submitting a duly executed proxy card bearing a later date;

 

voting again by Internet, telephone or mail at a later time before the closing of these voting facilities at 4:00 p.m. (Eastern Time) on October 27, 2020; or

 

attending the Annual General Meeting and voting in person.

 

Your attendance at the Annual General Meeting alone, without voting at the meeting, will not revoke your proxy.

 

What Vote is Required to Appoint Directors and Approve Each Voting Proposal?

 

 

Under Dutch law and our articles of association, our board of directors has the right to make binding nominations for open positions on the board of directors. If the list of candidates contains one candidate for a vacancy to be filled, such candidate shall be appointed, unless the binding nature of the nominations by the board of directors is set aside. The binding nature of the nominations by our board of directors may be overridden by a vote of two-thirds of the votes cast at an annual general meeting if such two-thirds vote constitutes more than one-half of our issued share capital, in which event a new meeting would be called at which the resolution for appointment of a member of our board of directors would require a majority of two-thirds of the votes cast, representing more than one-half of the issued share capital. At an annual general meeting of shareholders, votes with respect to the appointment of a member of our board of directors can only be cast for candidates named in the agenda of the meeting or the explanatory notes thereto.

 

The affirmative vote of a majority of the votes cast in person or by proxy at the Annual General Meeting and entitled to vote on the proposal is required to approve each of the other voting proposals in this proxy statement. As a matter of Dutch law, if less than one half of the issued capital is represented at the meeting, a majority of at least two-thirds of the votes cast shall be required for a resolution of a general meeting to adopt agenda item 11 (authorization to restrict or exclude pre-emptive rights).

 

Although there is no general quorum requirement under Dutch law, our articles of association provide that resolutions with respect to the voting proposals in this proxy statement shall be passed by a simple majority of votes cast in a meeting where at least one-third of the outstanding shares are represented. Broker non-votes will not count as shares present at the Annual General Meeting or for the purpose of determining the number of votes cast. “Broker non-votes” are shares that are held in “street name” by a broker, bank or other nominee that indicates on its proxy that it does not have discretionary authority to vote on a particular matter. Abstentions will count as shares present at the Annual General Meeting, but will not count for the purpose of determining the number of votes cast.

 

How Will Votes Be Counted?

 

 

Each Wright ordinary share will be counted as one vote according to the instructions contained on a properly completed proxy or cast in person at the Annual General Meeting. Shares will not be voted in favor of a proposal if either the shareholder abstains from voting on a particular matter or the shares represent broker non-votes.

 

Wright Medical Group N.V. – 2020 Proxy Statement 14


 

Who Will Count the Votes?

 

 

All proxies submitted to us will be tabulated by Broadridge Financial Solutions, Inc. All shares voted by shareholders of record present in person at the Annual General Meeting will be tabulated by our Corporate Secretary or his designee.

 

How Does the Board of Directors Recommend that I Vote on the Voting Proposals?

 

 

Our board of directors recommends that you vote:

 

FOR” the appointment of Robert J. Palmisano as executive director and David D. Stevens, Gary D. Blackford, J. Patrick Mackin, John L. Miclot, Kevin C. O’Boyle, Amy S. Paul, Richard F. Wallman and Elizabeth H. Weatherman as non-executive directors, in each case to serve until the 2021 Annual General Meeting or until his or her earlier death, resignation or removal (Voting Proposal No. 1);

 

FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 27, 2020 (Voting Proposal No. 2);

 

FOR” the appointment of KPMG N.V. as the auditor for our Dutch statutory annual accounts for the fiscal year ending December 27, 2020 (Voting Proposal No. 3);

 

FOR” the adoption of our Dutch statutory annual accounts for the fiscal year ended December 29, 2019 (Voting Proposal No. 4);

 

FOR” the release of each member of our board of directors from liability with respect to the exercise of his or her duties during the fiscal year ended December 29, 2019 (Voting Proposal No. 5);

 

FOR” the approval of the renewal of the authority of our board of directors to repurchase up to 10% of our issued share capital (including depositary receipts issued for our shares) until April 28, 2022 on the open market, through privately negotiated transactions or in one or more self-tender offers for a price per share (or depositary receipt) not less than the nominal value of a share and not higher than 110% of the market price of a share (or depositary receipt) at the time of the transaction (Voting Proposal No. 6);

 

FOR” the approval of the renewal of the authority of our board of directors to issue ordinary shares or grant rights to subscribe for ordinary shares up to 20% of our issued and outstanding shares at the time of the issue until October 28, 2022 (Voting Proposal No. 7);

 

FOR” the approval of the renewal of the authority of our board of directors to exclude or restrict shareholders’ pre-emptive rights under Dutch law with respect to the ordinary shares and rights to subscribe therefor that the board of directors may issue or grant pursuant to the authority in Voting Proposal No. 7 until October 28, 2022 (Voting Proposal No. 8); and

 

FOR” the approval, on an advisory basis, of our executive compensation (Voting Proposal No. 9).

 

Wright Medical Group N.V. – 2020 Proxy Statement 15


 

Where Can I Find the Voting Results of the Annual General Meeting?

 

 

We plan to announce preliminary voting results at the Annual General Meeting and will report the final results in a Current Report on Form 8-K, which we intend to file with the SEC within four business days after the Annual General Meeting.

 

COULD THE PENDING STRYKER TRANSACTION IMPACT the Annual General Meeting?

 

 

Yes. If the Stryker transaction is completed prior to the Annual General Meeting, the Annual General Meeting will not take place.

 

CORPORATE GOVERNANCE

 

BEST PRACTICES

 

 

ü One tier of directors – one executive director and eight non-executive directors ü Internal board rules similar to U.S. corporate bylaws or corporate governance guidelines
ü Annual election of directors ü Nearly 100% meeting attendance by directors
ü Majority independent directors ü Robust stock ownership guidelines and retention requirements
ü Independent board chairman ü Extensive executive succession planning efforts
ü Four standing board committees: audit, compensation, nominating, corporate governance and compliance and strategic transactions ü Annual review of corporate governance documents
ü Fully independent board committees ü Annual and thorough board and board committee evaluations
ü Recent board refreshment efforts ü No poison pill or the Dutch equivalent

 

Internal Rules for the Board of Directors

 

 

Our board of directors has adopted internal rules, which are similar to U.S. corporate bylaws or corporate governance guidelines. A copy of these internal rules can be found on the Investors—Governance Documents & Charters section of our website at www.wright.com. Among the topics addressed in our internal rules for our board of directors are:

 

Board responsibility Board meetings
Board composition Board resolutions
Chairman responsibilities Conflicts of interest
Executive director responsibilities Board committees
Non-executive director responsibilities Disclosure of information
Ownership of securities Confidentiality

 

Wright Medical Group N.V. – 2020 Proxy Statement 16

 


 

Dutch Corporate Governance Code

 

 

In addition to the Listing Rules of the Nasdaq Stock Market and rules and regulations as promulgated by the SEC, as a Dutch company, our governance practices are governed by the Dutch Corporate Governance Code. The Dutch Corporate Governance Code (as last amended on December 8, 2016) contains a number of principles and best practices, with emphasis on integrity, transparency and accountability as the primary means of achieving good governance.

 

There is considerable overlap between the requirements we must meet under U.S. rules and regulations and the provisions of the Dutch Corporate Governance Code. Although we apply several provisions of the Dutch Corporate Governance Code, as an SEC registrant and Nasdaq listed company, we believe that it is appropriate to maintain governance practices that are in line with our peers listed on the Nasdaq Global Select Stock Market, and therefore, at times may choose to apply practices common for Nasdaq listed companies.

 

In accordance with the Dutch Corporate Governance Code’s compliance principle of “apply-or-explain,” which permits Dutch companies to be fully compliant with the Dutch Corporate Governance Code by either applying the Dutch practices or explaining why the company has chosen to apply different practices, we disclose in our Dutch statutory annual report that accompanies our Dutch statutory annual accounts to what extent we do not apply provisions of the Dutch Corporate Governance Code, together with the reasons for those deviations. Our Dutch statutory annual report may be found on the Investors—Annual Reports section of our website at www.wright.com.

 

Director Independence

 

 

Under the Listing Rules of the Nasdaq Stock Market, independent directors must compose a majority of our board of directors. In addition, Nasdaq listing rules require that, subject to specified exceptions, each member of our audit, compensation and nominating, corporate governance and compliance committees must be independent directors. Audit committee members also must satisfy the enhanced independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (Exchange Act), and compensation committee members must satisfy the enhanced independence criteria set forth in Rule 10C-1 under the Exchange Act. Under Nasdaq listing rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.    

 

Our board of directors has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including, among others, family relationships, our board of directors has determined that eight of our current nine directors, consisting of David D. Stevens, Gary D. Blackford, J. Patrick Mackin, John L. Miclot, Kevin C. O’Boyle, Amy S. Paul, Richard F. Wallman and Elizabeth H. Weatherman are independent directors under Nasdaq listing rules and that each of the audit committee members and compensation committee members satisfy the additional enhanced independence criteria. Further, all of our non-executive directors are independent under the independence definition in the Dutch Corporate Governance Code. In making these determinations, our board of directors considered the current and prior relationships that each director has with our company and all other facts and circumstances that our board of directors deemed relevant in determining independence, including the beneficial ownership of ordinary shares by each director.

 

Wright Medical Group N.V. – 2020 Proxy Statement 17

 


 

Board of Directors Leadership Structure

 

 

Mr. Stevens serves as Chairman of our board of directors. Mr. Palmisano serves as our President and Chief Executive Officer and executive director.

 

Under the internal rules for our board of directors, the chairman may only be a non-executive director and may not be involved, nor have been involved in the daily management of Wright. The chairman’s general and specific responsibilities cover: (i) determining the agenda and chairing the meetings of our board of directors; (ii) ensuring that there is sufficient time for decision-making by our board of directors; (iii) ensuring the functioning of our board of directors and conducting shareholder meetings, including our Annual General Meetings of shareholders; (iv) managing our board of directors to ensure that it operates effectively; (v) ensuring that the members of our board of directors receive accurate, timely and clear information, in particular about our performance, to enable our board of directors to make sound decisions, monitor effectively and provide advice to promote the success of Wright; (vi) encouraging active engagement by all the members of our board of directors; (vii) setting and approving our board of directors agenda to take full account of the issues and the concerns of all directors; (viii) promoting effective relationships and open communication, both inside and outside the boardroom, between non-executive directors and the executive directors; (ix) monitoring effective implementation of board of directors decisions; (x) ensuring clear structure for and the effective running of board committees together with and facilitated by our corporate secretary, (xi) maintaining effective communication with major shareholders so as to ensure that our board of directors develops an understanding of their views; (xii) in conjunction with our corporate secretary, taking the lead in providing a properly constructed induction program for new directors that is comprehensive, formal and tailored; (xiii) ensuring that the performance of individuals and of our board of directors as a whole and its committees is evaluated at least once a year; and (xiv) establishing a close relationship of trust with the executive director, by providing support and advice while respecting executive responsibility.

 

Under the internal rules for our board of directors, the executive director’s responsibilities within our board of directors include: (i) day-to-day management of Wright comprising all decisions in the ordinary course of its business, and within the strategic and financial objectives and boundaries as included in the strategy and business plans approved by our board of directors; (ii) strategic management of Wright, including developing strategy and business plans for Wright, including the financial projections and the budget, and proposing these plans to our board of directors and implementing them after approval of our board of directors; (iii) maintaining appropriate accounting, financial and other controls; (iv) establishing and maintaining internal procedures, which ensure that all major financial information is known to our entire board of directors, so that the timeliness, completeness and correctness of the external financial reporting are assured; (v) adopting company policies in respect of corporate conduct, including compliance with applicable laws and regulations; (vi) reviewing the process of the provision of appropriate financial and operational information to our board of directors, and to (public) authorities or other relevant bodies; (vii) preparing and monitoring implementation of succession plans regarding our management; (viii) evaluating the overall effectiveness of Wright; and (ix) such other matters as may be specifically delegated to the executive director by our board of directors.

 

We currently believe this leadership structure is in the best interests of Wright and our shareholders and strikes the appropriate balance between the President and Chief Executive Officer’s responsibility for the strategic direction, day-to day-leadership and performance of Wright and the Chairman’s responsibility to guide the overall strategic direction of Wright and provide oversight of our corporate governance and guidance to our President and Chief Executive Officer and to set the agenda for and preside over board meetings. We recognize that different leadership structures may be appropriate for companies in different situations and believe that no one structure is suitable for all companies. We believe that our company is well-served by this leadership structure.

 

Wright Medical Group N.V. – 2020 Proxy Statement 18

 


 

Board Committees OF THE BOARD OF DIRECTORS

 

 

Our board of directors has four standing board committees: audit committee, compensation committee, nominating, corporate governance and compliance committee, and strategic transactions committee. Each of these committees has the composition described in the table below and the responsibilities described in the sections below. Our board of directors has adopted a written charter for each committee of our board of directors. These charters are available on the Investors—Governance Documents & Charters section of our corporate website at www.wright.com. Our board of directors from time to time may establish other committees.

 

The following table summarizes the current membership of each of our four board committees.

 

Director Board Audit Compensation Nominating,
corporate
governance
and
compliance
Strategic transactions
Robert J. Palmisano        
David D. Stevens Chair    
Gary D. Blackford     Chair  
J. Patrick Mackin      
John L. Miclot   Chair  
Kevin C. O’Boyle Chair    
Amy S. Paul    
Richard F. Wallman      
Elizabeth H. Weatherman     Chair

 

Audit Committee

 

The audit committee oversees a broad range of issues surrounding our accounting and financial reporting processes and audits of our consolidated financial statements. The primary responsibilities of the audit committee include:

 

assisting our board of directors in monitoring the integrity of our consolidated financial statements, our compliance with legal and regulatory requirements insofar as they relate to our consolidated financial statements and financial reporting obligations and any accounting, internal accounting controls or auditing matters, our independent registered public accounting firm’s qualifications and independence, and the performance of our internal audit function and independent registered public accounting firm;

 

appointing, compensating, retaining, and overseeing the work of any independent registered public accounting firm engaged for the purpose of performing any audit, review, or attest services and dealing directly with any such auditing firm; provided, that such appointment will be subject to shareholder ratification or decision in the case of the auditor for our Dutch statutory annual accounts;

 

providing a medium for consideration of matters relating to any audit issues;

 

establishing procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters, and for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; and

 

reviewing and approving all related party transactions required to be disclosed under the U.S. federal securities laws.

 

The audit committee reviews and evaluates, at least annually, the performance of the audit committee and its members, including compliance of the committee with its charter.

 

Wright Medical Group N.V. – 2020 Proxy Statement 19

 


 

The audit committee has the sole authority to select, retain, oversee, and terminate its own counsel, consultants, and advisors and approve the fees and other retention terms of such counsel, consultants, and advisors, as it deems appropriate.

 

The audit committee currently consists of Mr. O’Boyle (Chair), Mr. Wallman and Ms. Weatherman. We believe that the composition of the audit committee complies with the applicable rules of the SEC and the Nasdaq Stock Market. Our board of directors has determined that each of Mr. O’Boyle, Mr. Wallman and Ms. Weatherman is an “independent director” under the rules of the Nasdaq Stock Market and that each of Messrs. O’Boyle and Wallman is an “audit committee financial expert,” as defined in SEC rules, and satisfies the financial sophistication requirements of the Nasdaq Stock Market. Our board of directors also has determined that each of Mr. O’Boyle, Mr. Wallman and Ms. Weatherman meets the more stringent independence requirements for audit committee members of Rule 10A-3(b)(1) under the Exchange Act and the Listing Rules of the Nasdaq Stock Market and is independent under the Dutch Corporate Governance Code.

 

Compensation Committee

 

The primary responsibilities of our compensation committee, which are within the scope of the board of directors compensation policy adopted by the general meeting of our shareholders, include:

 

reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, evaluating the performance of these officers in light of those goals and objectives, and setting compensation of these officers based on such evaluations;

 

making recommendations to our board of directors with respect to incentive compensation and equity-based plans that are subject to board and shareholder approval, administering or overseeing all of our incentive compensation and equity-based plans, and discharging any responsibilities imposed on the committee by any of these plans;

 

reviewing and recommending to our board of directors any severance or similar termination payments proposed to be made to our Chief Executive Officer and reviewing and approving any severance or similar termination payments proposed to be made to any other executive officer;

 

reviewing and discussing with our Chief Executive Officer and reporting periodically to our board of directors plans for development and corporate succession plans for our executive officers and other key employees, which include transitional leadership in the event of an unplanned vacancy;

 

reviewing and discussing with management the “Compensation Discussion and Analysis” section of this proxy statement, and, based on such discussions, recommending to our board of directors whether the “Compensation Discussion and Analysis” section should be included in this proxy statement; and

 

approving, or recommending to our board of directors for approval, the compensation programs, and the payouts for all programs, applying to our non-executive directors, including reviewing the competitiveness of our non-executive director compensation programs and reviewing the terms to make sure they are consistent with our board of directors compensation policy adopted by the general meeting of our shareholders.

 

The compensation committee reviews and evaluates, at least annually, the performance of the compensation committee and its members, including compliance of the committee with its charter.

 

The compensation committee has the sole authority to select, retain, oversee, and terminate its own counsel, consultants, and advisors and approve the fees and other retention terms of such counsel, consultants, and advisors, as it deems appropriate. Before selecting any such counsel, consultant or advisor, the compensation committee reviews and considers the independence of such counsel, consultant or advisor, including any other services the counsel, consultant or other advisor is providing to our company and management.

 

Wright Medical Group N.V. – 2020 Proxy Statement 20

 


 

The compensation committee currently consists of Mr. Miclot (Chair), Mr. Mackin and Ms. Paul. We believe that the composition of our compensation committee complies with the applicable rules of the SEC and the Nasdaq Stock Market. Our board of directors has determined that each of Mr. Miclot, Mr. Mackin and Ms. Paul is an “independent director” under the rules of the Nasdaq Stock Market, meets the more stringent independence requirements for compensation committee members of Rule 10C-1 under the Exchange Act and the Listing Rules of the Nasdaq Stock Market and is independent under the Dutch Corporate Governance Code. None of our executive officers has served as a member of the board of directors or compensation committee of any entity that has an executive officer serving as a member of our board of directors.

 

Nominating, Corporate Governance and Compliance Committee

 

The primary responsibilities of our nominating, corporate governance and compliance committee include:

 

reviewing and making recommendations to our board of directors regarding the size and composition of our board of directors;

 

identifying, reviewing, and recommending nominees for election as directors;

 

making recommendations to our board of directors regarding corporate governance matters and practices, including any revisions to our internal rules for our board of directors; and

 

overseeing our compliance efforts with respect to our legal, regulatory, and quality systems requirements and ethical programs, including our code of business conduct, other than with respect to matters relating to our financial statements and financial reporting obligations and any accounting, internal accounting controls or auditing matters, which are within the purview of the audit committee.

 

The nominating, corporate governance and compliance committee reviews and evaluates, at least annually, the performance of the nominating, corporate governance and compliance committee and its members, including compliance of the committee with its charter.

 

The nominating, corporate governance and compliance committee has the sole authority to select, retain, oversee, and terminate its own counsel, consultants, and advisors and approve the fees and other retention terms of such counsel, consultants, and advisors, as it deems appropriate.

 

The nominating, corporate governance and compliance committee currently consists of Mr. Blackford (Chair), Ms. Paul and Mr. Stevens. We believe that the composition of our nominating, corporate governance and compliance committee complies with the applicable rules of the Nasdaq Stock Market. Our board of directors has determined that each of Mr. Blackford, Ms. Paul and Mr. Stevens is an “independent director” under the rules of the Nasdaq Stock Market.

 

The nominating, corporate governance and compliance committee considers all candidates recommended by our shareholders pursuant to specific minimum qualifications that the nominating, corporate governance and compliance committee believes must be met by a recommended nominee for a position on our board of directors, which qualifications are described in the nominating, corporate governance and compliance committee’s charter, a copy of which is available on the Investors—Governance Documents & Charters section of our corporate website www.wright.com. We have made no material changes to the procedures by which shareholders may recommend nominees to our board of directors, as described in our most recent proxy statement.

