o
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Preliminary Proxy Statement.
|
o
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)).
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x
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Definitive Proxy Statement.
|
o
|
Definitive Additional Materials.
|
o
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Soliciting Material Pursuant to §240.14a-12.
|
|
STRYKER CORPORATION
|
(Name of Registrant as Specified In Its Charter)
|
|
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
|
x
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No fee required.
|
o
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
|
1)
|
Title of each class of securities to which transaction applies:
|
2)
|
Aggregate number of securities to which transaction applies:
|
3)
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
|
4)
|
Proposed maximum aggregate value of transaction:
|
5)
|
Total fee paid:
|
o
|
Fee paid previously with preliminary materials.
|
o
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
|
1)
|
Amount Previously Paid:
|
2)
|
Form, Schedule or Registration Statement No.:
|
3)
|
Filing Party:
|
4)
|
Date Filed:
|
Date:
|
May 1, 2019
|
Time:
|
2:00 p.m., Eastern Time
|
Place:
|
Radisson Plaza Hotel & Suites at The Kalamazoo Center, Kalamazoo, Michigan
|
•
|
Elect ten directors;
|
•
|
Ratify appointment of Ernst & Young LLP as our independent registered public accounting firm for 2019;
|
•
|
Conduct an advisory vote to approve named executive officer compensation; and
|
•
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Transact any other business that may properly come before the meeting and any adjournment or postponement.
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|
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Dean H. Bergy
|
|
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Vice President, Corporate Secretary
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March 20, 2019
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|
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Section
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Page
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1
|
|
Meeting Information
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1
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Shareholder Voting Matters
|
1
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Our Director Nominees and Board Characteristics
|
1
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Corporate Governance Practices
|
2
|
Executive Compensation Philosophy
|
2
|
Executive Compensation Practices
|
2
|
Financial Performance
|
3
|
4
|
|
Who Is Entitled to Vote?
|
4
|
How Do I Vote?
|
4
|
May I Change My Mind after Submitting a Proxy?
|
4
|
What are Broker Non-Votes?
|
4
|
What is the Required Vote?
|
4
|
Will the Annual Meeting be Webcast?
|
4
|
How Do I Obtain Directions to the Annual Meeting?
|
4
|
Can I Access These Proxy Materials on the Internet?
|
4
|
Stryker's 2018 Annual Review Available Online
|
4
|
5
|
|
7
|
|
8
|
|
9
|
|
Principal Shareholders
|
9
|
Security Ownership of Directors and Executive Officers
|
10
|
11
|
|
Board's Role in Strategic Planning and Risk Oversight
|
11
|
Independent Directors
|
11
|
Board Committees
|
11
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Compensation Risks
|
12
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Board Leadership Structure
|
12
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Executive Sessions of Independent Directors
|
13
|
Contacting the Board of Directors
|
13
|
Code of Conduct / Code of Ethics
|
13
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Certain Relationships and Related Party Transactions
|
13
|
14
|
|
Named Executive Officers
|
14
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Overview
|
14
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Compensation Objectives
|
15
|
Executive Compensation Philosophy
|
15
|
The Role of Benchmarking in Our Executive Compensation Decisions
|
15
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Management's Role in Determining Executive Compensation
|
16
|
2018 Compensation Decisions
|
16
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2018 Compensation Elements
|
17
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Impact of Decisions Regarding One Compensation Element on Decisions Regarding Other Compensation Elements
|
24
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Equity Plans and Equity-Based Compensation Award Granting Policy
|
24
|
Executive and Non-Employee Director Stock Ownership Guidelines
|
25
|
Recoupment Policy
|
25
|
Employment Agreements and Severance Policy
|
25
|
Company Tax and Accounting Issues
|
25
|
2019 Compensation Decisions
|
26
|
26
|
|
27
|
|
Summary Compensation Table
|
27
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2018 Grants of Plan-Based Awards
|
29
|
Outstanding Equity Awards at 2018 Fiscal Year-End
|
31
|
2018 Option Exercises and Stock Vested
|
32
|
2018 Pension Benefits
|
32
|
2018 Nonqualified Deferred Compensation
|
32
|
Potential Payments upon Termination
|
33
|
Ratio of 2018 Compensation of the Chief Executive Officer to that of the Median Employee
|
35
|
36
|
|
37
|
|
38
|
|
Shareholder Proposals for the 2020 Annual Meeting
|
38
|
Section 16(a) Beneficial Ownership Reporting Compliance
|
38
|
Other Matters
|
38
|
Expenses of Solicitation
|
38
|
Appendix A
—
Reconciliation of the Most Directly Comparable GAAP Measure to Non-GAAP Financial Measure
|
A-1
|
This summary is intended to provide a broad overview of important information you will find elsewhere in this Proxy Statement and does not contain all the information you should consider. We encourage you to read the entire Proxy Statement before voting.
|
Meeting Information
|
Date and Time
|
May 1, 2019 at 2:00 p.m., Eastern Time
|
|
Audio Webcast
|
On our website,
www.stryker.com
, starting at 2:00 p.m, Eastern Time, on Wednesday, May 1, 2019. A replay will be available on our website through June 30, 2019.
|
Shareholder Voting Matters
|
|||
Matter
|
|
Board Vote Recommendation
|
See Page
|
Proposal 1 —
|
Election of Directors
|
For each nominee
|
5
|
Proposal 2 —
|
Ratify appointment of independent registered public accounting firm
|
For
|
7
|
Proposal 3 —
|
Advisory vote to approve named executive officer compensation
|
For
|
8
|
Board Skills and
|
|
|
|
|
Experience:
|
Consumer Marketing
|
Hospital / Payor
|
Leadership
|
Risk Management
|
|
Finance
|
Innovation
|
Mergers and Acquisitions
|
Strategic Thinking
|
|
Healthcare Industry
|
International
|
Quality Systems
|
Technology
|
Corporate Governance Practices
|
•
|
Majority voting in uncontested elections.
|
•
|
The Lead Independent Director position entails significant responsibility related to Board leadership and governance.
|
•
|
All directors are independent other than the Chairman and CEO.
