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Compensation Discussion and Analysis
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accounting consequences, including those stemming from changes to Section 162(m) of the Code, as one factor when making a decision regarding executive compensation.
Under the recent tax legislation, for taxable years beginning after December 31, 2017, there is no longer an exception to the deductibility limit
for qualifying performance-based compensation unless the compensation qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017 and not materially modified afterwards (the scope of which is
currently uncertain). Also under the recent legislation, the definition of covered employees has been expanded to include a companys chief financial officer, in addition to the chief executive officer and three other most highly
paid executive officers. Any individual who has been a covered employee in any taxable year beginning after December 31, 2016 remains a covered employee in all future years.
The Committee continues to evaluate the changes to Section 162(m) and retains the ability to provide compensation that exceeds deductibility limits
as it determines appropriate, including to recognize performance, meet market demands and retain key executives.
Employment Contracts
As a general matter, all Company employees are employed on an at-will basis, and the
Company does not enter into employment agreements except with respect to confidentiality, non-compete and non-solicitation provisions, and as may be customary in regions
outside of the United States (as is the case with Mr. Beyers compensation arrangements, discussed below).
Mr. Hartmans Compensation Arrangements
Effective November 9, 2014, the Company entered into a letter agreement with Mr. Hartman, outlining the terms of his employment as President
and CEO of the Company (the CEO Employment Letter). The CEO Employment Letter was amended as of December 28, 2020. The CEO Employment Letter provided Mr. Hartman with a minimum base salary of $710,000 and a target bonus equal
to 100% of his annual base salary. The CEO Employment Letter also provides that Mr. Hartman is subject to certain restrictive covenants, including confidentiality and non-disparagement covenants, and two-year post-termination restrictions on competition and solicitation of the Companys customers and employees. Additionally, as outlined in the CEO Employment Letter, Mr. Hartman participates in the
Executive Severance Plan as described below. The December 28, 2020 amendment updated the terms of Mr. Hartmans employment in connection with the designation of Largo, Florida as the Companys headquarters. As with several other
Executive Officers, including Mr. Garner, the terms of employment were updated to note that the Company would provide an office for him near his residence for when he was not at the Largo headquarters, and to provide for Delaware as the source
of controlling law and the exclusive forum for any disputes concerning the employment terms.
Mr. Hartman was awarded an equity grant on
February 24, 2015 (CEO Performance Award) in the form of PSUs under the Amended and Restated 2015 Long-Term Incentive Plan. The CEO Performance Award provided for a target number of 100,000 PSUs, with the actual number of PSUs
earned ranging from 0% to a maximum of 200% of target depending on the Companys total stockholder return relative to the S&P 1500 Health Care Equipment Select Index (the Peer Index) over the performance period of
January 1, 2015 to December 31, 2019.
The CEO Performance Award presented Mr. Hartman with the opportunity to earn a superior
payment for superior Company performance based on the Companys total stockholder return relative to the Peer Index. Total stockholder return, compared to the Peer Index, was selected by the Compensation Committee as the CEO
Performance Awards sole performance measure in order to provide strong alignment with stockholder interests and permit multi-year performance measurement without the need to establish multi-year goals. A rigorous payout schedule was
established, so that substantial outperformance was required in order to earn awards above target levels. No PSUs were to be earned unless the Companys total stockholder return exceeds the Peer Index by at least 2.0%, and in order for
Mr. Hartman to earn the maximum number of PSUs, our total stockholder return for the performance period was to exceed the index by 15.8%.
As
described more fully in the April 2020 Proxy Statement, as of December 31, 2019, the Companys actual performance based on total stockholder return during the performance period was 22.61% relative to the Peer Index (16.54%), or 6.07%
above the
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2021 Proxy Statement
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