 

Wright Medical Group N.V. – 2020 Proxy Statement 21

 


 

Strategic Transactions Committee

 

The primary responsibilities of our strategic transactions committee include:

 

reviewing and evaluating potential opportunities for strategic business combinations, acquisitions, mergers, dispositions, divestitures, investments, and similar strategic transactions involving our company or any one or more of our subsidiaries outside the ordinary course of our business that may arise from time to time;

 

approving on behalf of our board of directors any strategic transaction that may arise from time to time and is deemed appropriate by the strategic transactions committee and involves total cash consideration of less than $5.0 million; provided, however, that the strategic transactions committee is not authorized to approve any strategic transaction involving the issuance of capital stock or in which any director, officer, or affiliate of our company has a material interest;

 

making recommendations to our board of directors concerning approval of any strategic transactions that may arise from time to time and are deemed appropriate by the strategic transactions committee and are beyond the authority of the strategic transactions committee to approve;

 

reviewing integration efforts with respect to completed strategic transactions from time to time and making recommendations to management and our board of directors, as appropriate;

 

assisting management in developing, implementing, and adhering to a strategic plan and direction for its activities with respect to strategic transactions and making recommendations to management and our board of directors, as appropriate;

 

reviewing and approving the settlement or compromise of any material litigation or claim against us; and

 

reviewing and evaluating potential opportunities for restructuring our business in response to completed strategic transactions or otherwise in an effort to realize anticipated cost and expense savings for, and other benefits to, our company and making recommendations to management and our board of directors, as appropriate.

 

The strategic transactions committee reviews and evaluates periodically the performance of the committee and its members, including compliance of the committee with its charter.

 

The strategic transactions committee has the sole authority to select, retain, oversee, and terminate its own counsel, consultants, and advisors and approve the fees and other retention terms of such counsel, consultants, and advisors, as it deems appropriate.

 

The strategic transactions committee currently consists of Ms. Weatherman (Chair), Mr. Miclot, Mr. O’Boyle and Mr. Stevens.

 

Wright Medical Group N.V. – 2020 Proxy Statement 22

 


 

board and board committee meetings; attendance

 

 

The board of directors held 10 meetings during 2019. The audit committee held four meetings, the compensation committee held five meetings, the nominating, corporate governance and compliance committee held five meetings, and the strategic transactions committee held four meetings during 2019. All directors attended at least 75% of the combined total of (i) all board meetings and (ii) all meetings of committees of the board of which the director was a member during 2019.

 

Our formal policy regarding attendance by members of our board of directors at annual general meetings of shareholders is that, due to the location of our Annual General Meetings in the Netherlands, the residence of our directors in the United States and the fact that regular board meetings do not take place at or around the time of the annual general meetings of shareholders, directors are not required to attend annual general meetings of shareholders. None of our directors attended our 2019 Annual General Meeting held on June 28, 2019.

 

Consideration of Director Nominees

 

 

Our board of directors has delegated to the nominating, corporate governance and compliance committee the responsibility, among other things, to review and make recommendations to our board of directors regarding the size and composition of our board of directors and identify, review and recommend nominees for appointment as directors. The policy of the nominating, corporate governance and compliance committee with respect to nominees for appointment as directors submitted or recommended by our shareholders is to consider properly submitted recommendations for candidates to our board of directors from our shareholders. In evaluating such recommendations, the nominating, corporate governance and compliance committee seeks to achieve a balance of experience, knowledge, integrity and capability on our board of directors and to address the membership criteria described below. Any shareholder recommendations for consideration by the nominating, corporate governance and compliance committee should include the candidate’s name, biographical information, information regarding any relationships between the candidate and Wright within the last three years, at least three personal references, a statement of recommendation of the candidate from the shareholder, a description of our ordinary shares beneficially owned by the shareholder, a description of all arrangements between the candidate and the recommending shareholder and any other person pursuant to which the candidate is being recommended, a written indication of the candidate’s willingness to serve on our board of directors and a written indication to provide such other information as the nominating, corporate governance and compliance committee may reasonably request. There are no differences in the manner in which the nominating, corporate governance and compliance committee evaluates nominees for director based on whether the nominee is recommended by a shareholder or otherwise.

 

The nominating, corporate governance and compliance committee will evaluate and recommend candidates for membership on our board of directors consistent with criteria established by the committee. The nominating, corporate governance and compliance committee has not formally established any specific, minimum qualifications that must be met by each candidate for our board of directors or specific qualities or skills that are necessary for one or more of the members of our board of directors to possess. However, the nominating, corporate governance and compliance committee, when considering a potential candidate, will factor into its determination the following qualities of a candidate: (i) high personal and professional ethics, values and integrity; (ii) the education, skill and experience that our board of directors deems relevant and useful, including whether such attributes or background would contribute to the diversity of our board of directors as a whole; (iii) the ability and willingness to serve on any committees of our board of directors; and (iv) the ability and willingness to commit adequate time to the proper functioning of our board of directors and its committees.

 

Wright Medical Group N.V. – 2020 Proxy Statement 23

 


 

BOARD DIVERSITY

 

 

The board of directors understands the importance of adding diverse, experienced talent to the board in order to establish an array of experience and strategic views. The nominating, corporate governance and compliance committee is committed to refreshment efforts to ensure that the composition of the board and each of its committees encompasses a wide range of perspectives and knowledge.

 

While we do not have a stand-alone diversity policy, the nominating, corporate governance and compliance committee and our board of directors believe that the above-mentioned attributes provide us with a diverse range of perspectives and judgment necessary to guide our strategies and monitor their execution. The nominating, corporate governance and compliance committee seeks nominees with a broad diversity of experience, expertise and backgrounds. The nominating, corporate governance and compliance committee does not assign specific weight to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees. We believe that the backgrounds and qualifications of the directors, considered as a group, should provide a significant mix of experience, knowledge and abilities that will allow our board of directors to fulfill its responsibilities.

 

 

Wright Medical Group N.V. – 2020 Proxy Statement 24

 


 

Board OVERSIGHT OF BUSINESS STRATEGY AND ANNUAL OPERATING PLAN

 

 

Our board of directors oversees our strategic direction and business activities. Throughout the year, the board and management discuss our short and long-term business strategy. As part of our long-term strategy, management typically formulates three-year financial targets against which performance is reviewed by the board.

 

With respect to our short-term strategy, at the end of each year, our management presents to the board of directors a preliminary annual operating plan for the following year and receives input from the board. At the beginning of each year, management then presents a final annual operating plan that is approved by the board of directors. At each subsequent regular board meeting, the board of directors reviews our operating and financial performance relative to the plan.

 

 

 

Wright Medical Group N.V. – 2020 Proxy Statement 25

 


 

 

Risk Oversight

 

 

Risk is inherent with every business. We face a number of risks, including regulatory, compliance, legal, competitive, financial (accounting, credit, interest rate, liquidity and tax), operational, political, strategic and reputational risks. Our management is responsible for the day-to-day management of risks faced by us, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors ensures that the risk management processes designed and implemented by management are adequate and functioning as designed. Our board of directors oversees risks through the establishment of policies and procedures that are designed to guide daily operations in a manner consistent with applicable laws, regulations and risks acceptable to us. Our President and Chief Executive Officer, who is also a board member, regularly discusses with the board the strategies and risks facing our company.

 

 

 

The board’s standing committees oversee risks associated with their respective principal areas of focus. The audit committee’s role includes a particular focus on the qualitative aspects of financial reporting to shareholders, on our processes for the management of business and financial risk, and for compliance with significant applicable legal, ethical and regulatory requirements as they relate to our financial statements and financial reporting obligations. The audit committee, along with management, is also responsible for developing and participating in a process for review of important financial and operating topics that present potential significant risk to our company. The compensation committee is responsible for overseeing risks and exposures associated with our compensation programs and arrangements, including our executive and director compensation programs and arrangements, and management succession planning. The nominating, corporate governance and compliance committee oversees risks relating to our compliance efforts with respect to legal and regulatory requirements and relevant company policies and procedures, including our code of business conduct, code of conduct on insider trading and confidentiality and other aspects of our corporate compliance program and risks related to our corporate governance matters and policies and director succession planning. The strategic transactions committee oversees risks related to strategic transactions that we may undertake.

 

SUCCESSION PLAnning

 

 

The board of directors recognizes that one of its most important responsibilities is to ensure excellence and continuity in our senior leadership by overseeing the development of executive talent and planning for the effective succession of our CEO and the other members of our management team. This responsibility is reflected in the charter of the compensation committee, which requires the compensation committee to assist the board of directors in developing and evaluating potential candidates for executive officer positions and overseeing the development of executive succession plans, which will include transitional leadership in the event of an unplanned vacancy.

 

In furtherance of the foregoing, our CEO and Senior Vice President and Chief Human Resources Officer provide an annual succession planning report to the compensation committee, which summarizes the overall composition of our senior leadership team, including their professional qualifications, tenure, and work experience. The report also identifies internal members of the management team who are viewed as potential successors to the CEO and each

 

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member of our senior management team. Succession planning is also regularly discussed in executive sessions of the board of directors. The board of directors becomes familiar with internal potential successors for key leadership positions through various means, including the annual succession planning report and board of directors and committee meetings, and less formal interactions throughout the course of the year.

 

Additionally, the board of directors, with support and recommendations from the nominating, corporate governance and compliance committee, oversees the succession of its members. To this end, at least once a year, in connection with the annual director nomination and re-nomination process, the nominating, corporate governance and compliance committee evaluates each director’s performance, relative strengths and weaknesses, and future plans, including any personal retirement objectives. As part of that evaluation, the nominating, corporate governance and compliance committee also identifies areas of overall strength and weakness with respect to its composition and considers whether the board of directors as a whole possesses core competencies in the areas of accounting and finance, industry knowledge, management experience, sales and marketing, strategic vision, compensation, and corporate governance, among others.

 

BOARD AND COMMITTEE SELF-ASSESSMENTS

 

 

The board of directors recognizes that a thorough evaluation process is an important element of corporate governance and enhances the effectiveness of the full board of directors and each committee. Therefore, each year, the nominating, corporate governance and compliance committee oversees a self-assessment process to ensure that the full board of directors and each committee conduct an assessment of their performance and solicit feedback for areas of improvement.

 

  Board participates in regular periodic self-assessment process, including evaluation of skills and experience

 

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Shareholder engagement

 

 

We are committed to a robust and proactive shareholder engagement program. The board of directors values the perspectives of our shareholders, and feedback from shareholders on our business, corporate governance, executive compensation, and sustainability practices are important considerations for board discussions throughout the year.

 

In 2019, we contacted our top 50 institutional shareholders, representing approximately 90% of our outstanding ordinary shares, and attended over 300 meetings for investors and interested investors.

 

 

 

Shareholder feedback is thoughtfully considered and has led to modifications in our executive compensation program, governance practices and disclosures. Some of the actions we have taken in response to feedback over the last several years include:

 

  Added performance-based awards to our annual executive officer long-term incentive award program;
     
  Adopted a clawback policy;
     
  Adopted a double-trigger change-in-control vesting provision in our 2017 equity and incentive plan;
     
  Designed our 2017 equity and incentive plan to reflect evolving shareholder preferences; and
     
  Require pre-approval of additional directorships by our board members.

 

Shareholder Communications with the Board

 

 

We have not adopted a formal process for shareholder communications with our board of directors. Nevertheless, every effort has been made to ensure that the views of our shareholders are heard by our board of directors or individual directors, as applicable, and that appropriate responses are provided to shareholders in a timely manner. We believe our responsiveness to shareholder communications to our board of directors has been excellent and, to date, we have not considered it necessary to adopt a formal process. Nevertheless, our board of directors will continue to monitor whether it would be appropriate to adopt a formal process for shareholder communications with our board of directors. Shareholders and other interested parties can communicate with our board as listed below.

 

       
       
WRITE CALL EMAIL ATTEND

Corporate Secretary

Wright Medical Group N.V.

Prins Bernhardplein 200

1097 JB Amsterdam

The Netherlands

Investor Relations

(901) 290-5817

julie.dewey@wright.com

Annual General Meeting

Wednesday, October 28, 2020

Wright Medical Group N.V.

 

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Code of Business Conduct

 

 

We have adopted a code of business conduct, which applies to all of our directors, officers, and employees. We intend to disclose on our corporate website any amendment to, or waiver from, a provision of our code of business conduct that applies to directors and executive officers and that is required to be disclosed pursuant to the rules of the SEC and the Nasdaq Stock Market.

 

Code of Conduct on Insider Trading and Confidentiality

 

 

We have adopted a code of conduct on insider trading and confidentiality, which applies to all of our directors, officers and employees. The code of conduct on insider trading and confidentiality, among other things, subjects our directors, officers and employees to four quarterly blackout periods during which they may not effect transactions in Wright securities except under certain limited circumstances and prohibits our directors, officers and employees from engaging in hedging transactions, such as short sales, transactions in publicly traded options, such as puts, calls and other derivatives, and pledging ordinary shares.

 

CommITTEE CHARTERS AND OTHER INFORMATION

 

 

The charters of our standing Board committees, internal board rules and code of business conduct are available on the Investors—Governance Documents & Charters section of our corporate website at www.wright.com. Any person may request a copy free of charge by writing to James A. Lightman, Senior Vice President, General Counsel and Secretary, Wright Medical Group N.V., Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands.

 

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EXECUTIVE OFFICERS

 

The table below sets forth, as of May 15, 2020, certain information concerning our current executive officers. No family relationships exist among any of our directors or executive officers.

 

Name Age Position
Robert J. Palmisano 75 President and Chief Executive Officer and Executive Director
Lance A. Berry 47 Executive Vice President, Chief Financial and Operations Officer
Kevin D. Cordell 54 Executive Vice President, Chief Global Commercial Officer
Julie B. Andrews 49 Senior Vice President, Global Finance
Jason D. Asper 45 Senior Vice President, Chief Digital Officer
Julie D. Dewey 58 Senior Vice President, Chief Communications Officer
James A. Lightman 62 Senior Vice President, General Counsel and Secretary
Andrew C. Morton 55 Senior Vice President and Chief Human Resources Officer
J. Wesley Porter 50 Senior Vice President, Chief Compliance Officer
Barry J. Regan 48 Senior Vice President, Operations
Kevin C. Smith 60 Senior Vice President, Quality and Regulatory
Jennifer S. Walker 52 Senior Vice President, Process Improvement
Peter S. Cooke 55 President, Emerging Markets, Australia and Japan
Patrick Fisher 46 President, Lower Extremities
Timothy L. Lanier 58 President, Upper Extremities
Steven P. Wallace 40 President, International

 

Robert J. Palmisano was appointed our President and Chief Executive Officer and executive director and member of our board of directors in October 2015 in connection with the Wright/Tornier merger. Mr. Palmisano has served as President and Chief Executive Officer of Wright Medical Group, Inc. since September 2011. Prior to joining legacy Wright, Mr. Palmisano served as President and Chief Executive Officer of ev3 Inc., a global endovascular device company, from April 2008 to July 2010, when it was acquired by Covidien plc. From 2003 to 2007, Mr. Palmisano was President and Chief Executive Officer of IntraLase Corp. Before joining IntraLase, Mr. Palmisano was President and Chief Executive Officer of MacroChem Corporation from 2001 to 2003. Mr. Palmisano previously served on the board of directors of Avedro, Inc., ev3 Inc., Osteotech, Inc. and Abbott Medical Optics, Inc., all publicly held companies, and Bausch & Lomb, a privately held company. Under the terms of his employment agreement, we have agreed that Mr. Palmisano will be nominated by our board of directors for election as executive director and a member of our board of directors at each annual general meeting of shareholders during the term of his employment as President and Chief Executive Officer of Wright. Mr. Palmisano’s qualifications to serve on our board of directors include his day-to-day knowledge of Wright and its business due to his position as President and Chief Executive Officer, his experience serving on other public companies’ boards of directors, and his extensive business knowledge working with other public companies in the medical device industry.

 

Lance A. Berry was appointed our Executive Vice President, Chief Financial and Operations Officer in January 2019. Prior to such position, he served as our Senior Vice President and Chief Financial Officer from October 2015 to December 2018. He was appointed to that position in connection with the Wright/Tornier merger. Mr. Berry also serves as Senior Vice President and Chief Financial Officer of Wright Medical Group, Inc., a position he has held since 2009. He joined legacy Wright in 2002, and, until his appointment as Chief Financial Officer, served as Vice President and Corporate Controller. Prior to joining Wright, Mr. Berry served as audit manager with the Memphis, Tennessee office of Arthur Andersen LLP from 1995 to 2002.

 

Kevin D. Cordell was appointed our Executive Vice President, Chief Global Commercial Officer in January 2019. Prior to such position, he served as President, U.S. June 2016 to December 2018. From October 2015 to June 2016, he served as our President, Lower Extremities and Biologics. Mr. Cordell served as President, U.S. Extremities of Wright Medical Group, Inc. from September 2014 to October 2015. Prior to joining legacy Wright, Mr. Cordell served as Vice President of Sales for the GI Solutions business at Covidien plc, a global healthcare products company, from May 2012 to September 2014. While at Covidien, he served as Vice President of Sales and Global Marketing for its Peripheral Vascular business from July 2010 to May 2012. He joined Covidien in July 2010

 

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through the acquisition of ev3 Inc., a global endovascular device company, where he served as Vice President of U.S. Sales from January 2009 to July 2010. Prior to ev3, Mr. Cordell served as Vice President, Global Sales of FoxHollow Technologies, Inc. from March 2007 until it was acquired by ev3 in October 2007. Earlier in his career, Mr. Cordell held various positions of increasing responsibility for Johnson & Johnson’s Cordis Cardiology and Centocor companies. Mr. Cordell currently serves on the University of Oklahoma Healthcare Board. Mr. Cordell previously served on the board of directors of TissueGen, Inc., a privately-held developer of biodegradable polymer technology for implantable drug delivery.

 

Julie B. Andrews was appointed our Senior Vice President, Global Finance in August 2019. From October 2015 to August 2019, Ms. Andrews served as Vice President of Finance, Chief Accounting Officer. Ms. Andrews served as Vice President and Chief Accounting Officer of Wright Medical Group, Inc. from May 2012 to October 2015. From February 1998 to May 2012, Ms. Andrews held numerous key financial positions with Medtronic, Inc., a global medical device company. Most recently, Ms. Andrews served as Medtronic’s Vice President, Finance for its spinal and biologics business units. Ms. Andrews has significant accounting, finance, and business skills as well as global experience, having held positions in worldwide planning and analysis in Medtronic Sofamor Danek and in Medtronic’s spinal and biologics business. Prior to joining Medtronic, Ms. Andrews worked with Thomas & Betts Corporation in Memphis, Tennessee and Thomas Havey, LLP in Chicago, Illinois.

 

Jason D. Asper was appointed our Senior Vice President, Chief Digital Officer in April 2019. Prior to this position, he served as Senior Vice President, Strategy, Corporate Development and Technology from February 2019 to April 2019 and Senior Vice President, Strategy and Corporate Development from August 2017 to February 2019. Prior to joining Wright, Mr. Asper served as a principal for Deloitte Consulting, LLP, a global consulting company, from September 2012 to July 2017.

 

Julie D. Dewey was appointed our Senior Vice President, Chief Communications Officer in October 2015 in connection with the Wright/Tornier merger. Ms. Dewey served as Senior Vice President, Chief Communications Officer of Wright Medical Group, Inc. from October 2011 to October 2015. Prior to joining legacy Wright, Ms. Dewey served as Chief Communications Officer of Epocrates, Inc., a publicly held company that sold physician platforms for clinical content, practice tools and health industry engagement, from March 2011 to October 2011. From January 2008 to July 2010, Ms. Dewey was Senior Vice President and Chief Communications Officer of ev3 Inc. Prior to ev3, Ms. Dewey held marketing and investor relations positions at Kyphon Inc. from January 2003 to November 2007 and Thoratec Corporation from January 1998 to January 2003. Ms. Dewey currently serves as a member of the board of directors for the National Investor Relations Institute, the professional association of corporate officers and investor relations consultants responsible for communication among corporate management, shareholders, securities analysts and other financial community constituents.