|
•
|
Regular executive sessions of independent directors.
|
•
|
All members of Board Committees are independent.
|
•
|
A majority of Audit Committee members are "audit committee financial experts."
|
•
|
Annual Board and Committee self-evaluations.
|
•
|
Annual independent director evaluation of Chairman and CEO.
|
•
|
Active Board and Committee oversight of risk and risk management.
|
•
|
Commitment toward corporate social responsibility and sustainability.
|
•
|
No use of corporate funds for political contributions and careful oversight of lobbying activities.
|
•
|
No "poison pill" takeover defense plan.
|
Executive Compensation Philosophy
|
•
|
We monitor a comparison group of medical technology and other related companies to ensure that our compensation programs are within observed competitive practices.
|
•
|
We aim to provide market competitive total direct compensation consisting of base salary, annual bonus and long-term equity incentives (stock awards).
|
•
|
We emphasize pay for performance. In 2018, the value of the variable performance and stock-based compensation for our Named Executive Officers ("NEOs") averaged 86% of total direct compensation.
|
•
|
Our annual and long-term incentives align the interests of our executives with our shareholders, utilizing challenging performance goals that should result in profitable, sustained business growth over the long term as well as stock price increases over time.
|
•
|
We regularly evaluate our executive compensation programs to ensure that they do not encourage excessive risk taking.
|
•
|
Our stock ownership guidelines reflect our conviction that our senior executives and non-employee directors should have meaningful share ownership positions in the Company to reinforce the alignment of the interests of our management and shareholders.
|
•
|
Our recoupment policy applies to all cash and equity incentive payments made to our elected corporate officers after 2014 in the event of either a material restatement of our financial statements as a result of misconduct or an officer's material misconduct or negligence that results in a material violation of a law or regulation or material Company policy.
|
•
|
We hold an annual advisory vote regarding NEO compensation, which in 2018 resulted in a 96% favorable vote.
|
Executive Compensation Practices
|
•
|
Our Compensation Committee retains an independent compensation consultant that reports solely to the Compensation Committee.
|
•
|
We link the majority of NEO compensation to Company performance.
|
•
|
We balance short-term and long-term incentives.
|
•
|
We cap payouts of incentive awards.
|
•
|
Our recoupment policy applies to all cash and equity incentive payments made after 2014 to our elected corporate officers.
|
•
|
Our guidelines require significant stock ownership.
|
•
|
We provide limited perquisites and personal benefits to our NEOs.
|
•
|
We do not have employment or severance agreements.
|
•
|
We do not allow for contractual change-in-control payments.
|
•
|
We do not pay tax gross-ups (unless pursuant to our standard relocation and expatriate assignment practices).
|
•
|
We do not reprice, exchange or buyout stock options.
|
Financial Performance
|
Net Sales
|
|
Net Earnings
|
$ in billions
|
|
$ per diluted share
|
Adjusted Net Earnings
(1)
|
|
Dividends Paid
|
$ per diluted share
|
|
$ per share of common stock
|
Financial Overview
|
|
|
|
|||||
(in millions, except per share amounts)
|
2018
|
|
2017
|
|
% Change
|
|
||
|
|
|
|
|||||
Net sales
|
|
$13,601
|
|
|
$12,444
|
|
9.3
|
|
Earnings before income taxes
|
2,356
|
|
2,063
|
|
14.2
|
|
||
Income taxes
|
(1,197
|
)
|
1,043
|
|
(214.8
|
)
|
||
Net earnings
|
3,553
|
|
1,020
|
|
248.3
|
|
||
Adjusted net earnings
(1)
|
2,779
|
|
2,465
|
|
12.7
|
|
||
|
|
|
|
|||||
Net earnings per diluted share of common stock:
|
|
|
|
|||||
Reported
|
9.34
|
|
2.68
|
|
248.5
|
|
||
Adjusted
(1)
|
7.31
|
|
6.49
|
|
12.6
|
|
||
|
|
|
|
|||||
Dividends paid per share of common stock
|
1.88
|
|
1.70
|
|
10.6
|
|
||
Cash, cash equivalents, and marketable securities
|
3,699
|
|
2,793
|
|
32.4
|
|
(1)
|
Adjusted net earnings and adjusted net earnings per diluted share are non-GAAP financial measures. Refer to "Appendix A
—
Reconciliation of the Most Directly Comparable GAAP Measure to Non-GAAP Financial Measure" for additional information.
|
Who Is Entitled to Vote?
|
How Do I Vote?
|
•
|
By Internet or Telephone — If you have internet or telephone access, you may submit your proxy by following the voting instructions on the proxy card. If you vote by internet or telephone, you should not return your proxy card.
|
•
|
By Mail — You may vote by mail by completing, dating and signing your proxy card and mailing it in the envelope provided. You must sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as officer of a corporation, guardian, executor, trustee or custodian), you must indicate your name and title or capacity.
|
May I Change My Mind after Submitting a Proxy?
|
•
|
Written notice to the Vice President, Corporate Secretary of the Company at 2825 Airview Boulevard, Kalamazoo, Michigan 49002;
|
•
|
Timely delivery of a valid, later-dated proxy or later-dated vote by internet or telephone; or
|
•
|
Voting by ballot at the annual meeting.
|
What Are Broker Non-Votes?
|
What is the Required Vote?
|
Will the Annual Meeting be Webcast?
|
How Do I Obtain Directions to the Annual Meeting?
|
Can I Access These Proxy Materials on the Internet?
|
Stryker's 2018 Annual Review Available Online
|
MARY K. BRAINERD, Age 65, Director since 2017
|
|
ROCH DOLIVEUX, DVM, Age 62, Director since 2010
|
||
|
Former President and Chief Executive Officer of HealthPartners, the largest, consumer-governed, nonprofit health care organization in the United States, which she led from 2002 to May 2017. Prior to joining HealthPartners in 1992, she held various executive roles with Blue Cross and Blue Shield of Minnesota from 1984 to 1992. She also serves as a director of Bremer Bank and Securian Financial, a financial services company headquartered in Minneapolis.