 

James A. Lightman was appointed our Senior Vice President, General Counsel and Secretary in October 2015 in connection with the Wright/Tornier merger. Mr. Lightman joined Wright Medical Group, Inc. in December 2011 as Senior Vice President, General Counsel and Secretary. Prior to joining legacy Wright, Mr. Lightman served in various legal and executive positions with Bausch & Lomb Incorporated, a privately held supplier of eye health products. From February 2008 to November 2009, Mr. Lightman served as Vice President and Assistant General Counsel of Bausch & Lomb, and held the position of Vice President, Global Sales Operations until August 2011. From June 2007 to February 2008, he served as Vice President and General Counsel of Eyeonics, Inc. Prior to joining Eyeonics, Mr. Lightman served as Senior Vice President and General Counsel of IntraLase Corp. from February 2005 to April 2007.

 

Andrew C. Morton was appointed our Senior Vice President and Chief Human Resources Officer in March 2018. From November 2015 to March 2018, Mr. Morton served as Senior Vice President and Chief Human Resources Officer for Hanger, Inc., a provider of orthotic and prosthetic patient care services and solutions, and served as Vice President and Chief Human Resources Officer of Hanger from June 2010 to November 2015. Prior to joining Hanger, Mr. Morton served in two capacities; first as Vice President Talent and Corporate Services, and then Vice President Human Resources Supply Chain for Freescale Semiconductor, Inc., a designer and manufacturer of embedded processors, from May 2006 to June 2010. From June 1992 to April 2006, Mr. Morton worked at International Business Machines Corporation and held various global field and corporate human resource executive roles of increasing responsibility across its software, hardware and sales businesses.

 

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J. Wesley Porter was appointed our Senior Vice President and Chief Compliance Officer in October 2015 in connection with the Wright/Tornier merger. Mr. Porter joined Wright Medical Group, Inc. in July 2014 as Vice President, Compliance and became Senior Vice President and Chief Compliance Officer in October 2014. Prior to joining legacy Wright, Mr. Porter served as Vice President, Deputy Compliance Officer of Allergan, Inc. from September 2012 to February 2014, Vice President, Ethics and Compliance of CareFusion Corp. from June 2009 to September 2012, and Senior Corporate Counsel, Compliance, HIPAA and Reimbursement of Smith & Nephew, Inc. from April 2006 to May 2009.

 

Barry J. Regan was appointed our Senior Vice President, Operations in July 2018. From January 2018 to June 2018, Mr. Regan served as Senior Vice President, Global Supply Chain and Direct Procurement of Smith & Nephew, Inc., a global medical technology company, and served as Senior Vice President, Global Supply Chain of Smith & Nephew, Inc. from March 2015 to December 2017. Prior to joining Smith & Nephew, Inc., Mr. Regan served in two capacities at AbbVie Inc., a biopharmaceutical company; first as Director, Operations Strategy & Network Optimization from September 2011 to September 2012, and then Vice President & General Manager, US & Puerto Rico Manufacturing from September 2012 to February 2015. Prior to joining AbbVie Inc., Mr. Regan served in various positions at Abbott Laboratories, a health care product company, with increasing responsibilities from 1994 to 2011, including most recently Director of Manufacturing Operations. Mr. Regan previously served on the board of directors of the Pharmaceutical Industry Association of Puerto Rico.

 

Kevin C. Smith was appointed our Senior Vice President, Quality and Regulatory in March 2018. From May 2012 to February 2018, Mr. Smith served as our Vice President, Global Quality and Regulatory Affairs. Prior to joining Wright, Mr. Smith served as Corporate Director, Quality Systems for Boston Scientific Corporation, a global medical technology company, from December 2001 to May 2012.

 

Jennifer S. Walker was appointed our Senior Vice President, Process Improvement in October 2015 in connection with the Wright/Tornier merger. Ms. Walker served as Senior Vice President, Process Improvement of Wright Medical Group, Inc. from December 2011 to October 2015 and Vice President and Corporate Controller from December 2009 to December 2011. Since joining legacy Wright’s financial organization in 1993, she served as Assistant Controller, Director, Financial Reporting & Risk Management, Director, Corporate Tax & Risk Management, and Tax Manager of legacy Wright. Prior to joining legacy Wright, Ms. Walker was a senior tax accountant with Arthur Andersen LLP. Ms. Walker is a certified public accountant.

 

Peter S. Cooke was appointed our President, Emerging Markets, Australia and Japan in January 2019. Prior to such position, he served as President, International from October 2015 to December 2018. He was appointed to that position in connection with the Wright/Tornier merger. Mr. Cooke served as President, International of Wright Medical Group, Inc. from January 2014 to October 2015 and served as Senior Vice President, International from January 2013 to January 2014. Prior to joining legacy Wright, Mr. Cooke served as Vice President and General Manager, Vascular Therapies Emerging Markets of Covidien plc, a global healthcare products company, from July 2010 to January 2013. Prior to Covidien, Mr. Cooke served in various general management roles for ev3 Inc., a global endovascular device company acquired by Covidien in July 2010, including Vice President and General Manager, International from July 2008 to July 2010; Vice President, General Manager, International from November 2006 to June 2008; Vice President, Sales International from January 2005 until November 2006; and Regional Director Asia Pacific and China from February 2003 until January 2005. Prior to ev3, Mr. Cooke spent eleven years at Guidant Corporation, three years at Baxter Healthcare Corporation and two years at St. Jude Medical, Inc.

 

Patrick Fisher was appointed our President, Lower Extremities in June 2016. From October 2015 to June 2016, Mr. Fisher served as our Vice President, U.S. Sales. From October 2012 to October 2015, Mr. Fisher served as Vice President, U.S. Sales of Wright Medical Group, Inc., and from October 2010 to October 2012, Mr. Fisher served as Regional Vice President of Sales—West Region. From July 2002 to October 2010, Mr. Fisher served in various commercial and marketing roles within Wright. Prior to joining Wright in July 2002, Mr. Fisher held various positions within Smith & Nephew, Inc., a global medical technology company. Mr. Fisher serves on the advisory board for the University of Tennessee Health Sciences Center Research Foundation.

 

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Timothy L. Lanier was appointed our President, Upper Extremities in June 2016. Mr. Lanier has over 25 years of experience in medical device and commercial operations in both small and large companies that include various medical specialties such as orthopedics, vascular, oncology and ophthalmology. Prior to joining Wright, from September 2013 to June 2016, Mr. Lanier served as Vice President of Sales of DFINE Inc., a company committed to the treatment of metastatic tumors and other diseases of the spine. From July 2010 to September 2013, Mr. Lanier served as Vice President of US Sales for the Endovascular Division of Covidien plc, a global healthcare products company, where he built a world-class sales organization dedicated to treating both arterial and venous disease. He joined Covidien in July 2010 through the acquisition of ev3 Inc., where he served as Area Vice President from January 2008 to July 2010. Prior to ev3, Mr. Lanier served as Vice President of Commercial Operations at Anulex Technologies, Inc. from January 2007 to January 2008. He also had increasing executive responsibility at Zimmer Orthopedics, Spine Division and Spine-Tech, Inc. from 1997 to 2007, including Vice President of Commercial Operations.

 

Steven P. Wallace was appointed our President, International in January 2019. From November 2016 to December 2018, Mr. Wallace served as Vice President, Extremities Marketing of Wright. Prior to joining Wright, Mr. Wallace served as Vice President of Global Marketing and Medical Education of the CMF & Thoracic Division of Zimmer Biomet, Inc., an orthopedic company, from June 2015 to November 2016. Prior to that position, Mr. Wallace served as Senior Director of Global Marketing and Business Development from June 2012 to May 2015 and various other positions for the Microfixation Division of Biomet, Inc., an orthopedic company acquired by Zimmer. Prior to joining Biomet, Mr. Wallace served in a number of positions for Cardinal Health, Inc., a global, integrated healthcare services and products company.

 

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VOTING PROPOSAL NO. 1 -
APPOINTMENT OF DIRECTORS

 

Board Structure and Size

 

 

We have a one-tier board structure. Our articles of association provide that the number of our directors will be determined by our board of directors, provided that our board of directors will be comprised of at least one executive director and two non-executive directors. Under Dutch law, our executive directors are responsible for the policy and day-to-day management of our company. Our non-executive directors supervise and provide guidance to the executive director.

 

Our board of directors has set the number of our directors at nine, one of whom is executive director and eight of whom are non-executive directors. All directors serve for a term of one year. All of our current directors have been appointed to serve until the 2020 Annual General Meeting or until his or her earlier death, resignation or removal.

 

Current Directors

 

 

Our board of directors currently consists of the following nine directors, one of whom is executive director and eight of whom are non-executive directors.

 

Robert J. Palmisano, Executive Director
Gary D. Blackford, Non-Executive Director
J. Patrick Mackin, Non-Executive Director
John L. Miclot, Non-Executive Director
Kevin C. O’Boyle, Non-Executive Director
Amy S. Paul, Non-Executive Director
David D. Stevens, Non-Executive Director
Richard F. Wallman, Non-Executive Director
Elizabeth H. Weatherman, Non-Executive Director

 

Director Nominees

 

 

At the Annual General Meeting, our shareholders will be asked to appoint one individual to fill the one open executive director position and eight individuals to fill the eight open non-executive director positions. In each case, these directors would be appointed to serve until the 2021 Annual General Meeting or until his or her earlier death, resignation or removal. All of our current directors, other than David D. Stevens and Gary D. Blackford, have tendered their resignation and will voluntarily step down as a member of our board of directors effective upon the closing of the Offer.

 

The director nominees are listed below, all of whom are current directors. The table below sets forth certain information, as of May 15, 2020, concerning the director nominees.

 

Name Age Position
Robert J. Palmisano 75 President and Chief Executive Officer and Executive Director
David D. Stevens 66 Chairman and Non-Executive Director
Gary D. Blackford 63 Non-Executive Director
J. Patrick Mackin 53 Non-Executive Director
John L. Miclot 61 Non-Executive Director
Kevin C. O’Boyle 64 Non-Executive Director
Amy S. Paul 68 Non-Executive Director
Richard F. Wallman 69 Non-Executive Director
Elizabeth H. Weatherman 60 Non-Executive Director

 

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Under Dutch law and our articles of association, our board of directors has the right to make binding nominations for open positions on our board of directors. If the list of candidates contains one candidate for each open position to be filled, such candidate shall be appointed unless the binding nature of the nominations by the board of directors is set aside. The binding nature of nominations by our board of directors may be overridden by a vote of two-thirds of the votes cast at an annual or extraordinary general meeting of our shareholders if such two-thirds vote constitutes more than one-half of our issued share capital, in which event a new meeting would be called at which the resolution for appointment of a member of our board of directors would require a majority of two-thirds of the votes cast, representing more than one-half of our issued share capital. At an annual or extraordinary general meeting of shareholders, votes in respect of the appointment of a member of our board of directors can only be cast for candidates named in the agenda of the meeting or the explanatory notes thereto.

 

Our board of directors, upon recommendation of the nominating, corporate governance and compliance committee of our board of directors, has unanimously adopted resolutions to make the following binding nominations:

 

1. For the only open executive director position, our board of directors has nominated Robert J. Palmisano to serve as executive director for a term ending on the 2021 Annual General Meeting or until his earlier death, resignation or removal. Our board of directors recommends that shareholders vote for the appointment of Mr. Palmisano for this position.

 

2. For the first open non-executive director position, our board of directors has nominated David D. Stevens to serve as a non-executive director for a term ending on the 2021 Annual General Meeting or until his earlier death, resignation or removal. Our board of directors recommends that shareholders vote for the appointment of Mr. Stevens for this position.

 

3. For the second open non-executive director position, our board of directors has nominated Gary D. Blackford to serve as a non-executive director for a term ending on the 2021 Annual General Meeting or until his earlier death, resignation or removal. Our board of directors recommends that shareholders vote for the appointment of Mr. Blackford for this position.

 

4. For the third open non-executive director position, our board of directors has nominated J. Patrick Mackin to serve as a non-executive director for a term ending on the 2021 Annual General Meeting or until his earlier death, resignation or removal. Our board of directors recommends that shareholders vote for the appointment of Mr. Mackin for this position.

 

5. For the fourth open non-executive director position, our board of directors has nominated John L. Miclot to serve as a non-executive director for a term ending on the 2021 Annual General Meeting or until his earlier death, resignation or removal. Our board of directors recommends that shareholders vote for the appointment of Mr. Miclot for this position.

 

6. For the fifth open non-executive director position, our board of directors has nominated Kevin C. O’Boyle to serve as a non-executive director for a term ending on the 2021 Annual General Meeting or until his earlier death, resignation or removal. Our board of directors recommends that shareholders vote for the appointment of Mr. O’Boyle for this position.

 

7. For the sixth open non-executive director position, our board of directors has nominated Amy S. Paul to serve as a non-executive director for a term ending on the 2021 Annual General Meeting or until her earlier death, resignation or removal. Our board of directors recommends that shareholders vote for the appointment of Ms. Paul for this position.

 

8. For the seventh open non-executive director position, our board of directors has nominated Richard F. Wallman to serve as a non-executive director for a term ending on the 2021 Annual General Meeting or until his earlier death, resignation or removal. Our board of directors recommends that shareholders vote for the appointment of Mr. Wallman for this position.

 

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9. For the eighth open non-executive director position, our board of directors has nominated Elizabeth H. Weatherman to serve as a non-executive director for a term ending on the 2021 Annual General Meeting or until her earlier death, resignation or removal. Our board of directors recommends that shareholders vote for the appointment of Ms. Weatherman for this position.

 

Information regarding these nine director nominees, all of whom are current directors, including their biographical information, can be found below under “—Information About Director Nominees.”

 

Each director that is appointed at the Annual General Meeting will serve until the 2021 Annual General Meeting or until his or her earlier death, resignation or removal. All of our current directors, other than David D. Stevens and Gary D. Blackford, have tendered their resignation and will voluntarily step down as a member of our board of directors effective upon the closing of the Offer.

 

The persons named as proxies will vote the proxies received by them for the appointment of Mr. Palmisano as executive director and the appointment of Mr. Stevens, Mr. Blackford, Mr. Mackin, Mr. Miclot, Mr. O’Boyle, Ms. Paul, Mr. Wallman and Ms. Weatherman as non-executive directors, unless otherwise directed. If, prior to the Annual General Meeting, our board of directors should learn that any nominee for director will be unable to serve for any reason, the proxies may be voted only for the appointment of the nominees who will be able to serve. The board of directors has no reason to believe that any of the director nominees will be unable to serve.

 

The proposed executive director appointment and each of the proposed non-executive director appointments are considered separate voting items under Dutch law.

 

Information About Director Nominees

 

 

Robert J. Palmisano was appointed our President and Chief Executive Officer and executive director and member of our board of directors in October 2015 in connection with the Wright/Tornier merger. Mr. Palmisano has served as President and Chief Executive Officer of Wright Medical Group, Inc. since September 2011. Prior to joining legacy Wright, Mr. Palmisano served as President and Chief Executive Officer of ev3 Inc., a global endovascular device company, from April 2008 to July 2010, when it was acquired by Covidien plc. From 2003 to 2007, Mr. Palmisano was President and Chief Executive Officer of IntraLase Corp. Before joining IntraLase, Mr. Palmisano was President and Chief Executive Officer of MacroChem Corporation from 2001 to 2003. Mr. Palmisano previously served on the board of directors of Avedro, Inc., ev3 Inc., Osteotech, Inc. and Abbott Medical Optics, Inc., all publicly held companies, and Bausch & Lomb, a privately held company. Under the terms of his employment agreement, we have agreed that Mr. Palmisano will be nominated by our board of directors for election as executive director and a member of our board of directors at each annual general meeting of shareholders during the term of his employment as President and Chief Executive Officer of Wright. Mr. Palmisano’s qualifications to serve on our board of directors include his day-to-day knowledge of Wright and its business due to his position as President and Chief Executive Officer, his experience serving on other public companies’ boards of directors, and his extensive business knowledge working with other public companies in the medical device industry.

 

David D. Stevens joined our board of directors as a non-executive director in October 2015 in connection with the Wright/Tornier merger. Mr. Stevens serves as our Chairman. Mr. Stevens was a member of the board of directors of Wright Medical Group, Inc. from 2004 to 2015 and served as Chairman of the Board from 2009 to October 2015 and interim Chief Executive Officer of Wright from April 2011 to September 2011. He has been a private investor since 2006. Mr. Stevens served as Chief Executive Officer of Accredo Health Group, Inc., a subsidiary of Medco Health Solutions, Inc., from 2005 to 2006. He was Chief Executive Officer of Accredo Health, Inc. from 1996 to 2005, served as Chairman of the Board from 1999 to 2005, and was President and Chief Operating Officer of the predecessor companies of Accredo Health from their inception in 1983 until 1996. He serves on the board of directors of Allscripts Healthcare Solutions, Inc., a publicly held company. He previously served on the board of directors of Viasystems Group, Inc., a publicly held company, from 2012 until May 2015 when it was acquired by TTM Technologies, Inc., Medco Health Solutions, Inc., a publicly held company, from 2006 until 2012 when it was acquired by Express Scripts Holding Company, and Thomas & Betts Corporation, a publicly held company, from 2004 to 2012 when it was acquired by ABB Ltd. Mr. Stevens’ qualifications to serve on our board of directors

 

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include his extensive experience serving as a chief executive officer, including as interim chief executive officer of legacy Wright, his close familiarity with our business, and his prior experience as a director of legacy Wright.

 

Gary D. Blackford joined our board of directors as a non-executive director in October 2015 in connection with the Wright/Tornier merger. Mr. Blackford was a member of the board of directors of Wright Medical Group, Inc. from 2008 to 2015. From 2002 to February 2015, Mr. Blackford served as President and Chief Executive Officer and a member of the board of directors of Universal Hospital Services, Inc., a provider of medical technology outsourcing and services to the healthcare industry, and from 2007 to February 2015, served as Chairman of the board of directors. From 2001 to 2002, Mr. Blackford served as Chief Executive Officer of Curative Health Services Inc. From 1999 to 2001, Mr. Blackford served as Chief Executive Officer of ShopforSchool, Inc. He served as Chief Operating Officer for Value Rx from 1995 to 1998 and Chief Operating Officer and Chief Financial Officer of MedIntel Systems Corporation from 1993 to 1994. Mr. Blackford currently serves on the board of directors of Avanos Medical, Inc. (formerly Halyard Health, Inc.) and ReShape Lifesciences Inc. (formerly EnteroMedics Inc.), both publicly held companies. He also serves on the board of directors of Pipeline Rx, Inc., a privately held telepharmacy company and is the Chairman of the Minnesota Children’s Hospitals and Clinics. Mr. Blackford previously served on the board of directors of Compex Technologies, Inc., a publicly held medical device company, from 2005 until its acquisition by Encore Medical Corporation in 2006. Mr. Blackford’s qualifications to serve as a member of our board of directors include his experience as a chief executive officer and director of a healthcare services company and other companies and as a director of other public companies in the healthcare industry, his extensive experience leading healthcare companies, and his prior experience as a director of legacy Wright.

 

J. Patrick Mackin joined our board of directors as a non-executive director in June 2018. Mr. Mackin currently serves as President and Chief Executive Officer of CryoLife, Inc., a manufacturer, processor, and distributor of medical devices and implantable human tissues used in cardiac and vascular surgical procedures focused on aortic repair. He has held this position since September 2014. He was appointed to the CryoLife board of directors in October 2014, and was appointed Chairman of the CryoLife board of directors in April 2015. Mr. Mackin has more than 28 years of experience in the medical device industry. Prior to joining CryoLife, Mr. Mackin served as President of Cardiac Rhythm Disease Management, the then largest operating division of Medtronic, Inc., a global medical device company, from August 2007 to August 2014. At Medtronic, he previously held the positions of Vice President, Vascular, Western Europe and Vice President and General Manager, Endovascular Business Unit. Prior to joining Medtronic in 2002, Mr. Mackin worked for six years at Genzyme, Inc. serving as Senior Vice President and General Manager for the Cardiovascular Surgery Business Unit and as Director of Sales, Surgical Products division. Before joining Genzyme, Mr. Mackin spent four years at Deknatel/Snowden-Pencer, Inc. in various roles and three years as a First Lieutenant in the U.S. Army. Mr. Mackin has served as a director of Opsens, Inc., a fiber optic sensors manufacturer, since 2016. Mr. Mackin received an MBA from the Kellogg Graduate School of Management at Northwestern University and is a graduate of the U.S. Military Academy at West Point. Mr. Mackin’s qualifications to serve on our board of directors include his experience as a chief executive officer of a medical device company and various other officer positions with medical device companies and his deep knowledge of the medical device industry.

 

John L. Miclot joined our board of directors as a non-executive director in October 2015 in connection with the Wright/Tornier merger. Mr. Miclot was a member of the board of directors of Wright Medical Group, Inc. from 2007 to 2015. Mr. Miclot has served as President and Chief Executive Officer and a member of the board of directors of LinguaFlex, Inc., a medical device company focused on treatment of sleep disordered breathing, since August 2015. From December 2011 to December 2014, he served as Chief Executive Officer and a member of the board of directors of Tengion Inc., a publicly held company that focused on organ and cell regeneration. Prior to joining Tengion, Mr. Miclot was an Executive-in Residence at Warburg Pincus, LLC. From 2008 to 2010, he was President and Chief Executive Officer of CCS Medical, Inc., a provider of products and services for patients with chronic diseases. From 2003 until 2008, he served as President and Chief Executive Officer of Respironics, Inc., a provider of sleep and respiratory products, and prior to such time, served in various positions at Respironics, Inc. from 1998 to 2003, including Chief Strategic Officer and President of the Homecare Division. From 1995 to 1998, he served as Senior Vice President, Sales and Marketing of Healthdyne Technologies, Inc., a medical device company that was acquired by Respironics, Inc. in 1998. Mr. Miclot spent the early part of his medical career at DeRoyal Industries, Inc., Baxter International Inc., Ohmeda Medical, Inc. and Medix Inc. Mr. Miclot serves as a director of the Pittsburgh Zoo and PPG Aquarium, charitable and educational institutions, serves on the University of Iowa Tippie College of Business board of advisors and serves as an industrial advisor to EQT Partners, an

 

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investment company. Mr. Miclot previously served as Chairman and a member of the board of directors of Breathe Technologies, Inc., a privately held company, prior to its acquisition by Hill-Rom Holdings, Inc. in September 2019. Mr. Miclot previously served on the board of directors of DENTSPLY International Inc., a dental products company, prior to its merger with Sirona Dental Systems, Inc. in February 2016, and ev3 Inc., a global endovascular device company, prior to the sale of the company in 2010. Mr. Miclot’s qualifications to serve on our board of directors include his substantial experience as a chief executive officer of several medical device companies, his deep knowledge of the medical device industry, and his prior experience as a director of legacy Wright.

 

Kevin C. O’Boyle has served as a non-executive director and member of our board of directors since June 2010. In November 2012, Mr. O’Boyle was appointed as Interim Vice Chairman of Tornier, a position he held for about a year. From December 2010 to July 2011, Mr. O’Boyle served as Senior Vice President and Chief Financial Officer of Advanced BioHealing Inc., a medical device company that was acquired by Shire plc in July 2011. From January 2003 until December 2009, Mr. O’Boyle served as Chief Financial Officer of NuVasive, Inc., a medical device orthopedics company specializing in spinal disorders. Prior to that time, Mr. O’Boyle served in various positions during his six years with ChromaVision Medical Systems, Inc., a publicly held medical device company specializing in the oncology market, including as its Chief Financial Officer and Chief Operating Officer. Mr. O’Boyle also held various positions during his seven years with Albert Fisher North America, Inc., a publicly held international food company, including Chief Financial Officer and Senior Vice President of Operations. Mr. O’Boyle serves on the board of directors of GenMark Diagnostics, Inc., Nevro Corp. and Sientra, Inc., all publicly held companies. Mr. O’Boyle previously served on the board of directors of ZELTIQ Aesthetics, Inc., a public company acquired by Allergan plc in April 2017, and Durata Therapeutics, Inc. until its acquisition by Actavis plc in November 2014. Mr. O’Boyle’s qualifications to serve on our board of directors include his executive experience in the healthcare industry, his experience with companies during their transition from being privately held to publicly held, and his financial and accounting expertise.

 

Amy S. Paul joined our board of directors as a non-executive director in October 2015 in connection with the Wright/Tornier merger. Ms. Paul was a member of the board of directors of Wright Medical Group, Inc. from 2008 to 2015. Ms. Paul retired in 2008 following a 26-year career with C.R. Bard, Inc., a medical device company, most recently serving as the Group Vice President-International since 2003. She served in various positions at C.R. Bard, Inc. from 1982 to 2003, including President of Bard Access Systems, Inc., President of Bard Endoscopic Technologies, Vice President and Business Manager of Bard Ventures, Vice President of Marketing of Bard Cardiopulmonary Division, Marketing Manager for Davol Inc., and Senior Product Manager for Davol Inc. Ms. Paul previously served on the board of directors of Derma Sciences, Inc., a publicly held company acquired by Integra LifeSciences Holdings Corporation, Viking Systems, Inc., a publicly held company acquired by Conmed Corporation, and was a commissioner of the Northwest Commission on Colleges and Universities from 2010 to 2013. Ms. Paul serves on the President’s Innovation Network at Westminster College. Ms. Paul’s qualifications to serve on our board of directors include her over three decades of experience in the medical device industry, including having served in various executive roles with responsibilities that include international and divisional operations as well as marketing and sales functions, her experience as a director of other public companies in the healthcare industry, and her prior experience as a director of legacy Wright.

 

Richard F. Wallman has served as a non-executive director and member of our board of directors since December 2008. From 1995 through his retirement in 2003, Mr. Wallman served as Senior Vice President and Chief Financial Officer of Honeywell International, Inc., a diversified technology company, and AlliedSignal, Inc., a diversified technology company (prior to its merger with Honeywell International, Inc.). Prior to joining AlliedSignal, Inc., Mr. Wallman served as Controller of International Business Machines Corporation. Mr. Wallman serves on the board of directors of Charles River Laboratories International, Inc., Extended Stay America, Inc., Roper Technologies, Inc., and SmileDirectClub, Inc., all U.S. publicly held companies. Mr. Wallman previously served on the board of directors of Convergys Corporation and ESH Hospitality, Inc., all publicly held companies, and Boart Longyear, a publicly held company traded on the ASX (Australian Securities Exchange). Mr. Wallman’s qualifications to serve on our board of directors include his prior public company experience, including as Chief Financial Officer of Honeywell, his significant public company director experience, and his financial experience and expertise.

 

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Elizabeth H. Weatherman has served as a non-executive director and member of our board of directors since July 2006. Ms. Weatherman was initially appointed as a director of Tornier in connection with a securityholders’ agreement that Tornier entered into with certain shareholders. The securityholders’ agreement terminated by its terms in May 2016. Ms. Weatherman has been a Special Limited Partner of Warburg Pincus LLC, a private equity firm, since January 2016. Ms. Weatherman previously was a Partner of Warburg Pincus & Co., a Member and Managing Director of Warburg Pincus LLC and a member of the firm’s Executive Management Group. Ms. Weatherman joined Warburg Pincus in 1988 and primarily focused on the firm’s healthcare investment activities. Ms. Weatherman currently serves on the board of directors of Nevro Corp., Silk Road Medical, Inc. and Vapotherm, Inc., all publicly held companies. Ms. Weatherman previously served on the boards of directors of several publicly held companies, primarily in the medical device industry, including ev3 Inc., Wright Medical Group, Inc., and Kyphon Inc. Ms. Weatherman’s qualifications to serve on our board of directors include her extensive experience as a director of several public and private companies in the medical device industry.

 

Board Recommendation

 

 

Our board of directors unanimously recommends that shareholders vote “FOR” the appointment of Robert J. Palmisano as executive director and each of David D. Stevens, Gary D. Blackford, J. Patrick Mackin, John L. Miclot, Kevin C. O’Boyle, Amy S. Paul, Richard F. Wallman and Elizabeth H. Weatherman as a non-executive director, in each case to serve until the 2021 Annual General Meeting, or until his or her earlier death, resignation or removal.

 

  The Board of Directors Recommends a Vote FOR each Director Nominee in
Voting Proposal No. 1
þ

 

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VOTING PROPOSAL NO. 2 -
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2020

 

Proposed Ratification of the Appointment of KPMG LLP

 

 

The audit committee of our board of directors has appointed KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 27, 2020 and has directed that management submit the appointment of KPMG LLP for ratification by our shareholders at the Annual General Meeting. A voting proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 27, 2020 will be presented at the Annual General Meeting.

 

Although ratification is not required by law or otherwise, our board of directors is submitting this proposal as a matter of good corporate practice. If this proposal is not approved by our shareholders at the Annual General Meeting, the audit committee will reconsider its appointment of KPMG LLP. Even if this proposal is approved by our shareholders at the Annual General Meeting, the audit committee may appoint a different independent registered public accounting firm at any time during the year if it determines that this would be in the best interests of our company and our shareholders.

 

In appointing an independent registered public accounting firm, the audit committee evaluates the qualifications, performance and independence of the firm and determines whether to re-engage the current firm. As part of this evaluation, the audit committee considers, among other factors, the quality and efficiency of the services provided by the current firm, including the performance, technical expertise, and industry knowledge of the lead audit partner and the audit team assigned to our account; the overall strength and reputation of the firm; the firm’s global capabilities relative to our business; the firm’s knowledge of our operations; and fees. Upon consideration of these and other factors, the audit committee appointed KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 27, 2020.

 

Representatives of KPMG LLP are not expected to be present in person at the Annual General Meeting. However, representatives of KPMG LLP will be available by telephone at the Annual General Meeting to respond to appropriate shareholder questions and will have the opportunity to make a statement if they desire to do so, and as discussed under “Voting Proposal No. 3 – Appointment of KPMG N.V. as Auditor for Dutch Statutory Annual Accounts for Fiscal Year 2020,” representatives of KPMG N.V. are expected to be present in person at the Annual General Meeting and will be available to respond to appropriate shareholder questions and will have the opportunity to make a statement if they desire to do so.

 

Audit, Audit-Related, Tax and All Other Fees

 

 

The following table shows the fees that we paid or accrued for audit and other services provided by our independent registered public accounting firm, KPMG LLP, and the auditor of our Dutch statutory annual accounts, KPMG N.V., for 2019 and 2018:

 

Fees   2019     2018  
Audit fees   $ 1,983,713     $ 2,398,575  
Audit-related fees     76,000       50,125  
Tax fees     145,000       65,000  
All other fees           15,625  
Total   $ 2,204,713     $ 2,529,325  

 

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In the above table, in accordance with the SEC’s definitions and rules, “audit fees” are fees for professional services for the integrated audit of our consolidated financial statements included in our annual report on Form 10-K, and the review of our consolidated financial statements included in quarterly reports on Form 10-Q and registration statements and for services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings or engagements; “audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not included in “audit fees” and include fees for services performed related to audits on our benefit plan and due diligence on acquisitions; “tax fees” are fees for tax compliance and consultation primarily related to assistance with international tax compliance and tax audits, tax advice on acquisitions, and tax planning; and “all other fees” are fees for any services not included in the first three categories, which includes fees for a risk management review and assessment.

 

Pre-Approval Policies and Procedures

 

 

In addition to retaining KPMG LLP to audit our consolidated financial statements for 2019, the audit committee retained KPMG LLP to provide other auditing and advisory services in 2019. The audit committee understands the need for our independent registered public accounting firm to maintain objectivity and independence in its integrated audits of our consolidated financial statements. The audit committee has reviewed all non-audit services provided by KPMG LLP in 2019 and has concluded that the provision of such services was compatible with maintaining KPMG LLP’s independence in the conduct of its auditing functions.

 

To help ensure the independence of the independent auditor, the audit committee pre-approves all audit and permissible non-audit services to be provided to us by our independent registered public accounting firm prior to commencement of services. Our audit committee chair has the delegated authority to pre-approve such services up to a specified aggregate fee amount. These pre-approval decisions are presented to the full audit committee at its next scheduled meeting.

 

Report of the Audit Committee of the Board of Directors

 

 

This report is furnished by the audit committee of our board of directors with respect to our consolidated financial statements for the fiscal year ended December 29, 2019.

 

Management is primarily responsible for the establishment and maintenance of our accounting and financial reporting processes, including our internal controls, and for the preparation and presentation of complete and accurate financial statements. Our independent registered public accounting firm, KPMG LLP, is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB, expressing an opinion as to the conformity of the consolidated financial statements with U.S. generally accepted accounting principles, and expressing an opinion on the effectiveness of our internal control over financial reporting.

 

In performing its oversight role, the audit committee has (i) reviewed and discussed with management our audited consolidated financial statements for the fiscal year ended December 29, 2019; (ii) discussed with representatives of KPMG LLP the matters required to be discussed by PCAOB Auditing Standard 1301 (Communications with Audit Committees); (iii) received the written disclosures and the letters from KPMG LLP required by applicable requirements of the PCAOB regarding KPMG LLP’s communications with the audit committee concerning KPMG LLP’s independence; and (iv) discussed with representatives of KPMG LLP its independence and concluded that it is independent from Wright and our management.

 

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Based upon the reviews and discussions referred to above, the audit committee recommended to our board of directors that our audited consolidated financial statements be included in our annual report on Form 10-K for the fiscal year ended December 29, 2019 for filing with the SEC.

 

This report is dated February 18, 2020

 

Audit Committee

 

Richard F. Wallman, Chair

Gary D. Blackford

Kevin C. O’Boyle

 

Board Recommendation

 

 

Our board of directors unanimously recommends that shareholders vote “FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 27, 2020.

 

  The Board of Directors Recommends a Vote FOR Voting Proposal No. 2 þ

 

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VOTING PROPOSAL NO. 3 -
APPOINTMENT OF KPMG N.V. AS AUDITOR FOR DUTCH STATUTORY ANNUAL ACCOUNTS FOR FISCAL YEAR 2020

 

Proposed Appointment of KPMG N.V.

 

 

Pursuant to Dutch law, the general meeting is authorized to appoint an auditor to audit our Dutch statutory annual accounts. Upon the recommendation of the audit committee of our board of directors, our board of directors proposes to shareholders to appoint KPMG N.V. to serve as our auditor who will audit our Dutch statutory annual accounts to be prepared in accordance with Dutch law for the year ending December 27, 2020.

 

Representatives of KPMG N.V. are expected to be present in person at the Annual General Meeting and will be available to respond to appropriate shareholder questions and will have the opportunity to make a statement if they desire to do so.

 

If this voting proposal is not adopted by our shareholders at the Annual General Meeting, an alternative auditor will need to be appointed by shareholders to audit our Dutch statutory annual accounts to be prepared in accordance with Dutch law for the year ending December 27, 2020.

 

Audit, Audit-Related, Tax and Other Fees

 

 

We refer you to “Voting Proposal No. 2 – Ratification of the Appointment of KPMG LLP as Independent Registered Public Accounting Firm for Fiscal Year 2020—Audit, Audit-Related, Tax and Other Fees” for a description of all fees that we paid or accrued for audit and other services provided by KPMG N.V. and its affiliated entities, including KPMG LLP, for fiscal years 2019 and 2018.

 

Pre-Approval Policies and Procedures

 

 

We refer you to “Voting Proposal No. 2 – Ratification of the Appointment of KPMG LLP as Independent Registered Public Accounting Firm for Fiscal Year 2020—Pre-Approval Policies and Procedures” for a description of our policies and procedures regarding audit and permissible non-audit services provided by our independent registered public accounting firm, KPMG LLP, and the auditor of our Dutch statutory annual accounts, KPMG N.V.

 

Board Recommendation

 

 

Our board of directors unanimously recommends that shareholders vote “FOR” the appointment of KPMG N.V. to serve as our auditor who will audit our Dutch statutory annual accounts to be prepared in accordance with Dutch law for the year ending December 27, 2020.

 

  The Board of Directors Recommends a Vote FOR Voting Proposal No. 3 þ

 

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VOTING PROPOSAL NO. 4 -
ADOPTION OF DUTCH STATUTORY ANNUAL ACCOUNTS

 

Proposed Adoption of Dutch Statutory Annual Accounts

 

 

At the Annual General Meeting, as contemplated by Dutch law and as required for Dutch registered companies, our shareholders will be asked to adopt our Dutch statutory annual accounts for the fiscal year ended December 29, 2019, which are comprised of our balance sheet and the profits and loss account with explanatory notes thereto prepared in accordance with International Financial Reporting Standards, or IFRS.

 

As a public limited liability company incorporated under the laws of the Netherlands, we are required by both Dutch law and our articles of association to prepare Dutch statutory annual accounts and submit them to our shareholders for confirmation and adoption. Our Dutch statutory annual accounts have been prepared in accordance with IFRS and Dutch law. Our Dutch statutory annual accounts are different from the consolidated financial statements contained in our annual report on Form 10-K for the year ended December 29, 2019 that were prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, and filed with the SEC. The Dutch statutory annual accounts contain some disclosures that are not required under U.S. GAAP and not contained in our annual report on Form 10-K.

 

A copy of our Dutch statutory annual accounts is available on our website at www.wright.com or may be obtained by contacting James A. Lightman, Senior Vice President, General Counsel and Secretary, Wright Medical Group N.V., Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands.

 

Due to the international nature of our business and pursuant to prior shareholder authorization, our Dutch statutory annual accounts and annual report have been prepared in the English language.

 

Board Recommendation

 

 

Our board of directors unanimously recommends that shareholders vote “FOR” the adoption of our Dutch statutory annual accounts for the fiscal year ended December 29, 2019.

 

  The Board of Directors Recommends a Vote FOR Voting Proposal No. 4 þ

 

Wright Medical Group N.V. – 2020 Proxy Statement          44

 


 

VOTING PROPOSAL NO. 5 -
RELEASE OF CERTAIN LIABILITIES

 

Proposed Release of Certain Liabilities

 

 

At the Annual General Meeting, as contemplated by Dutch law and as is typical for Dutch registered companies, our shareholders will be asked to release each member of our board of directors in office during the fiscal year ended December 29, 2019 from liability with respect to the exercise of his or her management and other duties during our fiscal year ended December 29, 2019.

 

If our shareholders approve this release of liability, then members of our board of directors will not be liable to our company for actions that such directors took on behalf of our company in the exercise of their duties during the fiscal year ended December 29, 2019. However, this release does not apply to matters that were not previously disclosed to our shareholders. This release also is subject to the provisions of Dutch law relating to liability upon commencement of bankruptcy or other insolvency proceedings.

 

Board Recommendation

 

 

Our board of directors unanimously recommends that shareholders vote “FOR” the release of each member of our board of directors in office during the fiscal year ended December 29, 2019 from liability with respect to the exercise of his or her management and other duties during our fiscal year ended December 29, 2019.

 

  The Board of Directors Recommends a Vote FOR Voting Proposal No. 5 þ

 

Wright Medical Group N.V. – 2020 Proxy Statement          45

 


 

VOTING PROPOSAL NO. 6 -
RENEWAL OF AUTHORITY OF BOARD OF DIRECTORS TO REPURCHASE UP TO 10% OF OUR ISSUED SHARE CAPITAL UNTIL APRIL 28, 2022

 

Proposed RENEWAL of Repurchase Authority

 

 

At the Annual General Meeting, as contemplated by Dutch law and as is typical for Dutch registered companies, our shareholders will be asked to renew the authority of our board of directors to repurchase up to 10% of our issued share capital (including depositary receipts issued for our shares) until April 28, 2022 in open market purchases, through privately negotiated transactions, or by means of self-tender offer or offers, at prices per share (or depositary receipt) ranging up to 110% of the market price per share (or depositary receipt) at the time of the transaction. This authority to repurchase shares is similar to that generally afforded under state law to public companies domiciled in the United States. For purposes of this authorization, “market price” means the average of the closing price on each of the consecutive trading days during a period no shorter than five trading days and no longer than 20 trading days immediately preceding the date of repurchase as reasonably determined by our board of directors. Our prior board of directors’ share repurchase authorization is scheduled to expire on December 28, 2020. Under Dutch law and our articles of association, our board of directors may, subject to certain Dutch statutory provisions, be authorized to repurchase our issued shares on our behalf in an amount, at prices and in the manner authorized by the general meeting of shareholders. Adoption of this voting proposal will allow us to have the flexibility to repurchase our shares without the expense of calling an extraordinary general meeting of shareholders. Such authorization may not continue for more than 18 months, but may be given on a rolling basis.