Ms. Brainerd’s extensive experience surrounding both health care delivery and insurance enable her to provide unique and invaluable insight to our Board discussions, particularly in light of the evolving landscape in the health care delivery and payer markets.
|
|
|
Chairman of the Board, Pierre Fabre SA, a global dermocosmetics and healthcare company. Chairman of GLG Institute, a community of senior executives for experience sharing and learning. Director of UCB, a global biopharmaceutical company, where he was Chief Executive Officer for 10 years. He is also Chairman of the Board of the Vlerick Business School, a top-100 business school in the world based in Belgium and of the Caring Entrepreneurship Fund, a philanthropic organization to help entrepreneurs start their own businesses in healthcare.
Dr. Doliveux has extensive experience in life science and healthcare companies, including research, development, regulatory, medical, marketing, market access, sales and M&A, as well as strategic and organizational change management. His exposure to business in many geographies and cultures is very valuable as Stryker seeks to expand its global presence. |
SRIKANT M. DATAR, PH.D., Age 65, Director since 2009
|
|
LOUISE L. FRANCESCONI, Age 65, Director since 2006
|
||
|
Arthur Lowes Dickinson Professor at the Graduate School of Business Administration of Harvard University since 1996. Faculty Chair of the Harvard Innovation Labs and Senior Associate Dean for University Affairs. From 1989 to 1996, he was Edmund W. Littlefield Professor at the Graduate School of Business, Stanford University. Dr. Datar is also a director of Novartis AG, a multinational pharmaceutical and consumer health products company, ICF International, Inc., a management, technology and policy consulting firm, and T-Mobile US, Inc., a provider of wireless voice, messaging and data services.
Dr. Datar has an extensive background in accounting and finance and a variety of other business areas, including organization design and performance measurement. His strong academic and business background and his experience on the board committees of other companies allow him to make significant contributions to our committees. His service on the boards of global companies involved in pharmaceuticals and high tech gives him great insights into assessing the Company's technology and strategies to expand our business globally. |
|
|
Former Vice President of Raytheon Company and former President of Raytheon Missile Systems, which she led from 1996 to July 2008. She is Chairman of the Tucson Medical Center Healthcare Board of Trustees and a director of UNS Energy Corporation, a utility that delivers natural gas and electric service.
Ms. Francesconi's extensive experience in various leadership roles in operations and finance functions at Raytheon and other major businesses for over 30 years enable her to bring a wealth of insight into the complex operational, financial and governance issues facing the Company. Her role as Chairman of the Tucson Medical Center Board also has provided useful insights from the perspective of a healthcare provider. |
ALLAN C. GOLSTON, Age 52, Director since 2011
|
|
ANDREW K. SILVERNAIL, Age 48, Director since 2013
|
||
|
President, United States Program for the Bill & Melinda Gates Foundation since 2006, and Chief Financial and Administrative Officer of the Bill & Melinda Gates Foundation from 2000 to 2006. Mr. Golston is also a director of Harley-Davidson, Inc., a manufacturer of motorcycles and accessories.
Mr. Golston has extensive experience in auditing, finance and the healthcare industry. He is a Certified Public Accountant and has held positions as a finance executive with Swedish Health Services (Seattle, WA) and the University of Colorado Hospital. In his service to the Gates Foundation, he has contributed to the strategic formation and operation of successful initiatives to provide healthcare, education and other human needs, all of which give him understanding that will assist Stryker in our global efforts to meet the needs of patients and caregivers. Additionally, Mr. Golston's expertise in financial matters enables him to make valuable contributions to our Audit Committee and his overall experience positions him well to serve as our Lead Independent Director. |
|
|
Chairman, President and Chief Executive Officer of IDEX Corporation, an applied solutions business serving high growth specialized markets, Chairman since 2012 and President and Chief Executive Officer since 2011, and Vice President, Group Executive from January 2009 to August 2011. Mr. Silvernail is also a trustee for the Manufacturers Alliance for Productivity and Innovation (MAPI) and serves on the Board of Advisors for the Thayer School of Engineering at Dartmouth College.
By virtue of his service as Chairman, President and Chief Executive Officer of IDEX Corporation and his prior experience in executive leadership positions with IDEX and another large public company, Mr. Silvernail provides valuable business, leadership and management insights and useful perspectives to our Board discussions. His experience leading a large public company with global operations gives him a clear understanding of the issues facing a multinational business such as ours.
|
KEVIN A. LOBO, Age 53, Director since 2012
|
|
RONDA E. STRYKER, Age 64, Director since 1984
|
||
|
Mr. Lobo was named Chairman of the Board in July 2014 and has served as Chief Executive Officer of the Company since 2012. He joined the Company as a Group President in April 2011. Prior thereto, he held leadership roles over eight years with Johnson & Johnson, including president of Ethicon Endo-Surgery. Mr. Lobo is also a director of Parker-Hannifin Corporation, a manufacturer of motion and control technologies and systems.
Mr. Lobo's global business and leadership experience across multiple industries, including healthcare, enables him to provide valuable insight to the Board regarding the Company's operations and the strategic planning initiatives necessary to meet the demands of the changing environment. As the sole member of management on our Board, he provides management's business perspectives and the necessary link to the Company's day-to-day operations. |
|
|
Granddaughter of the founder of the Company and daughter of a former President of the Company. She is also Vice Chair and a director of Greenleaf Trust, a Michigan chartered bank, Vice Chair of Spelman College and member of the Harvard Medical School Board of Fellows.
Ms. Stryker brings a strong interest in advocating the benefits of diversity and various matters regarding social responsibility. As the Company's largest individual shareholder and a member of the founding family, she brings a strong shareholder perspective, unlike that of any other member of our Board, making her a valuable component of a well-rounded Board.
|
SHERILYN S. MCCOY, Age 60, Director since 2018
|
|
RAJEEV SURI, Age 51, Director since 2018
|
||
|
Former Chief Executive Officer and Director of Avon Products, Inc., a personal care products company, which she led for almost six years until she retired in February 2018. Prior thereto, Ms. McCoy had a 30-year career at Johnson & Johnson, where she led a variety of large medical device, pharmaceutical and consumer businesses and rose to the position of Vice Chair. She is also a director of AstraZeneca plc, a global, science-led biopharmaceutical company; Kimberly-Clark, a multinational manufacturer of personal care products; and Novacure, an oncology company pioneering a novel therapy for solid tumors called Tumor Treating Fields.
Ms. McCoy has deep global experience as well as strong knowledge regarding mergers and acquisitions and the management of complex organizational structures. These skills, along with her background in the medical technology industry and extensive experience in a public company environment, enable her to bring valuable insights to our Board. |
|
|
President and Chief Executive Officer of Nokia, a leading global technology company, since April 2014. From 2009 to 2014, he was Chief Executive Officer of Nokia Solutions and Networks (previously Nokia Siemens Networks). Much of his nearly 30-year career has been spent in leadership roles at Nokia. He is also a United Nations Broadband Commissioner and a member of the steering committee of the Digital Communications Industry at the World Economic Forum.
Mr. Suri has deep business experience working across a range of functions, including strategy, mergers and acquisitions, marketing and sales. He has led a transformation of Nokia through significant portfolio adjustments, including the acquisition of Alcatel-Lucent, and has strong global experience. This background and Mr. Suri’s extensive knowledge across a range of technology solutions provide critical input to our Board. |
Fees and Services
|
Vote Required
|
Principal Shareholders
|
Name and Address of Beneficial Owner
|
Number of Shares
Beneficially Owned (#)
|
Percentage of
Class (%)
|
T. Rowe Price Associates, Inc.
|
32,822,508
(1)
|
8.7
|
100 E. Pratt Street
|
|
|
Baltimore, Maryland 21202
|
|
|
The Vanguard Group, Inc.
|
26,195,821
(2)
|
7.0
|
100 Vanguard Boulevard
|
|
|
Malvern, Pennsylvania 19355
|
|
|
BlackRock, Inc.
|
24,882,912
(3)
|
6.6
|
55 East 52nd Street
|
|
|
New York, New York 10055
|
|
|
Ronda E. Stryker
|
24,599,060
(4)
|
6.6
|
c/o Greenleaf Trust
|
|
|
211 South Rose Street
|
|
|
Kalamazoo, Michigan 49007
|
|
|
Greenleaf Trust
|
22,185,620
(5)
|
5.9
|
211 South Rose Street
|
|
|
Kalamazoo, Michigan 49007
|
|
|
John W. Brown
|
19,784,533
(6)
|
5.3
|
2825 Airview Boulevard
|
|
|
Kalamazoo, Michigan 49002
|
|
|
(1)
|
This information is based solely on information as of December 31, 2018 contained in a filing with the SEC on February 14, 2019. T. Rowe Price Associates, Inc. has sole voting power with respect to 11,862,551 shares and sole dispositive power with respect to all shares.
|
(2)
|
This information is based solely on information as of December 31, 2018 contained in a filing with the SEC on February 13, 2019. The Vanguard Group, Inc. has sole voting power with respect to 397,216 shares, shared voting power with respect to 94,430 shares, sole dispositive power with respect to 25,711,234 shares and shared dispositive power with respect to 484,587 shares.
|
(3)
|
This information is based solely on information as of December 31, 2018 contained in a filing with the SEC on February 6, 2019. BlackRock, Inc. has sole voting power with respect to 21,920,150 shares and sole dispositive power with respect to all shares.
|
(4)
|
This information is based solely on information as of January 31, 2019 provided by Ms. Ronda E. Stryker. The shares of Common Stock shown as beneficially owned by Ms. Stryker include 49,145 shares that she has the right to acquire within 60 days of January 31, 2019 upon exercise of stock options and vesting of restricted stock units. Ms. Stryker has sole voting and dispositive power with respect to 7,799,293 of the shares of Common Stock shown as beneficially owned by her, sole voting and shared dispositive power with respect to 866,652 shares, no voting and shared dispositive power with respect to 40,000 shares and shared voting and dispositive power with respect to the remaining 15,843,970 shares. As a result of certain rights that she has under the terms of the L. Lee Stryker Trust established on September 10, 1974 for the benefit of members of the Stryker Family (the "Stryker Family Trust"), Ms. Stryker may be deemed to share voting power and dispositive power with respect to 15,843,970 shares with Greenleaf Trust, the trustee of a subtrust for her benefit under the Stryker Family Trust. See note (5) below.
|
(5)
|
This information is based solely on information as of December 31, 2018 contained in a filing with the SEC on February 13, 2019. Greenleaf Trust holds these securities in a fiduciary capacity on behalf of various trusts and investment management customers, some of whom have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of such shares of Common Stock. Greenleaf Trust has sole voting power with respect to 166,893 shares, shared voting power with respect to 22,018,727 shares, sole dispositive power with respect to 160,130 shares and shared dispositive power with respect to 22,025,490 shares. See note (4) above regarding the shared voting power and dispositive power with respect to 15,843,970 shares of Common Stock held by a subtrust for the benefit of Ronda E. Stryker under the terms of the Stryker Family Trust.
|
(6)
|
This information is based solely on information as of December 31, 2018 contained in a filing with the SEC on February 11, 2019. Mr. Brown has sole voting and dispositive power with respect to 19,524,533 shares of Common Stock shown as beneficially owned by him and shared voting and dispositive power with respect to 260,000 shares.
|
Security Ownership of Directors and Executive Officers
|
|
Number of Shares Owned (#)
(4)
|
Right to
Acquire (#)
(5)
|
Total (#)
(6)
|
Percentage of Outstanding Shares (%)
|
|||
Directors:
|
|
|
|
|
|||
Mary K. Brainerd
|
600
|
601
|
1,201
|
*
|
|||
Srikant M. Datar, Ph.D.