 

Although we have no present intention to commence an open market or other share repurchase program and are restricted from doing so without the prior written consent of Stryker under the Purchase Agreement, to maintain maximum flexibility, our board of directors believes that we would benefit by authorizing our board of directors to repurchase our shares if the board of directors believes such repurchases would be in the best interests of our company and shareholders. For example, to the extent our board of directors believes that our shares may be undervalued at the market levels at which they are then trading, repurchases of our share capital (including depositary receipts issued for our shares) may represent an attractive investment for us. Such shares could be used for any valid corporate purpose, including use under our equity compensation plans, sale in connection with the exercise of outstanding options, or for acquisitions, mergers or similar transactions. The reduction in our issued capital resulting from any such purchases will increase the proportionate interest of the remaining shareholders in our net worth and whatever future profits we may earn. However, the number of shares repurchased (including depositary receipts issued for our shares), if any, and the timing and manner of any repurchases would be determined by our board of directors, in light of prevailing market conditions, our available resources and other factors that cannot be predicted now. The nominal value of the shares in our capital which we acquire, hold, hold as pledgee or which are acquired or held by one of our subsidiaries (including depositary receipts issued for our shares), may never exceed 50% of our issued share capital.

 

In order to provide us with sufficient flexibility, our board of directors proposes that shareholders extend authority to our board of directors for the repurchase of up to 10% of our issued share capital (including depositary receipts issued for our shares) until April 28, 2022 on the open market, or through privately negotiated repurchases or in self-tender offers, at prices ranging up to 110% of the market price per share (or depositary receipt) at the time of the transaction. Such authority would extend for 18 months from the date of the Annual General Meeting until April 28, 2022.

 

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Board Recommendation

 

 

Our board of directors unanimously recommends that shareholders vote “FOR” the renewal of the authority of our board of directors to repurchase up to 10% of our issued share capital until April 28, 2022.

 

  The Board of Directors Recommends a Vote FOR Voting Proposal No. 6 þ

  

Wright Medical Group N.V. – 2020 Proxy Statement          47

 


 

VOTING PROPOSAL NO. 7 -
RENEWAL OF AUTHORITY OF BOARD OF DIRECTORS TO ISSUE ORDINARY SHARES UNTIL OCTOBER 28, 2022

 

Proposed RENEWAL of LIMITED Share Issuance Authority

 

 

At the Annual General Meeting, our shareholders will be asked to renew the authority of our board of directors to issue, or grant rights to purchase or subscribe for, up to an aggregate of 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions, until October 28, 2022. Seeking board authority to issue shares is typical for Dutch companies and is similar to the legal authority generally accorded boards of public companies domiciled in the United States.

 

Under Dutch law and our articles of association, we are required to seek approval of our shareholders each time we wish to issue shares from our authorized ordinary share capital unless our shareholders have authorized our board of directors to issue shares. Shareholder authorization may not continue for more than five years, but may be given on a rolling basis. We currently have a limited authorization from our shareholders to issue, or grant rights to purchase or subscribe for, up to an aggregate of 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions. This current limited authorization expires on June 28, 2021. Approval of this voting proposal will extend this current authorization to October 28, 2022, thus maintaining our flexibility to issue ordinary shares without the delay and expense of calling an extraordinary general meeting of shareholders, while at the same time protecting shareholders by maintaining a limit on the aggregate number of shares the board may issue without seeking further shareholder authorization.

 

Other than ordinary share issuances in connection with our equity compensation plans, we presently do not have specific plans to issue shares for any purpose. In addition, we are restricted from issuing shares except under certain circumstances without the prior written consent of Stryker under the Purchase Agreement. However, to maintain maximum flexibility going forward, our board of directors believes it is in the best interests of our company to renew the authority of our board of directors to issue, or grant rights to purchase or subscribe for, up to an aggregate of 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions, until October 28, 2022.

 

Accordingly, at the Annual General Meeting, we are asking our shareholders to renew the authority of our board of directors, until October 28, 2022, to issue, or grant rights to purchase or subscribe for, our unissued ordinary shares up to an aggregate of 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions.

 

Management believes retaining flexibility to allow our board of directors to issue ordinary shares for acquisitions, financings or other general corporate purposes in a timely manner without first obtaining specific shareholder approval is important to our continued growth and future. Furthermore, our ordinary shares are listed on the Nasdaq Global Select Market, and the issuance of additional shares will remain subject to Nasdaq rules. For example, one of the Nasdaq rules requires shareholder approval for the issuance of shares in excess of 20% of the shares outstanding, with several exceptions.

 

If our shareholders do not renew the limited authority of our board of directors to issue, or grant rights to purchase or subscribe for, our unissued ordinary shares up to the maximum described above, then the current limited authorization would remain in place, and our board of directors would continue to retain authority to issue our ordinary shares and grant rights to purchase or subscribe for our ordinary shares pursuant to that authorization until it expires on June 28, 2021.

 

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Board Recommendation

 

 

Our board of directors unanimously recommends that shareholders vote “FOR” the renewal of the authority of our board of directors until October 28, 2022 to issue, or grant rights to purchase or subscribe for, our unissued ordinary shares up to 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions.

 

  The Board of Directors Recommends a Vote FOR Voting Proposal No. 7 þ

 

Wright Medical Group N.V. – 2020 Proxy Statement          49

 


 

VOTING PROPOSAL NO. 8 -
RENEWAL OF AUTHORITY OF BOARD OF DIRECTORS TO EXCLUDE OR RESTRICT SHAREHOLDERS’ PRE-EMPTIVE RIGHTS UNTIL OCTOBER 28, 2022

 

Proposed RENEWAL of Limited Authorization to Exclude or Restrict Shareholders’ Pre-emptive Rights

 

 

At the Annual General Meeting, our shareholders will be asked to renew the authority of our board of directors to exclude or restrict pre-emptive rights on the issue of, or grant of rights to purchase or subscribe for, up to an aggregate of 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions, until October 28, 2022. While seeking this type of board authorization is typical for Dutch companies, pre-emptive rights are uncommon for public companies domiciled in the United States.

 

Under Dutch law and our articles of association, holders of our ordinary shares (other than our employees who receive ordinary shares pursuant to our equity compensation plans) would generally have a pro rata pre-emptive right of subscription to any of our ordinary shares issued for cash. A pre-emptive right of subscription is the right of our current shareholders to maintain their percentage ownership of our ordinary shares by buying a proportional number of any newly issued ordinary shares. However, Dutch law and our articles of association permit our shareholders to authorize our board of directors to exclude or restrict these pre-emptive rights. This authorization may not continue for more than five years, but may be given on a rolling basis. We currently have a limited authorization from our shareholders to exclude or restrict these pre-emptive rights on the issue of, or grant of rights to purchase or subscribe for, up to an aggregate of 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions. This current limited authorization expires on June 28, 2021. Approval of this voting proposal will extend the current authorization to October 28, 2022, thus maintaining our flexibility to issue ordinary shares without pre-emptive rights without the delay and expense of calling an extraordinary general meeting of shareholders, while at the same time protecting shareholders by maintaining a limit on the aggregate number of shares without pre-emptive rights the board may issue without seeking further shareholder authorization.

 

As explained in voting proposal no. 7, other than ordinary share issuances in connection with our equity compensation plans, we presently do not have specific plans to issue shares for any purpose. In addition, we are restricted from issuing shares except under certain circumstances without the prior written consent of Stryker under the Purchase Agreement. However, to maintain maximum flexibility going forward, our board of directors believes it is in the best interests of our company to renew the limited authority of our board of directors to exclude or restrict pre-emptive rights on the issue of, or grant of rights to purchase or subscribe for, up to an aggregate of 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions, until October 28, 2022.

 

Accordingly, at the Annual General Meeting, we are asking our shareholders to renew the authority of our board of directors until October 28, 2022 to exclude or restrict pre-emptive rights on the issue of, or grant of rights to purchase or subscribe for, up to an aggregate of 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions.

 

Management believes retaining flexibility to allow our board of directors to limit pre-emptive rights on the issuance of ordinary shares for acquisitions, financings or other general corporate purposes in a timely manner without first obtaining specific shareholder approval is important to our continued growth and future. We believe if we are not granted the requested authority to limit pre-emptive rights, our ability to raise capital through sales of our equity

 

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securities would be significantly affected because the exercise of pre-emptive rights by our shareholders would cause delays in a transaction and may dissuade potential buyers of our equity securities from entering into a transaction with us. In addition, our ability to effect acquisitions using our ordinary shares as consideration also would be similarly limited if our board of directors did not have the authority to exclude or restrict pre-emptive rights as previously described. Any exclusion or restriction of pre-emptive rights would apply equally to all holders of our ordinary shares. Furthermore, as long as our ordinary shares remain listed on the Nasdaq Global Select Market, any issuance of ordinary shares would remain subject to Nasdaq rules, including limitations on our ability to issue our ordinary shares without shareholder approval. See “Voting Proposal No. 7 – Renewal of Authority of Board of Directors to Issue Ordinary Shares Until October 28, 2022” for a brief discussion of the Nasdaq rules regarding share issuances.

 

If our shareholders do not renew the limited authority of our board of directors to exclude or restrict pre-emptive rights on the issue of, or grant of rights to purchase or subscribe for, our unissued ordinary shares up to the maximum described above, then the current limited authorization would remain in place, and our board of directors would continue to retain authority to exclude or restrict pre-emptive rights pursuant to that authorization until it expires on June 28, 2021.

 

Board Recommendation

 

 

Our board of directors unanimously recommends that shareholders vote “FOR” the renewal of the authority of our board of directors until October 28, 2022 to exclude or restrict pre-emptive rights on the issue of, or grant of rights to purchase or subscribe for, our unissued ordinary shares up to 20% of our issued and outstanding shares at the time of issue, 10% of which shares would be authorized for issuance for general corporate purposes (including potential mergers and acquisitions) and the remaining 10% which would be authorized for issuance only for potential mergers and acquisitions.

 

  The Board of Directors Recommends a Vote FOR Voting Proposal No. 8 þ

 

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VOTING PROPOSAL NO. 9 -
ADVISORY APPROVAL OF OUR EXECUTIVE COMPENSATION

 

Proposed Advisory Approval of our Executive Compensation

 

 

Our board of directors is providing our shareholders with an advisory vote on our executive compensation pursuant to the Dodd-Frank Wall Street Consumer Protection Act, or the Dodd-Frank Act, and Section 14A of the Exchange Act. This advisory vote, commonly known as a say-on-pay vote, is a non-binding vote on the compensation paid to our named executive officers as set forth in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this proxy statement, including in the accompanying compensation tables and the corresponding narrative discussion and footnotes.

 

We last submitted a say-on-pay proposal to our shareholders at our 2019 Annual General Meeting held on June 28, 2019. At that meeting, 70.7% of the votes cast by our shareholders were in favor of our say-on-pay vote. The compensation committee considered whether to change certain aspects of our executive compensation program in response to this vote, but ultimately determined in light of our pending acquisition by Stryker not to make any significant changes at this time, but to revisit the program if for some reason the Stryker acquisition is not completed.

 

why you should vote in favor of our say-on-pay vote

 

 

Our executive compensation policies, plans and programs seek to enhance our financial performance, and thus shareholder value, by aligning the financial interests of our executives with those of our shareholders and by emphasizing pay-for-performance. We seek to accomplish this through the following methods:

 

Base salary and total compensation levels are generally targeted near the 67th percentile of a group of similarly-sized peer companies, with adjustments based on the executive’s experience, skills, and contributions. Consideration is also given to the sufficiency of total compensation potential to ensure retention;

 

At least two-thirds of the CEO’s compensation and half of other executives’ compensation opportunity should be in the form of variable compensation that is tied to financial results and/or creation of shareholder value;

 

The portion of total compensation that is performance-based or at-risk should increase with an executive’s overall responsibilities, job level, and compensation. However, compensation programs should not encourage excessive risk-taking behavior among executives and should support our commitment to corporate compliance;

 

Primary emphasis should be placed on company performance as measured against goals approved by the compensation committee rather than on individual performance; and

 

At least half of the CEO’s compensation opportunity and one-third of other executives’ compensation opportunities should be in the form of stock-based incentive awards.

 

For additional information on our compensation philosophies, please see the “Compensation Discussion and Analysis – Compensation Objectives and Philosophies” section of this proxy statement.

 

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Compensation Highlights and Best Practices

 

 

The “Compensation Discussion and Analysis” section describes our executive compensation program and the executive compensation decisions made by our compensation committee in 2019 in more detail. Our compensation practices include many best pay practices that support our executive compensation objectives and principles, and benefit our shareholders.

 

What we do What we don’t do
ü Structure our executive officer compensation so that a significant portion of pay is at risk x No automatic salary increases
ü Emphasize long-term performance in our equity-based incentive awards x No repricing of stock options unless approved by shareholders
ü Use a mix of performance measures and caps on payouts x No excessive perquisites
ü Require minimum vesting periods on equity awards x No new single-trigger change in control arrangements
ü Require double-trigger for equity acceleration upon a change in control x No tax gross-ups, other than limited CEO and relocation tax gross-ups
ü Maintain a competitive compensation package x No change in control excise tax gross-ups
ü Have robust stock ownership guidelines and stock retention requirements for executive officers x No hedging or pledging of Wright securities
ü Maintain a clawback policy x No short sales or derivative transactions in Wright shares, including hedges
ü Hold an annual say-on-pay vote x No current payment of dividends on unvested awards

 

Proposed Resolution

 

 

Our board of directors recommends that our shareholders vote in favor of our say-on-pay vote as set forth in the following resolution:

 

RESOLVED, that our shareholders approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including in the “Compensation Discussion and Analysis,” the accompanying compensation tables and the corresponding narrative discussion and footnotes, and any related material disclosed in this proxy statement.

 

Shareholders are not ultimately voting to approve or disapprove the recommendation of our board of directors. As this is an advisory vote, the outcome of the vote is not binding on us with respect to future executive compensation decisions, including those relating to our named executive officers, or otherwise. Our compensation committee and our board of directors expect to take into account the outcome of the vote when considering future executive compensation decisions.

 

In accordance with the result of the advisory vote on the frequency of the say-on-pay vote, which was conducted at our 2017 Annual General Meeting, our board of directors has determined that we will conduct an advisory vote on executive compensation on an annual basis. Accordingly, the next say-on-pay vote will occur in 2021 in connection with our 2021 Annual General Meeting, in the event our pending acquisition by Stryker has not been completed by then.

 

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Board Recommendation

 

 

Our board of directors unanimously recommends that shareholders vote “FOR” the approval, on an advisory basis, of our executive compensation, or say-on-pay vote.

 

The Board of Directors Recommends a Vote FOR Voting Proposal No. 9 þ

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis (CD&A) addresses the principles underlying our policies and decisions with respect to the compensation of our executive officers who are named in the “Summary Compensation Table—2019” found under “Executive Compensation—Summary Compensation Information” and material factors relevant to these policies and decisions.

 

These executive officers and their current officer positions are:

 

Named executive officer Current officer position
Robert J. Palmisano President and Chief Executive Officer
Lance A. Berry Executive Vice President, Chief Financial and Operations Officer
Kevin D. Cordell Executive Vice President, Chief Global Commercial Officer
James A. Lightman Senior Vice President, General Counsel and Secretary
Barry J. Regan Senior Vice President, Operations

 

We refer to these executive officers as our “named executive officers” or “NEOs” and our President and Chief Executive Officer as our “CEO” in this CD&A. This CD&A should be read in conjunction with the accompanying compensation tables, corresponding notes and narrative discussion, as they provide additional information and context to our compensation disclosures.

 

Executive Summary

 

  

Fiscal 2019 Business Highlights

 

Below are operational and financial highlights for 2019.

 

Pending Acquisition by Stryker. On November 4, 2019, we entered into a definitive agreement with Stryker and Purchaser under which Purchaser has commenced the Offer. The obligation of Stryker and Purchaser to consummate the Offer is subject to the tender of a minimum number of our outstanding shares in the Offer, the adoption of certain resolutions relating to the transaction at the Extraordinary General Meeting (which has occurred), receipt of applicable regulatory approvals and other customary conditions.

 

No. 1 Position in Shoulder Market. By the end of 2019, we achieved our goal of being no. 1 in the global shoulder market.

 

Adjusted EBITDA Margin Goal. We achieved our long-standing adjusted EBITDA margin goal by the end of fourth quarter of 2019.

 

New Digital Strategy. In May 2019, we announced a new digital organization led by Jason Asper as Senior Vice President, Chief Digital Officer, to focus on executing Wright’s transformative digital surgery strategy to develop new platforms, accelerate surgical solutions and drive software technology innovation across our business.

 

 

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Fiscal 2019 Compensation Actions and Outcomes

 

One of our key executive compensation objectives is to link pay to performance by aligning the financial interests of our executives with those of our shareholders and by emphasizing pay for performance in our compensation programs. We strive to accomplish this objective primarily through our annual performance incentive plan (PIP), which compensates executives for achieving annual corporate and divisional financial and other goals, and our long-term incentive equity grants, which align the interests of our executives with the long-term interests of our shareholders, promote stock ownership, and create significant incentives for executive retention.

 

Our compensation actions and incentive plan outcomes based on performance for fiscal 2019 are summarized below:

 

Pay element 2019 actions
Base salary

●   Our CEO received no base salary increase.

●   Messrs. Berry and Cordell received upward market adjustments of 10.0% and 7.3%, respectively, to compensate them for assuming increased roles and responsibilities in connection with their new Executive Vice President positions and bring them closer to target market positioning within our peer group in their new positions.

●   Messrs. Lightman and Regan received base salary merit increases of 4.4%.

Short-term annual incentive

●   Target bonus percentages for our NEOs did not change from their 2018 levels, other than in the case of our CEO whose percentage increased by 20 percentage points to bring him closer to our target market positioning within our peer group and Messrs. Berry and Cordell whose percentages increased by 10 percentage points to compensate them for assuming increased roles and responsibilities and bring them closer to target market positioning within our peer group in their new positions.

●   Target bonus percentage for our CEO was increased to 120% and remained the same for our other NEOs, ranging from 50% to 65% of base salary.

●   Short-term incentive was based 100% on corporate performance goals for all NEOs except Messrs. Lightman and Regan who also had individual performance goals.

●   To encourage the retention of our employees, including our NEOs, we approved 2019 PIP payouts to all participants who remained employed at the time of such payments assuming the achievement of applicable performance metrics at the higher of target or actual performance. Since actual performance was less than target performance, all of our NEOs received payouts equal to target performance. We believe target payouts were important for retention purposes in light of our pending acquisition by Stryker. These payouts were made to our executives in December 2019 to mitigate potential adverse tax consequences to Wright and the NEOs in connection with the Stryker acquisition and in agreement with Stryker. 

    Measure Weighting
Target
performance
2019 actual
performance
    Adjusted global net sales 40% $961.6 million     $918.1 million
    Adjusted EBITDA 30%    204.9 million       189.7 million
    Adjusted free cash flow 30%        3.0 million           1.7 million

         
Long-term incentive

●  The long-term incentive (LTI) grant guideline for our CEO increased from 450% to 500% of base salary and the LTI grant guidelines for our other NEOs increased from 0 to 50 percentage points to align them more closely to target market positioning within our peer group.

●   LTI is delivered 1/3 in stock options, 1/3 in time-vested restricted stock unit (RSU) awards and 1/3 in performance share unit (PSU) awards.

●   Stock options and RSU awards vest over four years.

●   PSU awards vest and are paid out in shares upon the achievement of a threshold net sales growth goal over a three-year period.

 

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Pay element 2019 actions

●   There were no payouts of prior PSU awards during 2019 because PSU awards have a three-year performance period and were first granted in 2017.

●   In recognition of the changed circumstances created by the Stryker acquisition and to encourage retention during the pendency of the acquisition, the compensation committee determined, consistent with the terms of the Purchase Agreement, that all outstanding PSU awards will be deemed to have achieved maximum levels of performance.

 

Compensation Highlights and Best Practices

 

 

Our compensation practices include many best pay practices that support our executive compensation objectives and principles, and benefit our shareholders.

 

What we do What we don’t do
ü Structure our executive officer compensation so that a significant portion of pay is at risk x No automatic salary increases
ü Emphasize long-term performance in our equity-based incentive awards x No repricing of stock options unless approved by shareholders
ü Use a mix of performance measures and caps on payouts x No excessive perquisites
ü Require minimum vesting periods on equity awards x No new single-trigger change in control arrangements
ü Require double-trigger for equity acceleration upon a change in control x No tax gross-ups, other than limited CEO and relocation tax gross-ups
ü Maintain a competitive compensation package x No change in control excise tax gross-ups
ü Have robust stock ownership guidelines and stock retention requirements for executive officers x No pledging of Wright securities
ü Maintain a clawback policy x No short sales or derivative transactions in Wright shares, including hedges
ü Hold an annual say-on-pay vote x No current payment of dividends on unvested awards

 

Shareholder Outreach Efforts and Changes to Our Executive Compensation

 

 

During 2019, we continued to review our executive compensation program to ensure that it not only motivates our executives, but also aligns with shareholder interests and prevailing market practice. As part of this review, we reached out and listened to shareholders. In 2019, we contacted our top 50 institutional shareholders, representing approximately 90% of our outstanding ordinary shares and attended over 300 meetings for investors and interested investors. For the individual investor meetings, our CEO, Chief Financial and Operations Officer and/or Chief Communications Officer attended. The agenda for these meetings requested feedback from investors and shareholders and generally included: (1) a review of our operations and results to date; (2) a summary of our strategic priorities and focus; and (3) a review of our compensation philosophy and its alignment with our strategic direction.

 

After similar shareholder outreach efforts a couple of years ago, we made several changes to our executive compensation program to respond to shareholder concerns and align with best practices. These changes include the

 

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use of performance-based awards, eliminating a single-trigger change in control provision in our equity plan, requiring minimum vesting periods on equity awards under our equity plan, adopting a clawback policy and moving to an annual say-on-pay vote.

 

Say-on-Pay Vote

 

 

At our 2019 annual general meeting, our shareholders had the opportunity to vote on an advisory say-on-pay proposal. At the meeting, 70.7% of the votes cast by our shareholders were in favor of our say-on-pay proposal. The compensation committee considered whether to change certain aspects of our executive compensation program in response to this vote, but ultimately determined in light of our pending acquisition by Stryker not to make any significant changes at this time, but to revisit the program if for some reason the Stryker acquisition is not completed.

 

Compensation Objectives and Philosophies

 

 

Our executive compensation policies, plans and programs seek to enhance our financial performance, and thus shareholder value, by aligning the financial interests of our executives with those of our shareholders and by emphasizing pay for performance. Specifically, our executive compensation programs are designed to:

 

Reinforce our corporate mission, vision and values;

 

Attract and retain executives important to the success of Wright;

 

Align the interests of our executives with the interests of our shareholders; and

 

Reward executives for the achievement of Wright’s performance objectives, the creation of shareholder value in the short- and long-term, and their contributions to the success of Wright.

 

To achieve these objectives, although the compensation committee has not adopted any formal or informal policies or guidelines for allocating compensation, the committee makes executive compensation decisions based on the following philosophies:

 

Base salary and total compensation levels are generally targeted to be within a reasonable range of the 67th percentile of a group of similarly-sized peer companies. However, the specific competitiveness of any individual executive’s salary and compensation will be determined considering factors like the executive’s experience, skills and capabilities, contributions as a member of the executive management team, contributions to our overall performance, and the sufficiency of total compensation potential to ensure the retention of an executive when considering the compensation potential that may be available elsewhere.

 

At least two-thirds of the CEO’s compensation opportunity and half of other executives’ compensation opportunities should be in the form of variable compensation that is tied to financial results and/or creation of shareholder value.

 

The portion of total compensation that is performance-based or at-risk should increase with an executive’s overall responsibilities, job level, and compensation. However, compensation programs should not encourage excessive risk-taking behavior among executives and should support our commitment to corporate compliance.

 

Primary emphasis should be placed on company performance as measured against goals approved by the compensation committee rather than on individual performance.

 

At least half of the CEO’s compensation opportunity and one-third of other executives’ compensation opportunities should be in the form of stock-based incentive awards.

 

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Use of Peer Group and Other Market Data and Market Positioning

 

 

Peer Group. To help determine appropriate levels of compensation for certain elements of our executive compensation program, the compensation committee reviews annually the compensation levels of our NEOs and other executives against the compensation levels of comparable positions with companies similar to us in terms of industry, revenues, products and operations. The elements of our executive compensation program to which the compensation committee “benchmarks” or uses to base or justify a compensation decision or to structure a framework for compensating executives include base salary, short-term cash incentive opportunity, and long-term equity incentives. With respect to other elements of our executive compensation program, such as perquisites, severance, and change in control arrangements, the compensation committee benchmarks these elements on a periodic or as needed basis and in some cases uses peer group or market data more as a “market check” after determining the compensation on some other basis. The compensation committee believes that compensation paid by peer group companies is more representative of the compensation required to attract, retain, and motivate our executive talent than broader survey data and that compensation paid by peer companies that are in the same industry, with similar products and operations, and with revenues in a range similar to ours, generally provides more relevant comparisons.

 

In July 2018, Mercer worked with the compensation committee to identify a peer group of 13 companies in the health care equipment and supplies business with products and operations similar to ours and that had annual revenues generally within a range of our annual revenues. The compensation committee re-confirmed the peer group in July 2019, with the exception of replacing NxStage Medical, Inc., which was acquired in February 2019, with DexCom, Inc. This peer group, which included the following companies, was used in determining our 2019 executive compensation program.

 

The Cooper Companies, Inc. Masimo Corporation NuVasive, Inc.
Globus Medical, Inc. Merit Medical Systems, Inc. ResMed Inc.
Integer Holdings Corporation Natus Medical Incorporated Insulet Corporation
Haemonetics Corporation NxStage Medical, Inc. Abiomed, Inc.
Integra LifeSciences Holdings Corporation  

 

The table below sets forth certain revenue and other financial information Mercer used to compile the peer group and market capitalization information as of May 16, 2018 for the peer group that the compensation committee used in connection with its recommendations and decisions for 2019 executive compensation.

 

 

Trailing 12-month revenue

(in millions)

One-year
revenue growth
Three-year
revenue growth
Market capitalization
(in millions)
25th percentile $   549  
   7% 10% $ 2,323
50th percentile   814 13% 12%     4,874
75th percentile 1,393  23% 20%     8,082
Wright’s percentile rank 42% 29% 91%         23%

 

In reviewing benchmarking data, the compensation committee recognizes that benchmarking may not always be appropriate as a stand-alone tool for setting compensation due to aspects of our business and objectives that may be unique to us. Nevertheless, the compensation committee believes that gathering this information is an important part of its compensation-related decision-making process. However, where a sufficient basis for comparison does not exist between the peer group data and an executive, the compensation committee gives less weight to the peer group data. For example, relative compensation benchmarking analysis does not consider individual specific performance or experience or other case-by-case factors that may be relevant in hiring or retaining a particular executive.

 

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Market Positioning. In general, we target base salary and total compensation levels to be within a reasonable range of the 67th percentile of our peer group. However, the specific competitiveness of any individual executive’s pay will be determined considering factors like the executive’s experience, skills and capabilities, contributions as a member of the executive management team, and contributions to our overall performance. The compensation committee will also consider the sufficiency of total compensation potential and the structure of pay plans to ensure the hiring or retention of an executive when considering the compensation potential that may be available elsewhere. We believe this market positioning is important to attract and retain the best executive talent to achieve our business strategies and objectives.

 

Executive Compensation Pay Mix

 

 

The overall mix of annual base salaries, target annual cash incentive awards and the grant date fair value of long-term incentive awards as a percentage of target total direct compensation for our CEO and other NEOs as a group for 2019 is provided below. The annual base salary is the 2019 base salary. The value of the long-term incentives represented is based on the grant date fair value of stock options, RSU awards and PSU awards granted during 2019. Actual long-term incentive value will be based on long-term stock price performance and whether the PSU performance goals are achieved. All other compensation is excluded from the graphics below.

 

 

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Executive Compensation Components

 

 

During 2019, our executive compensation program consisted of the following key elements: base salary, short-term cash incentive, long-term incentives in the form of stock option, RSU and PSU awards, limited perquisites and personal benefits, retirement benefits, and severance and change in control arrangements. The following table provides some of the key characteristics of, and purpose for, each element.

 

Element Key characteristics Purpose Key 2019 changes

Base salary

 

(Fixed, cash)

 

A fixed amount, paid in regular cash payments throughout the year and reviewed annually and, if appropriate, adjusted, effective typically April 1 of each year. Provides a source of fixed income that is market competitive and reflects the scope and responsibility of the position held.

No base salary increase for the CEO.

 

Base salary upward market adjustments of 10.0% and 7.3% to Messrs. Berry and Cordell, respectively, to compensate them for assuming increased roles and responsibilities and bring them closer to target market positioning within our peer group in their new positions. 

Base salary merit increases for Messrs. Lightman and Regan of 4.4%.

Short-term incentive (STI)

 

(Variable, cash)

 

A variable, short-term element of compensation that is payable in cash based on achievement of key pre-established annual corporate, and in some cases, divisional financial goals and/or individual goals. Motivates and rewards our executives for meeting annual financial and other goals intended to achieve our annual operating plan objectives. Target bonus percentages for our NEOs did not change from their 2018 levels, other than in the case of our CEO whose percentage increased by 20 percentage points to bring him closer to our target market positioning within our peer group and Messrs. Berry and Cordell, whose percentages increased by 10 percentage points to compensate them for assuming increased roles and responsibilities and bring them closer to target market positioning within our peer group in their new positions.

 

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Element Key characteristics Purpose Key 2019 changes

Long-term incentives (LTI)

 

(Variable, stock option, restricted stock unit and performance share unit awards)

 

A variable, long-term element of compensation that is provided one-third in stock options, one-third in time-vested RSUs and one-third in PSU awards.

 

Stock options and RSUs vest over four years.

 

PSU awards vest and are paid out in our ordinary shares upon the achievement of a threshold three-year net sales growth goal. 

Aligns the interests of our executives with those of our shareholders; encourages focus on long-term company financial performance measures that are deemed strategically and operationally important to Wright; promotes retention of our executives; and encourages significant ownership of our ordinary shares.

 

No significant changes made to long-term equity incentives, other than a 50 percentage point increase in the LTI grant guideline for our CEO and an increase between 0 and 50 percentage points for each of our other NEOs to align them more closely to target market positioning within our peer group.
Perquisites and personal benefits

Includes personal insurance premiums, up to $5,000 reimbursement for financial and tax planning and tax preparation for all NEOs and supplemental long-term disability insurance.

 

Additional benefits for our CEO under his employment agreement.

 

Customary relocation benefits and assignment and expat benefits that are consistent with local policies and practices.

 

Assists in attracting new and retaining existing talent, allowing our executives to more efficiently use their time and supports them in effectively contributing to Wright’s success.

 

CEO benefits were critical to our ability to hire him.

 

No significant changes were made to perquisites and personal benefits, except the adoption of a supplemental long-term disability insurance policy effective January 1, 2019.
Retirement benefits

Includes a defined contribution retirement plan with a discretionary Company match.

 

No pension arrangements, post-retirement health coverage or nonqualified defined contribution or other deferred compensation plans. 

Provides an opportunity for employees to save and prepare financially for retirement. No significant changes made to retirement benefits.
Change in control and severance benefits Customary “double-trigger” change in control and severance benefits for our CEO under his employment agreement and for other NEOs under separation pay agreements. Attracts key executive talent and encourages continuity, stability and retention when considering the potential disruptive impact of an actual or potential corporate transaction. No significant changes made to change in control and severance benefits.

 

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Base Salary

 

Setting Initial Salaries for New Executives. We initially fix base salaries for executives at a level we believe enables us to hire and retain them in a competitive environment, and to reward individual performance and contributions to our overall business objectives. During 2019, we did not hire any new executives.

 

Annual Salary Increases. We review the base salaries of our NEOs each year following the completion of our prior year individual performance reviews. If appropriate, we increase base salaries to recognize annual increases in the cost of living and superior individual performance and to ensure that our base salaries remain market competitive. In addition, as required under his employment agreement, we review our CEO’s base salary at least annually and consider whether an increase is appropriate. We refer to annual base salary increases as a result of cost of living adjustments and individual performance as “merit increases.” In addition, we may make additional upward adjustments to an executive’s base salary to compensate the executive for assuming increased roles and responsibilities, to retain an executive at risk of recruitment by other companies, and/or to bring an executive’s base salary closer to our target market positioning of companies in our peer group. We refer to these base salary increases as “market adjustments.”

 

The 2019 base salary merit increases for our NEOs ranged from 0.0% to 4.4% over their respective 2018 base salaries. Our CEO received no base salary increase, but received an increase in his STI and LTI grant guideline as described below. No upward market adjustments were made during 2019, except in the case of Messrs. Berry and Cordell to compensate them for assuming increased roles and responsibilities and bring them closer to target market positioning within our peer group in their new positions. We believe the 2019 base salaries of all of our NEOs were within a reasonable range of our targeted positioning among our peer group at that time.

 

2019 Base Salaries. The table below sets forth the 2018 base salaries of our NEOs, their 2019 base salaries (effective March 23, 2019), and the percentage increase compared to their 2018 base salaries:

 

Name

2018

base salary

($)

2019

base salary

($)

2019 base salary %
increase compared to
2018 base salary
Robert J. Palmisano $958,514    $958,514    0.0%
Lance A. Berry 468,000 515,000 10.0%
Kevin D. Cordell 480,069 515,000   7.3%
James A. Lightman 450,000 470,000   4.4%
Barry J. Regan 450,000 470,000   4.4%

 

Short-Term Cash Incentive Compensation

 

Our short-term cash incentive compensation is paid as an annual cash bonus under our PIP and is intended to compensate executives for achieving annual corporate financial performance goals and, in some cases, divisional financial and individual performance goals. The PIP provides broad discretion to the compensation committee in interpreting and administering the plan.

 

In recognition of the changed circumstances created by the Stryker acquisition and to encourage the retention of our employees, including our NEOs, we approved 2019 PIP payouts to all participants who remained employed at the time of such payments assuming the achievement of applicable performance metrics at the higher of target or actual performance. Since actual performance was less than target performance, all of our NEOs received payouts equal to target performance. These payouts were made to our executives in December 2019 to mitigate potential adverse tax consequences to Wright and the NEOs in connection with the Stryker acquisition and in agreement with Stryker.

 

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Target Bonus Percentages. Target short-term cash incentive bonuses for 2019 for each executive were based on a percentage of base salary and were as follows for each NEO:

 

Name Percentage of base
salary
Robert J. Palmisano 120%
Lance A. Berry 75%
Kevin D. Cordell 70%
James A. Lightman 50%
Barry J. Regan 50%

 

Our CEO’s target bonus percentage increased by 20 percentage points to bring him closer to our target market positioning within our peer group and Messrs. Berry’s and Cordell’s target bonus percentages increased 10 percentage points to compensate them for assuming increased roles and responsibilities and bring them closer to target market positioning within our peer group in their new positions. The 2019 target bonus percentages for Messrs. Lightman and Regan did not change from their 2018 levels. Based on an executive compensation analysis by our compensation consultant, we believe the 2019 target bonus percentages for our NEOs were generally aligned with our targeted positioning within our peer group at that time.

 

Performance Goal Mix. Bonuses awarded to our NEOs for 2019 were based on achievement of corporate performance goals for all executives, and also included individual performance goals for Messrs. Lightman and Regan.

 

Named executive officer Percentage based upon corporate
performance goals
Percentage based upon
individual performance goals
Robert J. Palmisano 100% 0%
Lance A. Berry 100% 0%
Kevin D. Cordell 100% 0%
James A. Lightman 80% 20%
Barry J. Regan 80% 20%

 

Corporate Performance Goals. For 2019, we had three corporate performance measures as set forth in the table below. These three measures were the same corporate performance measures from 2018, and were selected again because they were determined to continue to be the three most important indicators of our financial performance for 2019 as evaluated by management and analysts.

 

2019 corporate performance metric Weighting
Adjusted global net sales (1) 40%
Adjusted EBITDA (2) 30%
Adjusted free cash flow (3) 30%

 

 

(1) This performance measure was calculated using a non-GAAP financial measure, which we believe provides meaningful supplemental information regarding our core operational performance. The adjusted net sales goal and actual results were calculated based on a foreign currency exchange planning rate to adjust for any impact of foreign currency on underlying performance.

 

(2) This performance measure was calculated using a non-GAAP financial measure, which we believe provides meaningful supplemental information regarding our core operational performance. Adjusted EBITDA from continuing operations means net loss from continuing operations plus charges for interest, income taxes, depreciation and amortization expenses, non-cash share-based compensation expense and non-operating income and expense. Additionally, adjusted EBITDA from continuing operations excluded transaction and transition costs associated with acquisitions and divestitures; tax benefit related to realizability of net operating losses; and bonus compensation.

 

(3) This performance measure was calculated using a non-GAAP financial measure, which we believe provides meaningful supplemental information regarding our core operational performance. Adjusted free cash flow means net cash flow provided by operating activities (excluding net cash flow from certain discontinued operations, certain transaction and transition cost associated with acquisitions and foreign currency gains and losses) less capital expenditures.

 

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The percentage of the target bonus earned by bonus objective was based on the following performance levels and an overall weighted average corporate payout:

 

Performance level Percent of target bonus earned
Threshold 0% to 99.9%
Target 100%
Above target 100.1% to 150%
High 150.1% to 200%

 

In setting the threshold, target, above target, and maximum performance achievement levels, we considered past performance, market conditions, and the financial, strategic, and operational plans presented by management. When setting the target performance levels, we sought to ensure that at- or above-market performance was the goal. For above-target performance levels, the achievement levels required “stretch” performance by the management team to achieve this level of performance. At the threshold level, targets would be set on a steeper slope than at the above target/maximum categories, so that missed target performance would result in more rapidly declining bonus opportunity.

 

The performance level of each corporate performance measure is set forth in the table below.

 

Performance level Adjusted global net sales Adjusted EBITDA Adjusted free cash flow
Threshold $ 913.5 million $179.9 million $ (12.0) million
Target $ 961.6 million $204.9 million $ 3.0 million
Above target $ 980.8 million $219.9 million $ 17.0 million
High $  1,009.7 million $244.8 million $ 42.0 million

 

The table below sets forth our actual performance for each corporate performance measure and the overall weighted corporate performance achievement rating, which was between threshold and target. Absent the decision to make payouts at target in connection with the pending Stryker acquisition and consistent with the Purchase Agreement, the payout for the corporate performance measures would have been at 71.4% for our corporate performance measures.

 

2019 corporate performance
measures and weighting
Actual Payout
Adjusted global net sales (40%) $918.1 million Between threshold and target
Adjusted EBITDA (30%) $189.7 million Between threshold and target
Adjusted free cash flow (30%) $1.7 million Between threshold and target
Overall weighted achievement rating 71.4% Between threshold and target

 

Individual Performance Goals. To foster cooperation and communication among executives, the compensation committee places primary emphasis on overall corporate performance goals rather than on individual performance goals. For NEOs, at least 80% of their 2019 annual PIP bonuses were to be determined based on the achievement of corporate performance goals and only 20% or less were based on achievement of individual performance goals. The individual performance goals used to determine annual PIP bonuses were management by objectives (MBOs). MBOs are generally two to three written, specific and measurable objectives agreed to and approved by the executive, CEO and compensation committee in the beginning of the year. The only NEOs with MBOs for 2019 were Messrs. Lightman and Regan. As previously discussed, to encourage the retention of our employees, including our NEOs, all MBOs were paid out assuming target level performance.

 

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2019 Actual PIP Bonuses. The table below sets forth the 2019 PIP bonuses for all NEOs:

 

Named executive officer   2019 PIP bonus  
Robert J. Palmisano   $ 1,150,217  
Lance A. Berry     386,250  
Kevin D. Cordell     360,500  
James A. Lightman     235,000  
Barry J. Regan     235,000  

 

2020 Changes. Under the terms of the Purchase Agreement, prior to the acceptance time by Stryker of shares tendered in the Offer, if the acceptance time occurs in 2020, we may pay each employee, including our NEOs, if they are employed at the time of such payments, a 2020 cash bonus assuming the achievement of the applicable performance metrics at target. The amount would be prorated for the period of the 2020 calendar year that occurs prior to the acceptance time and if the acceptance time occurs in 2021, we may pay each such employee, including our NEOs, a cash bonus assuming (a) the achievement of applicable performance metrics at the higher of target or actual performance in 2020 and (b) the achievement of applicable performance metrics at target in 2021. The amount would be prorated for the period of the 2021 calendar year that occurs prior to the acceptance time. We believe this provision encourages retention of our employees in light of the Stryker acquisition.