|
9,277
|
40,100
|
49,377
|
*
|
|||
Roch Doliveux, DVM
|
19,695
|
26,843
|
46,538
|
*
|
|||
Louise L. Francesconi
|
18,277
|
36,770
|
55,047
|
*
|
|||
Allan C. Golston
|
9,027
|
26,775
|
35,802
|
*
|
|||
Kevin A. Lobo
|
50,105
|
910,377
|
960,482
|
*
|
|||
Sherilyn S. McCoy
|
—
|
|
—
|
|
—
|
|
—
|
Andrew K. Silvernail
|
1,902
|
11,575
|
13,477
|
*
|
|||
Ronda E. Stryker
|
24,549,915
|
49,145
|
24,599,060
|
6.6
|
|||
Rajeev Suri
|
—
|
|
—
|
|
—
|
|
—
|
Named Executive Officers
(1)
:
|
|
|
|
|
|||
Glenn S. Boehnlein
|
16,981
|
98,585
|
115,566
|
*
|
|||
Timothy J. Scannell
|
137,623
|
371,751
|
509,374
|
*
|
|||
Viju S. Menon
|
—
|
|
—
|
|
—
|
|
—
|
Michael D. Hutchinson
|
12,765
|
83,371
|
96,136
|
*
|
|||
David K. Floyd
(2)
|
14,128
|
62,242
|
76,370
|
*
|
|||
Lonny J. Carpenter
(3)
|
153,248
|
53,295
|
206,543
|
*
|
|||
Executive officers and directors as a group (19 persons)
|
24,854,571
|
1,841,007
|
26,695,578
|
7.2
|
*
|
Less than 1%.
|
(1)
|
Other than Kevin A. Lobo, who is also a director.
|
(2)
|
This information is based solely on information as of January 31, 2019 provided by Mr. David K. Floyd.
|
(3)
|
This information is based solely on information as of January 31, 2019 provided by Mr. Lonny J. Carpenter.
|
(4)
|
Excludes shares that may be acquired within 60 days after January 31, 2019 upon exercise of options and vesting of shares underlying restricted stock units or performance stock units.
|
(5)
|
Includes shares that may be acquired within 60 days after January 31, 2019 upon exercise of options and vesting of shares underlying restricted stock units or performance stock units.
|
(6)
|
Except for the shared beneficial ownership of certain shares of Common Stock by Dr. Datar (7,642 shares) and Ms. Stryker (16,750,622 shares), such persons hold sole voting and dispositive power with respect to the shares shown in this column.
|
Board's Role in Strategic Planning and Risk Oversight
|
Independent Directors
|
Board Committees
|
•
|
Providing information and education on executive and non-employee director compensation trends and developments and the implications for Stryker;
|
•
|
Reviewing the competitiveness of our non-employee director compensation program;
|
•
|
Reviewing the competitiveness of total compensation for the members of our executive leadership team;
|
•
|
Providing recommendations for the compensation levels of our Chief Executive Officer;
|
•
|
Reviewing and giving its opinion on management's recommendations for executive compensation and equity plan design and practices; and
|
•
|
Participating in Compensation Committee meetings when requested by the Compensation Committee Chair.
|
Compensation Risks
|
Board Leadership Structure
|
Executive Sessions of Independent Directors
|
Contacting the Board of Directors
|
Code of Conduct / Code of Ethics
|
Certain Relationships and Related Party Transactions
|
Named Executive Officers
|
Name
|
Title
|
Kevin A. Lobo
|
Chairman and CEO
|
Glenn S. Boehnlein
|
Vice President, Chief Financial Officer ("CFO")
|
Timothy J. Scannell
|
President and Chief Operating Officer
(1)
|
Viju S. Menon
|
Group President, Global Quality and Operations
(2)
|
Michael D. Hutchinson
|
Vice President, Chief Legal Officer
|
David K. Floyd
|
Group President and Advisor to the Chief Executive Officer
(3)
|
Lonny J. Carpenter
|
Group President and Advisor to the Chief Executive Officer
(4)
|
(1)
|
Mr. Scannell was promoted to President and Chief Operating Officer ("COO") effective August 1, 2018. Prior to his promotion, Mr. Scannell served as Group President, MedSurg and Neurotechnology.
|
(2)
|
Mr. Menon joined the Company as Group President, Global Quality and Operations ("GQO") on April 23, 2018.
|
(3)
|
Mr. Floyd retired from his role as Group President, Orthopaedics effective August 1, 2018 and will continue to be employed (in a non-executive officer capacity) as Group President and Advisor to the CEO from August 1, 2018 through June 30, 2019. During the advisory period, Mr. Floyd continues to receive base salary at the annual rate of $640,000, remained eligible for an incentive bonus opportunity for 2018 and will be entitled to receive an advisory period incentive bonus in the amount of $272,000 provided he remains employed in the advisory capacity through June 30, 2019.
|
(4)
|
Mr. Carpenter retired from his role as Group President, Global Quality and Business Operations effective April 30, 2018 and will continue to be employed (in a non-executive officer capacity) as Group President and Advisor to the CEO from April 30, 2018 through March 31, 2019. During the advisory period, Mr. Carpenter continues to receive base salary at the annual rate of $545,000, remained eligible for an incentive bonus opportunity for 2018 and will be entitled to receive an advisory period incentive bonus in the amount of $120,000 provided he remains employed in the advisory capacity through March 31, 2019.
|
Overview
|
•
|
An important part of our executive compensation philosophy is the alignment of the compensation of our NEOs with the interests of our shareholders and achievement of key business objectives;
|
•
|
In 2018, the value of the variable, performance and stock-based compensation elements for the NEOs averaged 86% of the total value of the primary compensation elements (salary, actual bonus and stock awards). See "Summary Compensation Table" on page 27;
|
•
|
Our NEO bonus plans are based on challenging performance goals that, if met, should result in profitable, sustained business performance over the long term and be reflected in stock price increases over time. The NEOs' payouts for 2018 (148% of target on average) were greater than the 2017 levels (116% of target on average) as a result of performance that, overall, was above 2018 bonus plan goals that were generally more challenging than prior year actual results;
|
•
|
Stock-based compensation realized by our NEOs is tied directly to the interests of our shareholders via stock price performance and, for performance stock units, based on financial performance relative to pre-established financial goals for a three-year performance period. The payout related to the 2016 grant of performance stock units, which is discussed under "2016 Performance Stock Units: Results for the 2016-2018 Performance Period" beginning on page 22, was 200% of target as a result of performance that reached the maximum goal for both sales growth relative to a comparison group of companies and average adjusted diluted net earnings per share growth;
|
•
|
We monitor a comparison group of medical technology and related companies to ensure that our compensation programs are within observed competitive practices, review trends and practices with assistance from the Compensation Committee's independent compensation consultant and make adjustments as deemed appropriate by the Compensation Committee; and
|
•
|
We evaluate key risk issues related to compensation and, in this regard, engaged a third-party independent consultant to conduct a risk assessment of executive compensation programs in 2016 as discussed under "Compensation Risks" on page 12 and believe that our executive compensation practices do not create risks that are reasonably likely to have a material adverse effect on Stryker.
|
Compensation Objectives
|
•
|
Attract, retain and motivate talented executives who drive the Company's success;
|
•
|
Structure compensation packages with a significant percentage of compensation earned as variable pay based on performance, which balances risk with the potential reward;
|
•
|
Align incentives with measurable corporate, business area and individual performance, both financial and non-financial;
|
•
|
Provide flexibility to adapt to changing business needs;
|
•
|
Align total compensation with shareholder value creation; and
|
•
|
Establish compensation program costs that are reasonable, affordable and appropriate.
|
Executive Compensation Philosophy
|
The Role of Benchmarking in Our Executive Compensation Decisions
|
•
|
Product competitors or companies in the medical technology industry, as well as within adjacent industries, with which we compete for executive talent;
|
•
|
Companies with significant global operations; and
|
•
|
Companies with revenues and market capitalizations of similar scale to Stryker.
|
Management's Role in Determining Executive Compensation
|
•
|
Developing, summarizing and presenting information and analyses to enable the Compensation Committee to execute its responsibilities, as well as addressing specific requests for information from the Compensation Committee;
|
•
|
Attending Compensation Committee meetings as requested to provide information, respond to questions and otherwise assist the Compensation Committee;
|
•
|
Developing individual NEO bonus plans for consideration by the Compensation Committee and reporting to the Compensation Committee regarding achievement against the bonus plans; and
|
•
|
Preparing stock-based award recommendations for the Compensation Committee's approval, which includes providing the Compensation Committee with regular updates on run rate (the rate at which stock awards are being awarded under our equity plans) and overhang (a measure of potential earnings dilution from stock awards) levels, and reporting to the Compensation Committee at the end of the performance period regarding the number of performance stock units earned based on achievement of the pre-established goals.
|
2018 Compensation Decisions
|
Name
|
2018 Annualized Base Salary ($)
|
% Increase Relative to 2017
|
2018 Target Bonus ($)
|
% Increase Relative to 2017
|
||
Kevin A. Lobo
|
1,200,000
|
2.7
|
%
|
1,800,000
|
10.0
|
%
|
Glenn S. Boehnlein
|
600,000
|
5.3
|
%
|
510,000
|
11.8
|
%
|
Timothy J. Scannell
(1)
|
750,000
|
18.1
|
%
|
637,756
|
18.2
|
%
|
Viju S. Menon
(2)
|
500,000
|
—
|
|
294,589
|
—
|
|
Michael D. Hutchinson
|
525,000
|
5.0
|
%
|
393,750
|
12.5
|
%
|
David K. Floyd
|
640,000
|
3.2
|
%
|
544,000
|
3.2
|
%
|
Lonny J. Carpenter
|
545,000
|
4.8
|
%
|
463,250
|
4.8
|
%
|
(1)
|
Mr. Scannell's base salary was initially increased to $655,000, which was a 3.1% increase relative to 2017 and effective March 1, 2018, when he was serving as Group President, MedSurg and Neurotechnology. Mr. Scannell's annualized base salary was increased to $750,000 upon his promotion to President and Chief Operating Officer, effective August 1, 2018. The 2018 target bonus amount for Mr. Scannell reflects prorated amounts as a result of his promotion.
|
(2)
|
Mr. Menon's annualized base salary was effective as of his start date in April 2018 and his 2018 target bonus amount was prorated to reflect his start date.
|
2018 Compensation Elements
|
Name
|
Target Bonus ($)
|
Maximum Bonus Opportunity ($)
|
Actual Bonus Payment ($)
|
Payment as Percentage of Target
|
|
Kevin A. Lobo
|
1,800,000
|
3,600,000
|
2,709,720
|
151
|
%
|
Glenn S. Boehnlein
|
510,000
|
1,020,000
|
767,754
|
151
|
%
|
Timothy J. Scannell
(1)
|
637,756
|
1,275,512
|
985,980
|
155
|
%
|
Viju S. Menon
(2)
|
294,589
|
589,178
|
443,474
|
151
|
%
|
Michael D. Hutchinson
|
393,750
|
787,500
|
592,751
|
151
|
%
|
David K. Floyd
|
544,000
|
1,088,000
|
692,621
|
127
|
%
|
Lonny J. Carpenter
|
463,250
|
926,500
|
688,112
|
149
|
%
|
(1)
|
Reflects prorated amounts as a result of promotion in August 2018.
|
(2)
|
Reflects prorated amounts as a result of joining the Company in April 2018. Mr. Menon also received a sign-on bonus payment of $130,000 in connection with joining the Company in April 2018, which is not reflected in the table above. The sign-on bonus amount served as an inducement to join the Company and approximated the prorated 2018 target bonus amount that Mr. Menon forfeited upon his departure from his prior employer.
|
•
|
These are key measures that are the objectives of our strategic plan;
|
•
|
These metrics focus our NEOs on growth and profitability, which are important for our long-term success;
|
•
|
The goals for these metrics generally align with our annual budget; and
|
•
|
We believe these are primary measures our investors monitor in evaluating our performance and making investment decisions regarding Stryker stock.
|
•
|
Threshold is the performance required before any bonus accrues. Performance below the threshold level results in no bonus payment for that performance measure. Results for all quantitative measures are prorated between threshold and target. Meeting the target goal results in the payment of 100% of bonus opportunity for the particular measure.
|
•
|
The tables express the goals for quantitative performance measures as a percentage change from 2017 actual results to show the degree of improvement required relative to the prior year to achieve bonus plan payment levels.