 

Long-Term Equity-Based Incentive Compensation

 

Long-term equity-based incentives typically comprise a significant portion of each NEO’s compensation package, consistent with our executive compensation philosophy. Our board of directors, on recommendation of the compensation committee, generally grants two types of long-term incentives in the form of equity awards: annual performance recognition grants and talent acquisition grants. On limited occasions, we may make special recognition grants or discretionary grants to executive officers for retention or other purposes. Such grants may vest based on the passage of time and/or the achievement of certain performance goals. No talent acquisition, special recognition or discretionary grants were made to our NEOs in 2019. All equity awards are granted under the shareholder-approved Wright Medical Group N.V. 2017 Equity and Incentive Plan, which was amended and restated in June 2019.

 

Annual Performance Recognition Grants. Annual performance recognition grants are discretionary annual grants that are made during mid-year to give the compensation committee another formal opportunity during the year to review executive compensation and recognize executive and other key employee performance. The recipients and size of the annual performance recognition grants are determined based on our long-term incentive grant guidelines, which we review annually to ensure continued alignment with our target positioning. Consistent with the principle that the interests of our executives should be aligned with those of our shareholders and that the portion of an executive’s total compensation that varies with performance and is at risk should increase with the executive’s level of responsibility, incentive grants, expressed as a percentage of base salary and dollar values, increase as an executive’s level of responsibility increases.

 

The table below describes our LTI grant guidelines for annual performance recognition grants that applied to our NEOs for 2019.

 

Named executive officer Incentive grant guideline
expressed as % of base salary
Dollar value of
incentive grant guideline as of
July 25, 2019 grant date ($)
Robert J. Palmisano 500% 4,792,570
Lance A. Berry 275% 1,416,250
Kevin D. Cordell 225% 1,158,750
James A. Lightman 175% 822,500
Barry J. Regan 125% 587,500

 

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The LTI grant guideline for our CEO increased 50 percentage points (from 450% to 500% of base salary) to bring his LTI closer to our target positioning in our peer group and provide him greater performance-based compensation in lieu of an annual base salary increase. The LTI grant guidelines for each of Messrs. Berry and Cordell also increased 50 percentage points (225% to 275% and 175% to 225% of base salary, respectively) to compensate them for assuming increased roles and responsibilities and bring them closer to target positioning within our peer group in their new positions. Finally, the LTI grant guideline for Mr. Lightman increased 25 percentage points (from 150% to 175% of base salary) to bring him closer to target positioning in our peer group. Based on an executive compensation analysis by our compensation consultant, we believe the 2019 LTI grant guidelines for our NEOs were generally aligned with our targeted positioning within our peer group at that time.

 

Talent Acquisition Grants. Talent acquisition grants are new hire grants that are considered and approved as part of an executive’s compensation package at the time of hire (with the grant date and exercise price delayed until the hire date). As with our annual performance recognition grants, the size of our talent acquisition grants is determined by dollar amount (as opposed to number of underlying shares), and under our LTI grant guidelines, is generally 2 to 2.5 times the LTI grant guidelines for annual performance recognition grants, as recommended by our compensation consultant. We recognize that higher initial grants often are necessary to attract a new executive, especially one who may have accumulated a substantial amount of equity-based long-term incentive awards or other equity at a previous employer that would typically be forfeited upon acceptance of employment with us. In some cases, we may need to further increase a talent acquisition grant to attract an executive. No NEOs received a talent acquisition grant during 2019.

 

Equity Award Mix. Once an executive’s target total LTI value is determined, one-third of the value is provided in stock options, one-third is provided in RSU awards and one-third is provided in PSU awards, except in the case of new hires, where the value is provided one-half in stock options and one-half in RSU awards. The number of stock options, RSU awards and target PSU awards is based on the Black-Scholes value of our ordinary shares as determined on the third business day prior to the corporate approval of the award and using an average closing price of our ordinary shares over the most recent 10-trading days.

 

 

 

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The following table describes each of these three types of awards and why we provide them to our executives:

 

Stock options RSU awards PSU awards
Provides executives with the opportunity once vested to purchase our ordinary shares at a price fixed on the grant date regardless of future market price. Provides executives a commitment by us to issue ordinary shares at the time the RSU award vests. Gives executives a commitment from us to issue a certain number of ordinary shares dependent upon achievement of one or more performance measures.
Exercise price is equal to fair market value of an ordinary share on the grant date. Vesting is time-based, in four annual installments. At time of grant, the compensation committee establishes performance measures, weightings, goals, performance adjustment events, if any, and the performance period, as well as thresholds, targets, and maximums.
Vesting is time-based, with 25% of the shares underlying the stock option vesting on the one-year anniversary of the grant date and the remaining 75% of the underlying shares vesting over a three-year period thereafter in 36 nearly equal monthly installments. Annual awards vest on each August 15th. Performance periods typically begin on the first day of our third fiscal quarter and end on the last day of our second fiscal quarter of the third year thereafter.
  New hire awards vest beginning on either August 15, November 15, March 1 or May 15, depending on the grant date. At the end of the performance period, the compensation committee certifies performance against the performance goals, including the applicability of any performance adjustment events, and a corresponding payout, which is expressed as a percent of target.
  In all cases, the first vesting date is at least one year after the grant date. Actual payouts for PSU awards can range from 0% (if the threshold levels of performance are not met) to 200% of the target award (if maximum levels of performance are met).
  Provides the opportunity for capital accumulation and more predictable LTI value than stock options.  
   
Benefits of all equity award types
Incentivizes employees to maximize company performance, as the value of awards is directly tied to an appreciation in the value of our ordinary shares.
Provides an effective retention mechanism because of vesting provisions.
Strengthens the relationship between the long-term value of our ordinary shares and the potential financial gain for executives.
Links a portion of an executive’s compensation to the interests of our shareholders by providing an incentive to achieve corporate goals and increase the market price of our ordinary shares over the vesting period.

 

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2019 Equity Awards. The table below sets forth the number of stock options, RSU awards and target PSU awards granted to each of our NEOs in 2019.

 

Named executive officer Stock options (#) RSU awards (#) PSU awards (assuming target performance) (#)
Robert J. Palmisano 181,429 58,991 58,991
Lance A. Berry 53,614 17,432 17,432
Kevin D. Cordell 43,866 14,263 14,263
James A. Lightman 31,137 10,124 10,124
Barry J. Regan 22,241 7,231 7,231

 

No payouts for PSU awards were made during 2019 because 2017 was the first year we granted PSU awards and the performance period of those awards is three years. The performance measure for the PSU awards granted in 2019, 2018 and 2017 is net sales growth over a three-year period. The specific performance goals are maintained by us as proprietary and confidential. We believe that disclosure of this specific performance goal would represent competitive harm to us. Based on historical performance, we believe the attainment of the target performance level, while uncertain, could be reasonably anticipated. The threshold goal represents the minimum level of performance necessary for there to be a payout and we believe is likely to be achieved. The maximum goal represents the performance at which a payout is 200% of the target award and represents the level of performance of which we believe a payout of 200% would be appropriate. We believe that the maximum goal established for the performance measure is much more aggressive than the target goal. We consider the following factors when establishing the performance goals: our prior year and year-to-date financial business results, long-term strategic plan outlook, our competitive situation, anticipated state of our business, and any anticipated business opportunities.

 

Additional information concerning the long-term incentive compensation information for our NEOs for 2019 is included in the “Summary Compensation Table—2019” and “Grants of Plan-Based Awards—2019” table under the heading “Executive Compensation” beginning on page 76.

 

2020 Changes. Under the terms of the Purchase Agreement, we are limited in our ability to issue future equity grants prior to the completion of the acquisition. Under the terms of the Purchase Agreement, in the event the closing of the acquisition of Wright by Stryker has not occurred prior to July 1, 2020, we may issue annual equity awards in the ordinary course of business consistent with past practices to eligible employees, with any such awards that are so granted having (except as set forth below) the same terms and being granted at approximately the same time as equity awards granted by Wright in July 2019. In the event such awards are made, no award to an individual will have a grant date value (based on a percentage of base salary) greater than the grant made to such individual by Wright in July 2019 and no awards may be PSUs or otherwise subject to performance-based vesting conditions. A portion of these awards will vest at the closing of the acquisition of Wright by Stryker on a pro rata basis based on the number of days of the vesting period that occur between the grant date and the closing of the Stryker acquisition and the holder thereof will be entitled to payment for such vested awards in a manner consistent with other awards contemplated to be paid out at closing, provided that any portion of an award that does not become so vested will terminate and be cancelled without consideration. All other equity awards outstanding at the time of the closing of the acquisition will be immediately vested in full (and assuming maximum performance in the case of the PSUs) and cashed out in connection with the transaction based on the $30.75 per share acquisition price. Accordingly, as a result of the limitations in the Purchase Agreement, we anticipate that if annual equity grants are made in 2020 that they will be time-based RSU awards. In addition, in recognition of the changed circumstances created by the Stryker acquisition and to encourage retention during the pendency of the acquisition, the compensation committee determined, consistent with the terms of the Purchase Agreement, that all outstanding PSU awards will be deemed to have achieved maximum levels of performance.

 

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All Other Compensation

 

Retirement benefits

Our executives have the opportunity to participate in retirement plans maintained by our operating subsidiaries, including a 401(k) plan, on the same basis as our other employees. We believe these plans provide an opportunity for our executives to plan for and meet their retirement savings needs.

 

We do not provide pension arrangements or post-retirement health coverage for our employees, including NEOs, or nonqualified defined contribution or other deferred compensation plans.

 

Perquisites and other benefits

We provide our executives with modest perquisites to attract and retain them. The perquisites provided to our NEOs during 2019 included $1,000 for certain personal insurance premiums and up to $5,000 reimbursement for financial and tax planning and tax preparation, and supplemental long-term disability insurance. We also provide annual sales award trips for certain executives and their spouses. We encourage these executives to attend sales award trips in order to help build morale and for team building purposes; but we recognize that such out-of-town trips place increased demands on the executives’ families and thus pay for travel and other expenses incurred by spouses of executives who choose to attend such trips.

 

In addition, we are required to provide our CEO additional perquisites under the terms of his employment agreement, which we agreed on at the time of his initial hiring by legacy Wright to attract him to our company. These additional perquisites include additional reimbursement for financial and tax planning and tax preparation, a monthly allowance of $7,500 for housing and automobile expenses, reimbursement for reasonable travel expenses between Memphis, Tennessee and his residences, and an annual physical examination. To the extent that the reimbursements for his housing and automobile expenses and travel expenses are not deductible by Mr. Palmisano for income tax purposes, such amounts are “grossed-up” for income tax purposes so that the reimbursed items will be received net of any deduction for income and payroll taxes. We agreed to this gross-up provision at the time of his initial hiring by legacy Wright to attract him to our company and ease the financial burden on him to travel to and from our U.S. corporate headquarters in Memphis, Tennessee.

 

We believe perquisites and certain other benefits are an important part of our overall compensation package and help us accomplish our goal of attracting, retaining, and rewarding top executive talent. The value of all of the perquisites and other compensation provided to our NEOs for 2019 can be found under “Executive Compensation—All Other Compensation for 2019-Supplemental.” 

 

Change in Control and Post-Termination Severance Arrangements

 

 

Change in Control Arrangements. To encourage continuity, stability and retention when considering the potential disruptive impact of an actual or potential corporate transaction, we have established change in control arrangements, including provisions in our equity-based compensation plans, separation pay agreements with our executives, and our employment agreement with our CEO, which are described in more detail below and under “Executive Compensation—Potential Payments Upon a Termination or Change in Control.” These arrangements are designed to incentivize our executives to remain with our company in the event of a change in control or potential change in control. The closing of the Stryker acquisition will be considered a change in control under these arrangements.

 

We believe our change in control arrangements are an important part of our executive compensation program in part because they mitigate some of the risk for executives working in a smaller company where there is a meaningful likelihood that the company may be acquired. Change in control benefits are intended to attract and retain qualified

 

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executives who, absent these arrangements and in anticipation of a possible change in control of our company, might consider seeking employment alternatives to be less risky than remaining with our company through the transaction. We believe that relative to our company’s overall value, our potential change in control benefits are relatively small and are aligned with current peer company practices.

 

Our 2017 equity plan contains a “double trigger” change in control provision under which equity awards will not vest in connection with a change in control unless there is a termination event or the equity awards are not continued, assumed or substituted with like awards by the successor. Under the terms of our prior equity plan and the individual award documents provided to recipients of awards under that plan, all stock options and RSU awards become immediately vested (and, in the case of options, exercisable) upon the completion of a change in control of our company. Thus, the immediate vesting of stock options and RSU awards is triggered by the change in control, itself, and thus is known as a “single trigger” change in control arrangement. The intent of our prior “single trigger” equity acceleration change in control arrangements was to provide retention incentives during what can often be an uncertain time for employees. They also provided executives with additional monetary motivation to focus on and complete a transaction that our board of directors believes is in the best interests of our company and shareholders rather than to seek new employment opportunities. The immediate acceleration of equity-based awards also aligned the interests of our executives and other employees with those of our shareholders by allowing our executives to participate fully in the benefits of a change in control as to all of their equity. If an executive were to leave before the completion of the change in control, unvested awards held by the executive would terminate. However, we recognized that our single trigger change in control arrangements did not align with current market practice and the desires of many of our shareholders so we changed this practice with the adoption of our 2017 equity plan.

 

In addition to the change in control provisions in our 2017 equity plan, we have entered into an employment agreement with our CEO and separation pay agreements with our other NEOs and other officers which provide certain payments and benefits in the event of a termination of employment in connection with a change in control. These “double trigger” change in control protections are intended to induce executives to accept or continue employment with our company, provide consideration to executives for certain restrictive covenants that apply following termination of employment, and provide continuity of management in connection with a threatened or actual change in control transaction. If an executive’s employment is terminated without “cause” or by the executive for “good reason” (as such terms are defined in the agreements) within 12 months (24 months for our CEO) following a change in control, the executive will be entitled to receive a severance payment and certain benefits. These arrangements and a quantification of the payment and benefits provided under these arrangements are described in more detail under “Executive Compensation—Potential Payments Upon a Termination or Change in Control.”

 

Other Severance Arrangements. Each of our NEOs is entitled to receive severance benefits upon certain other qualifying terminations of employment, other than a change in control, pursuant to the provisions of an employment agreement for our CEO and separation pay agreements for our other NEOs. These severance arrangements are intended to induce the executives to accept or continue employment with our company and are primarily intended to retain our executives and provide consideration to those executives for certain restrictive covenants that apply following a termination of employment. Additionally, we entered into these agreements because they provide us valuable protection by subjecting the executives to restrictive covenants that prohibit the disclosure of confidential information during and following their employment and limit their ability to engage in competition with us or otherwise interfere with our business relationships following their termination of employment.

 

For more information on our severance arrangements with our NEOs, see the discussions below under “Executive Compensation - Potential Payments Upon a Termination or Change in Control.”

 

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Stock Ownership Guidelines

 

 

We have established stock ownership guidelines that are intended to further align the interests of our executives with those of our shareholders. Stock ownership targets for each of our executive officers have been set at the number of our ordinary shares with a value equal to a multiple of the executive’s annual base salary. Each of the executive officers has five years from the date of hire or, if the ownership multiple has increased during his or her tenure, five years from the date established in connection with the increase to reach his or her stock ownership targets. Until his or her stock ownership target is achieved, each executive is required to retain an amount equal to 75% of the net shares received as a result of the exercise of stock options or the vesting of RSU awards. If there is a significant decline in the price of our ordinary shares that causes executives to be out of compliance, such executives will be subject to the 75% retention ratio, but will not be required to purchase additional shares to meet the applicable targets. Our compensation committee reports on compliance with the guidelines at least annually to our board of directors. Each of our NEOs is in compliance with our stock ownership guidelines, taking into account the five-year compliance deadline.

 

Named executive officer Stock ownership target as a
multiple of base salary
In compliance (yes/no)
Robert J. Palmisano 4x Yes
Lance A. Berry 2x Yes
Kevin D. Cordell 2x Yes
James A. Lightman 2x Yes
Barry J. Regan 2x Yes

 

Anti-Hedging and Pledging

 

 

Our code of conduct on insider trading and confidentiality prohibits our employees, including our NEOs, from engaging in hedging transactions, such as short sales, transactions in publicly traded options, such as puts, calls and other derivatives, and pledging our ordinary shares. Our anti-hedging and pledging policy is described under “Executive Compensation—Anti-Hedging and Pledging Policy.”

 

Risk Assessment

 

 

As a result of our annual assessment on risk in our compensation programs, we concluded that our compensation policies, practices, and programs and related compensation governance structure, work together in a manner to encourage our executives (and other employees) to pursue growth strategies that emphasize shareholder value creation, but not to take unnecessary or excessive risks that could threaten the value of our company. For more information on this assessment, see the discussions below under “Executive Compensation—Risk Assessment of Compensation Policies, Practices and Programs.”

 

Clawback Policy

 

 

In 2017, we adopted a clawback policy that applies to all officers, including our NEOs, that authorizes recovery of gains from incentive compensation, including equity awards, in the event of certain financial restatements. In addition, under our equity plans, if an executive is determined by the compensation committee to have taken action that would constitute “cause” or an “adverse action,” as those terms are defined in the plan, during or within one year after the termination of the executive’s employment, all rights of the executive under the plan and any agreements evidencing an equity award then held by the executive will terminate and be forfeited. In addition, the compensation committee may require the executive to surrender and return to us any shares received, and/or to disgorge any profits or any other economic value made or realized by the executive in connection with any awards or any shares issued upon the exercise or vesting of any awards during or within one year after the termination of the executive’s employment or other service. In addition to the clawback policy and equity plan provisions, our CEO is subject to a broader clawback provision in his employment agreement which applies in the event of certain financial restatements.

 

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How We Make Compensation Decisions

 

 

Roles and Responsibilities. There are several elements to our executive compensation decision-making, which we believe allow us to most effectively implement our compensation philosophy and objectives. The compensation committee, the board of directors, our independent external compensation consultant and management all have a role in decision-making for executive compensation. The following table summarizes their roles and responsibilities:

 

Responsible party Roles and responsibilities

Compensation committee

 

(Comprised solely of independent directors and reports to the board of directors)

 

    Oversees all aspects of our executive compensation program.

 

    Annually reviews and approves our corporate goals and objectives relevant to CEO compensation.

 

    Evaluates CEO’s performance in light of such goals and objectives, and determines and recommends his compensation based on this evaluation.

 

    Determines and approves all executive officer compensation, including salary, bonus and equity and non-equity incentive compensation.

 

    Administers our equity compensation plans and reviews and recommends all equity awards.

 

    Reviews our incentive compensation arrangements to confirm that incentive pay does not encourage unnecessary risk-taking.

 

    Evaluates market competitiveness of each executive’s compensation.

 

    Evaluates proposed changes to our executive compensation program.

 

    Assists the Board in developing and evaluating potential candidates for executive positions and overseeing the development of succession plans.

 

    Has sole authority to hire consultants, approve their fees and determine the nature and scope of their work.

 

Board of directors

   Approves, upon recommendation of the compensation committee, all CEO compensation consistent with our shareholder-approved board of directors compensation policy.

 

   Approves, upon recommendation of the compensation committee, all equity grants.

 

Independent external compensation consultant

 

(Mercer (US) Inc.)

 

(Independent and reports to the compensation committee)

 

   Advises on all significant aspects of executive compensation, as well as non-executive director compensation.

 

   Provides advice and guidance on the appropriateness and competitiveness of our executive compensation program relative to our performance and market practice.

 

   Reviews total compensation strategy and pay levels for executives.

 

   Examines our executive compensation program to ensure that each element supports our business strategy.

 

   Assists in selection of peer companies and gathering competitive market data.

 

   Provides advice with respect to our equity-based compensation plans.

 

   Attends on a regular basis compensation committee meetings.

 

 

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Responsible party Roles and responsibilities
President and Chief Executive Officer

   Reviews performance of other executive officers and makes recommendations with respect to their compensation.

 

   Confers with the compensation committee and compensation consultant concerning design and development of compensation and benefit plans.

 

   Provides no input or recommendations with respect to his own compensation.

 

Other members of senior management team

 

(Senior Vice President, Chief Human Resources Officer, Senior Vice President, General Counsel and Secretary, and Executive Vice President, Chief Financial and Operations Officer)

 

   Gathers compensation data regarding executives and coordinates the exchange of information among management, the compensation committee and compensation consultant.

 

   Assists the compensation committee by ensuring compliance with legal and regulatory requirements and educating the committee on executive compensation trends and best practices from a corporate governance perspective.

 

   Provides no input or recommendations with respect to their own compensation. 

 

Factors Considered. In setting or recommending executive compensation for our NEOs, the compensation committee considers the following primary factors:



each executive’s position within the company and the level of responsibility;

 

the ability of the executive to impact key business initiatives;

 

the executive’s individual experience and qualifications;

 

compensation paid to executives of comparable positions by companies similar to us;

 

company performance, as compared to specific pre-established objectives;

 

individual performance, generally and as compared to specific pre-established objectives;

 

the executive’s current and historical compensation levels;

 

advancement potential and succession planning considerations;

 

an assessment of the risk that the executive would leave us and the harm to our business initiatives if the executive left;

 

the retention value of executive equity holdings, including outstanding stock options, RSU awards and PSU awards;

 

the dilutive effect on the interests of our shareholders of long-term equity-based incentive awards; and

 

anticipated share-based compensation expense as determined under applicable accounting rules.

 

In light of the pending Stryker acquisition, the compensation committee also considers any covenants in the Purchase Agreement that could limit our ability to set executive compensation.

 

The compensation committee also considers the recommendations of our CEO with respect to executive compensation to be paid to other executives. In making these recommendations, the CEO considers many of the same factors listed above that the compensation committee considers in setting executive compensation, including in particular the results of each executive’s annual performance review and the executive’s achievement of his or her

 

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individual MBOs established in connection with our PIP, described above. In making its final decision regarding the form and amount of compensation to be paid to our NEOs (other than the CEO), the compensation committee considers and gives great weight to the recommendations of the CEO recognizing that due to his reporting and otherwise close relationship with each executive, the CEO often is in a better position than the compensation committee to evaluate the performance of each executive (other than himself). In making its final decision regarding the form and amount of compensation to be paid to the CEO, the compensation committee considers the results of the CEO’s self-review and his individual annual performance review by the compensation committee, benchmarking data gathered by our compensation consultant, and the recommendations of our non-executive directors. In making its final decision regarding the form and amount of compensation to be paid to executives, the compensation committee considers the information gathered by and recommendations of Mercer. The compensation committee values Mercer’s benchmarking information and input regarding best practices and trends in executive compensation matters.

 

Tax Deductibility of Compensation

 

 

Prior to the enactment of the Tax Cuts and Jobs Act signed into law on December 22, 2017 (the “Tax Act”), in designing our executive compensation program, we considered the deductibility of executive compensation under Code Section 162(m). The Tax Act repealed the exemption from Code Section 162(m)’s $1 million deduction limit for “performance-based” compensation for taxable years beginning after December 31, 2017, other than with respect to certain “grandfathered” arrangements entered into prior to November 2, 2017. Our compensation plans were designed with the intention of satisfying the requirements for “performance-based” compensation as defined in Code Section 162(m) prior to the effective date of the Tax Act so that such awards would be exempt from the Code Section 162(m) deduction limitation. While we designed these plans to operate in this manner, the exemption is no longer available for performance-based awards paid in tax years beginning after 2017 (other than with respect to certain “grandfathered” arrangements as noted above). Further, as it relates to any “grandfathered” arrangements, the compensation committee may administer the plans in a manner that does not satisfy such requirements in order to achieve a result that the compensation committee determines to be appropriate, including by revising performance goals and/or adjustment events as needed to ensure our pay practices continue to align with performance.

 

Despite the changes to Section 162(m) as a result of the Tax Act, consistent with our executive compensation philosophy of linking pay to performance and aligning executive interests with those of our shareholders, we currently expect that we will continue to structure our executive compensation program so that a significant portion of total executive compensation is linked to the performance of our company.

 

Compensation Committee Report

 

 

The compensation committee has reviewed and discussed the foregoing “Compensation Discussion and Analysis” with our management. Based on this review and these discussions, the compensation committee has recommended to our board of directors that the foregoing “Compensation Discussion and Analysis” be included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2019 and proxy statement in connection with our extraordinary general meeting of shareholders held in connection with our pending acquisition by Stryker Corporation and our 2020 annual general meeting of shareholders.

 

This report is dated February 18, 2020.

 

Compensation Committee

John L. Miclot, Chair

J. Patrick Mackin

Amy S. Paul

 

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EXECUTIVE COMPENSATION

 

Summary Compensation Information

 

 

The table below provides summary information concerning all compensation awarded to, earned by, or paid to the individuals that served as our principal executive officer or principal financial officer during the fiscal year ended December 29, 2019 and other named executive officers for each of the last three fiscal years of which they served as an executive officer.

 

Name and principal position Year Salary(1)
($)
Bonus(2)
($)
Stock
awards(3)
($)
Option awards(4)
($)
Non-equity incentive plan compensation(5)
($)
All other compen-sation(6)
($)
Total
($)
Robert J. Palmisano
President and Chief Executive Officer and Executive Director
2019 956,859 3,284,618 1,694,547 1,150,217 222,934 7,309,175
2018 957,008 2,720,153 1,413,445 1,064,909 220,932 6,376,447
2017 945,792 2,592,818 1,346,571 261,593 5,146,774
Lance A. Berry
Executive Vice President, Chief Financial and Operations Officer
2019 513,193 970,614 500,755 386,250 19,118 2,389,930
2018 463,154 664,071 345,061 337,966 16,606 1,826,858
2017 440,146 608,630 316,095 16,800 1,381,671
Kevin D. Cordell
Executive Vice President, Chief Global Commercial Officer
2019 513,657 794,164 409,708 360,500 26,973 2,105,002
2018 477,535 529,817 275,303 330,556 17,000 1,630,211
2017 466,371 556,978 289,276 84,718 16,800 1,414,143
James A. Lightman
Senior Vice President, General Counsel and Secretary
2019 464,616 563,704 290,820 235,000 18,083 1,572,223
2018 437,493 425,686 221,197 279,180 15,486 1,379,042
2017 399,366 341,118 177,167 30,266 208,207 1,156,124
Barry J. Regan(7)
Senior Vice President, Operations
2019 464,616 402,622 207,731 235,000 17,701 1,327,670
               
               

 

 

(1) Five percent of Mr. Palmisano’s annual base salary was allocated to his service as an executive director and member of our board of directors.

 

(2) We generally do not pay any discretionary bonuses or bonuses that are subjectively determined and did not pay any such bonuses to any NEOs in 2019. Annual cash incentive bonus payouts are typically based on performance against pre-established performance goals under our performance incentive plan are reported in the “Non-equity incentive plan compensation” column.

 

(3) Amounts reported represent the aggregate grant date fair value for RSU and PSU awards, in each case computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. The grant date fair value is determined based on the per share closing sale price of our shares on the grant date.

 

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    Amounts reported for each NEO and each award for 2019 are set forth in the “Grants of Plan-Based Awards—2019” table in the “Grant Date Fair Value of Stock and Option Awards” column. Set forth below is the 2019 grant date fair value of PSU awards assuming maximum levels of performance. The maximum value is calculated using the number of shares reflected in the “Maximum” column of the “Estimated Future Payouts Under Equity Incentive Plan Awards” section of the “Grants of Plan-Based Awards—2019” table and the closing price of our shares on July 26, 2019, the grant date, of $27.84, as reported by the Nasdaq Global Select Market.

 

Name

Grant date fair value at maximum levels of performance

($) 

Mr. Palmisano 3,284,618
Mr. Berry 970,614
Mr. Cordell 794,164
Mr. Lightman 563,704
Mr. Regan 402,622

 

(4) Amounts reported represent the aggregate grant date fair value for option awards granted to each NEO computed in accordance with FASB ASC Topic 718. The grant date fair value is determined based on our Black-Scholes option pricing model. The table below sets forth the specific assumptions used in the valuation of each such option award:

 

Grant date Grant date fair value per share ($) Risk free interest rate Expected life Expected volatility Expected dividend yield
07/26/2019 9.34 1.750% 6.22 years 30.50%
07/24/2018 9.49 2.750% 6.66 years 32.40%
07/25/2017 9.80 1.875% 6.10 years 32.50%

 

(5) Amounts reported represent payouts under our performance incentive plan and for each year other than 2019 reflect the amounts earned for that year but paid during the following year.

 

(6) Amounts reported in this column for 2019 are described under “Compensation Discussion and Analysis—All Other Compensation for 2019—Supplemental.”

 

(7) Mr. Regan was appointed our Senior Vice President, Operations effective July 9, 2018 and was not an NEO in 2017 or 2018; therefore, his information is only provided for 2019.

 

EMPLOYMENT AND OTHER AGREEMENTS

 

 

Agreements with Robert J. Palmisano

 

Effective October 1, 2015, we entered into a service agreement and one of our subsidiaries entered into an employment agreement with Robert J. Palmisano, our President and CEO.

 

The service agreement deals with certain Dutch law matters relating to Mr. Palmisano’s role as an executive director. Under the terms of the service agreement, we have allocated a portion of Mr. Palmisano’s annual base salary to his service as an executive director, which amounts are paid after deduction of applicable withholdings for taxes and social security contributions. In addition, under the terms of the service agreement, we have agreed to provide Mr. Palmisano with indemnification and director and officer liability insurance, on terms and conditions that are at least as favorable to Mr. Palmisano as those then provided to any other current or former director or executive officer of Wright or any of its affiliates.

 

The employment agreement provides that during the term of the agreement, Mr. Palmisano will serve as President and CEO of Wright and each principal operating subsidiary and will report to our Chairman and our board of directors. During the term, we agreed to nominate Mr. Palmisano for election as an executive director and member of our board of directors at each annual general meeting of shareholders. The employment agreement expires on December 31, 2020, subject to earlier termination under certain circumstances. On October 1, 2020 and on each anniversary thereafter, the term will automatically extend for an additional one-year period, unless at least 30 days prior to such date, either party gives notice of non-extension to the other.

 

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With respect to compensation, the employment agreement established an annual base salary for Mr. Palmisano and provides that our board of directors will review his compensation at least annually for any increase. The employment agreement acknowledges that a certain percentage of Mr. Palmisano’s base salary will be paid by Wright in consideration for his services as an executive director under the service agreement described above. The employment agreement provides that Mr. Palmisano is eligible to receive an annual performance incentive bonus depending on whether, and to what extent, certain performance goals established by the compensation committee for such year have been achieved. The amount of the performance incentive bonus payable to Mr. Palmisano will be targeted at least 100% of his annual base salary (currently set at 120%) and will not exceed 200% of his annual base salary. The employment agreement provides that Mr. Palmisano will receive an annual equity grant equal to at least 300% (currently set at 500%) of his annual base salary. In addition, the employment agreement provides that Mr. Palmisano is eligible to participate in the fringe benefit programs, including those for medical and disability insurance and retirement benefits that we generally make available to our executive officers from time to time. During the term, Mr. Palmisano will be reimbursed for up to $1,000 for personal insurance premiums, other than for insurance coverage that pays for medical, prescription drug, dental, vision, or other medical care expenses. In addition, he may elect, in accordance with our cafeteria plan rules, not to participate in the medical and disability insurance programs provided by us, in which case, we will pay him up to $900 per month (or such greater amount that we would otherwise pay for medical and disability coverage for him and his spouse under our benefits programs). Mr. Palmisano is also entitled to receive reimbursement for up to $15,000 for financial and tax planning and tax preparation, and an annual physical examination at our expense. The employment agreement also provides for a monthly allowance of $7,500 for housing and automobile expenses, and Mr. Palmisano will be reimbursed for reasonable travel expenses between Memphis, Tennessee and his residences. To the extent that these reimbursements are not deductible by Mr. Palmisano for income tax purposes, such amounts will be “grossed-up” for income tax purposes so that the reimbursed items will be received net of any deduction for income and payroll taxes. The employment agreement contains severance provisions as described in more detail under “Executive Compensation—Potential Payments Upon a Termination or Change in Control.” We have guaranteed the obligations of our subsidiary under Mr. Palmisano’s employment agreement.

 

Mr. Palmisano and one of our subsidiaries also entered into a confidentiality, non-competition, non-solicitation and intellectual property rights agreement, pursuant to which Mr. Palmisano agreed to certain covenants that impose obligations on him regarding confidentiality of information, transfer of inventions, non-solicitation of employees, customers and suppliers, and non-competition with our business.

 

Agreements with Other Named Executive Officers

 

Each of the other NEOs also is a party to a confidentiality, non-competition, non-solicitation and intellectual property rights agreement with us, the material terms of which are substantially similar to Mr. Palmisano’s agreement, as described above. In addition, through one of our subsidiaries, we have entered into separation pay agreements with our NEOs who are currently executive officers, other than Mr. Palmisano, which agreements are described in more detail under “—Potential Payments Upon a Termination or Change in Control.”

 

Promotion Offer Letters with Lance A. Berry and Kevin D. Cordell

 

Effective January 2019, Lance A. Berry was promoted to Executive Vice President, Chief Financial and Operations Officer, and Kevin D. Cordell was promoted to Executive Vice President, Chief Global Commercial Officer. In connection with these promotions, in December 2018, we entered into offer letters with each of these officers pursuant to which we agreed to pay him an annual base salary of $515,000, provide a target annual incentive opportunity equal to 75%, in the case of Mr. Berry, and 70%, in the case of Mr. Cordell, of his annual base salary, and a target long-term incentive opportunity equal to 275%, in the case of Mr. Berry, and 225%, in the case of Mr. Cordell, of his annual base salary.

 

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Indemnification Agreements

 

We have entered into indemnification agreements with all of our NEOs. The indemnification agreements are governed by the laws of the State of Delaware and provide, among other things, for indemnification to the fullest extent permitted by law and our articles of association against any and all expenses (including attorneys’ fees) and liabilities, judgments, fines and amounts paid in settlement that are paid or incurred by the executive or on his or her behalf in connection with such action, suit or proceeding. We will be obligated to pay these amounts only if the executive acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of Wright. The indemnification agreements provide that the executive will not be indemnified and expenses advanced with respect to an action, suit or proceeding initiated by the executive unless (i) so authorized or consented to by our board of directors or Wright has joined in such action, suit or proceeding or (ii) the action, suit or proceeding is one to enforce the executive’s rights under the indemnification agreement. Wright’s indemnification and expense advance obligations are subject to the condition that an appropriate person or body not party to the particular action, suit or proceeding shall not have determined that the executive is not permitted to be indemnified under applicable law. The indemnification agreements also set forth procedures that apply in the event an executive requests indemnification or an expense advance.

 

All Other Compensation for 2019 – Supplemental

 

 

The table below provides information concerning amounts reported in the “All other compensation” column of the “Summary Compensation Table—2019” with respect to each NEO. Additional detail on these amounts is provided below the table.

 

Name

Retirement
benefits

($)

Housing/
car
allowance

($)

Commuting
expenses

($)

Financial
and tax
planning
and
insurance premium 

($)

Gross-up

payments

($)

Long-term disability insurance

($)

Sales
award trip 

($)

Total other compensation

($)

Mr. Palmisano 11,000 90,000 32,221 15,000 73,833 880 222,934
Mr. Berry 11,000 6,000 2,118 19,118
Mr. Cordell 11,000 6,000 1,892 2,446 5,635 26,973
Mr. Lightman 11,000 5,061 2,022 18,083
Mr. Regan 11,000 5,000 1,701 17,701

 

RETIREMENT BENEFITS

 

Under our 401(k) plan, participants, including our NEOs, may voluntarily request that we reduce his or her pre-tax compensation and contribute such amounts to the 401(k) plan’s trust up to certain statutory maximums. We contribute matching contributions in an amount equal to 3% of the participant’s eligible earnings for a pay period, or if less, 50% of the participant’s pre-tax 401(k) contributions (other than catch-up contributions) for that pay period. We do not provide any nonqualified defined contribution or other deferred compensation plans for our executives.

 

PERQUISITES AND OTHER BENEFITS

 

We provide our executive officers with modest perquisites to attract and retain them. The perquisites provided to our NEOs during 2019 included $1,000 for certain personal insurance premiums, up to $5,000 reimbursement for financial and tax planning and tax preparation, and supplemental long-term disability insurance. We also provide annual sales award trips for certain executives and their spouses. In addition, we are required to provide our CEO additional perquisites under the terms of his employment agreement, which we agreed upon at the time of his initial hiring by legacy Wright to attract him to our company. These additional perquisites include additional reimbursement for financial and tax planning and tax preparation, a monthly allowance of $7,500 for housing and automobile expenses, reimbursement for reasonable travel expenses between Memphis, Tennessee and his residences, and an annual physical examination. To the extent that the reimbursements for his housing and automobile expenses and travel expenses between Memphis, Tennessee and his residences are not deductible by Mr. Palmisano for income tax purposes, such amounts are “grossed-up” for income tax purposes so that the

 

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reimbursed items will be received net of any deduction for income and payroll taxes. We agreed to this gross-up provision at the time of his initial hiring by legacy Wright to attract him to our company and ease the financial burden on him to travel between Memphis, Tennessee and his residences.

 

Grants of Plan-Based Awards

 

 

The table below provides information concerning grants of plan-based awards to each of our NEOs during the fiscal year ended December 29, 2019. Non-equity incentive plan awards were granted to our NEOs under our performance incentive plan, the material terms of which are described under “Compensation Discussion and Analysis.” Stock awards (in the form of RSU awards and PSU awards) and option awards were granted under the Wright Medical Group N.V. Amended and Restated 2017 Equity and Incentive Plan (2017 plan). The material terms of these awards and the material plan provisions relevant to these awards are described under “Compensation Discussion and Analysis,” or in the notes to the table below or the narrative following the table below.

 

     



Estimated future payouts 

under non-equity incentive
plan awards(1)

Estimated future payouts under
equity incentive plan awards(4) 

All other
stock
awards: number
of shares
of stock
or units(5)
(#)

All other option
awards: number of securities underlying options(6)

(#)

Exercise
or base price of option awards

($/Sh)

Grant date
fair value of stock and option awards(7)(8)

($)

Name Grant
date
Board approval date
Threshold(2)
($)

Target 

($) 

Maximum(3)
($)
Threshold
(#)

Target

(#)

Maximum
(#)
Robert J. Palmisano                        
Cash incentive award N/A 2/19/19 575,109 1,150,217 2,300,434
RSU award 7/26/19 7/26/19 58,991 1,642,309
PSU award 7/26/19 7/26/19 29,496 58,991 117,982 1,642,309
Stock option 7/26/19 7/26/19 181,429 27.84 1,694,547
Lance A. Berry                        
Cash incentive award N/A 2/19/19 193,125 386,250 772,500
RSU award 7/26/19 7/26/19 17,432 485,307
PSU award 7/26/19 7/26/19 8,716 17,432 34,864 485,307
Stock option 7/26/19 7/26/19 53,614 27.84 500,755
Kevin D. Cordell                        
Cash incentive award N/A 2/19/19 180,250 360,500 721,000
RSU award 7/26/19 7/26/19 14,263 397,082
PSU award 7/26/19 7/26/19 7,132 14,263 28,526 397,082
Stock option 7/26/19 7/26/19 43,866 27.84 409,708
James A. Lightman                        
Cash incentive award N/A 2/19/19 117,500 235,000 470,000
RSU award 7/26/19 7/26/19 10,124 281,852
PSU award 7/26/19 7/26/19 5,062 10,124 20,248 281,852
Stock option 7/26/19 7/26/19 31,137 27.84 290,820
Barry J. Regan                        
Cash incentive award N/A 2/19/19 117,500 235,000 470,000
RSU award 7/26/19 7/26/19 7,231 201,311
PSU award 7/26/19 7/26/19