|
•
|
Bonus plan goals are based on the Company's financial results as reported in conformance with GAAP but may be adjusted at the Compensation Committee's discretion to reflect the impact of specified corporate transactions, changes in foreign currency exchange rates, accounting or tax changes and other extraordinary or nonrecurring events so that the operating results of the Company or the applicable business unit are calculated on a comparable basis from year to year. Information with respect to adjustments made to GAAP consolidated operating income in 2018 that resulted in the adjusted consolidated operating income used in the calculation of the NEOs' bonus awards is set forth in the following reconciliation (dollar values in millions), with adjustments made on a similar basis when determining the adjusted group operating income used in the calculation of the 2018 bonus awards for Mr. Scannell (as Group President, MedSurg and Neurotechnology) and Mr. Floyd:
|
Item
|
Year Ended
December 31, 2018 |
||
Operating income, as reported
|
|
$2,537
|
|
Acquired inventory stepped up to fair value
|
15
|
|
|
Other acquisition and integration-related charges
|
108
|
|
|
Amortization of purchased intangible assets
|
417
|
|
|
Restructuring-related and other charges
|
220
|
|
|
Medical device regulations
|
12
|
|
|
Recall-related matters
|
23
|
|
|
Regulatory and legal matters
|
185
|
|
|
Net currency adjustments
|
47
|
|
|
Operating income attributable to acquisitions that occurred during 2018
|
3
|
|
|
Adjusted operating income for bonus calculation
|
|
$3,567
|
|
•
|
Information with respect to adjustments made to GAAP diluted net earnings per share in 2018 that resulted in the adjusted diluted net earnings per share used in the calculation of the NEOs' bonus awards is set forth below:
|
Item
|
Year Ended
December 31, 2018 |
||
Diluted net earnings per share, as reported
|
|
$9.34
|
|
Acquired inventory stepped up to fair value
|
0.02
|
|
|
Other acquisition and integration-related charges
|
0.24
|
|
|
Amortization of purchased intangible assets
|
0.89
|
|
|
Restructuring-related and other charges
|
0.47
|
|
|
Medical device regulations
|
0.03
|
|
|
Recall-related matters
|
0.05
|
|
|
Regulatory and legal matters
|
0.37
|
|
|
Tax matters
|
(4.10
|
)
|
|
Adjusted diluted net earnings per share for bonus calculation
|
|
$7.31
|
|
•
|
For performance measures that are qualitative in nature, the determination of performance requires subjective evaluations rather than quantifiable calculations of levels of goal achievement. These subjective performance evaluations for 2018 were made by the Compensation Committee after considering recommendations from Mr. Lobo in the case of each of the other NEOs and by the independent directors in the case of Mr. Lobo, in each case after consideration was given to the individual's performance with respect to the goal. The threshold payment for qualitative measures is zero percent.
|
•
|
Payout for each overachievement metric generally begins when performance exceeds the budgeted value for the respective metric and is prorated between the threshold and target overachievement levels.
|
|
2018 Threshold
|
|
2018 Target
|
||||||||
|
Threshold
|
Threshold as Percentage Change Over 2017 Actual
|
Potential Payment as Percentage of Total Target Bonus
|
|
Target
|
Target as Percentage Change Over 2017 Actual
|
Potential Payment as Percentage of Total Target Bonus
|
||||
Core Bonus Potential:
|
|
|
|
|
|
|
|
||||
Adjusted operating income
|
$3.124 bil.
|
(0.2
|
)%
|
10
|
%
|
|
$3.471 bil.
|
10.9
|
%
|
20
|
%
|
Adjusted operating income margin
|
25.99%
|
3.3
|
%
|
10
|
%
|
|
26.19%
|
4.1
|
%
|
20
|
%
|
Constant currency sales
|
$12.460 bil.
|
0.1
|
%
|
20
|
%
|
|
$13.255 bil.
|
6.5
|
%
|
40
|
%
|
Functional goal
(1)
|
—
|
—
|
|
0
|
%
|
|
—
|
—
|
|
20
|
%
|
|
|
|
40
|
%
|
|
|
|
100
|
%
|
||
Overachievement Bonus Potential:
|
|
|
|
|
|
|
|
||||
Adjusted operating income
|
$3.471 bil.
|
10.9
|
%
|
0
|
%
|
|
$3.645 bil.
|
16.4
|
%
|
50
|
%
|
Constant currency sales
|
$13.255 bil.
|
6.5
|
%
|
0
|
%
|
|
$13.785 bil.
|
10.8
|
%
|
25
|
%
|
Adjusted diluted net earnings per share
|
$7.11
|
9.6
|
%
|
0
|
%
|
|
$7.54
|
16.2
|
%
|
25
|
%
|
|
|
|
0
|
%
|
|
|
|
100
|
%
|
Name
|
Functional Goal
|
Kevin A. Lobo
|
Qualitative assessment of his efforts in leading the Company's multi-year cost transformation initiative, driving commercial model innovation, strengthening the Company's leadership bench strength, and driving robust product performance processes and results.
|
Glenn S. Boehnlein
|
Qualitative assessment of his contributions to the execution of the Company's cost transformation initiative and implementing the Company's Finance transformation program with a focus on global shared services.
|
Timothy J. Scannell
|
Qualitative assessment of his contributions to the execution of the Company's cost transformation initiative, driving success in the integration of the Company's recent acquisitions and developing a consistent commercial model to address the changing landscape of the healthcare market.
|
Viju S. Menon
|
Qualitative assessment of his contributions to the execution of the Company's cost transformation initiative and continuing the transformation of the Company's global supply chain organization.
|
Michael D. Hutchinson
|
Qualitative assessment related to his efforts of assessing the Company's intellectual property organization model and recommending changes and driving efficiency within the Company's Legal and Compliance department.
|
Lonny J. Carpenter
|
Qualitative assessment of his contributions to the execution of the Company's cost transformation initiative and continuing the transformation of the Company's global supply chain organization.
|
|
2018 Threshold
|
|
2018 Target
|
||||||||
|
Threshold
|
Threshold as Percentage Change Over 2017 Actual
|
Potential Payment as Percentage of Total Target Bonus
|
|
Target
|
Target as Percentage Change Over 2017 Actual
|
Potential Payment as Percentage of Total Target Bonus
|
||||
Core Bonus Potential
(1)
:
|
|
|
|
|
|
|
|
||||
Adjusted operating income - group
|
$1.898 bil.
|
(0.2
|
)%
|
5
|
%
|
|
$2.109 bil.
|
10.9
|
%
|
10
|
%
|
Adjusted operating income - consolidated
|
$3.124 bil.
|
(0.2
|
)%
|
5
|
%
|
|
$3.471 bil.
|
10.9
|
%
|
10
|
%
|
Adjusted operating income margin - group
|
29.08%
|
1.9
|
%
|
10
|
%
|
|
29.28%
|
2.6
|
%
|
20
|
%
|
Constant currency sales - group
|
$6.699 bil.
|
0.5
|
%
|
20
|
%
|
|
$7.203 bil.
|
8.1
|
%
|
40
|
%
|
Functional goal
(2)
|
—
|
—
|
|
0
|
%
|
|
—
|
—
|
|
20
|
%
|
|
|
|
|
40
|
%
|
|
|
|
|
100
|
%
|
Overachievement Bonus Potential
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income - group
|
$2.109 bil.
|
10.9
|
%
|
0
|
%
|
|
$2.278 bil.
|
19.8
|
%
|
25
|
%
|
Adjusted operating income - consolidated
|
$3.471 bil.
|
10.9
|
%
|
0
|
%
|
|
$3.645 bil.
|
16.4
|
%
|
25
|
%
|
Constant currency sales - group
|
$7.203 bil.
|
8.1
|
%
|
0
|
%
|
|
$7.563 bil.
|
13.5
|
%
|
25
|
%
|
Adjusted diluted net earnings per share
|
$7.11
|
9.6
|
%
|
0
|
%
|
|
$7.54
|
16.2
|
%
|
25
|
%
|
|
|
|
0
|
%
|
|
|
|
100
|
%
|
(1)
|
Goals are specific to the MedSurg and Neurotechnology Group that reported to Mr. Scannell, except the goals related to adjusted operating income - consolidated and adjusted diluted net earnings per share, which are total Company goals.
|
(2)
|
Qualitative assessment of his contributions to the execution of the Company's cost transformation initiative and deployment of the enterprise resource planning platform and driving success in the integration of recent acquisitions.
|
|
2018 Threshold
|
|
2018 Target
|
||||||||
|
Threshold
|
Threshold as Percentage Change Over 2017 Actual
|
Potential Payment as Percentage of Total Target Bonus
|
|
Target
|
Target as Percentage Change Over 2017 Actual
|
Potential Payment as Percentage of Total Target Bonus
|
||||
Core Bonus Potential
(1)
:
|
|
|
|
|
|
|
|
||||
Adjusted operating income - group
|
$1.531 bil.
|
(3.8
|
)%
|
5
|
%
|
|
$1.701 bil.
|
6.9
|
%
|
10
|
%
|
Adjusted operating income - consolidated
|
$3.124 bil.
|
(0.2
|
)%
|
5
|
%
|
|
$3.471 bil.
|
10.9
|
%
|
10
|
%
|
Adjusted operating income margin - group
|
36.16%
|
0.5
|
%
|
10
|
%
|
|
36.36%
|
1.1
|
%
|
20
|
%
|
Constant currency sales - group
|
$4.352 bil.
|
(1.6
|
)%
|
20
|
%
|
|
$4.679 bil.
|
5.8
|
%
|
40
|
%
|
Functional goal
(2)
|
—
|
—
|
|
0
|
%
|
|
—
|
—
|
|
20
|
%
|
|
|
|
|
40
|
%
|
|
|
|
|
100
|
%
|
Overachievement Bonus Potential
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income - group
|
$1.701 bil.
|
6.9
|
%
|
0
|
%
|
|
$1.837 bil.
|
15.4
|
%
|
25
|
%
|
Adjusted operating income - consolidated
|
$3.471 bil.
|
10.9
|
%
|
0
|
%
|
|
$3.645 bil.
|
16.4
|
%
|
25
|
%
|
Constant currency sales - group
|
$4.679 bil.
|
5.8
|
%
|
0
|
%
|
|
$4.913 bil.
|
11.1
|
%
|
25
|
%
|
Adjusted diluted net earnings per share
|
$7.11
|
9.6
|
%
|
0
|
%
|
|
$7.54
|
16.2
|
%
|
25
|
%
|
|
|
|
|
0
|
%
|
|
|
|
100
|
%
|
(1)
|
Goals are specific to the Orthopaedics Group that reported to Mr. Floyd, except the goals related to adjusted operating income - consolidated and adjusted diluted net earnings per share, which are total Company goals.
|
(2)
|
Qualitative assessment of his contributions to the execution of the Company's cost transformation initiative and deployment of the enterprise resource planning platform and achieving key milestones related to the Company's Spine business.
|
•
|
Aligning the personal and financial interests of management and other employees with shareholder interests;
|
•
|
Balancing near-term considerations with a focus on improving the business and creating shareholder value over the long-term; and
|
•
|
Providing a means to attract, reward and retain a skilled management team.
|
Abbott Laboratories
|
Johnson & Johnson (Medical & Diagnostics)
|
Smith & Nephew plc
|
Baxter International Inc.
|
Laboratory Corporation of America Holdings
|
Thermo Fisher Scientific Inc.
|
Becton, Dickinson and Company
|
Medtronic plc
|
3M Company (Healthcare Segment)
|
Boston Scientific Corporation
|
Quest Diagnostics Inc.
|
Zimmer Biomet Holdings, Inc.
|
Fresenius Medical Care AG& Co. KGaA
|
Royal Philips (Healthcare Segment)
|
|
General Electric (Healthcare Segment)
|
Siemens Aktiengesellschaft (Healthcare)
|
|
Average Adjusted Diluted Net Earnings Per Share Growth
|
Below Minimum
|
Minimum
|
Target
|
Maximum
|
Actual
|
Goal
|
< 6.0%
|
6.0%
|
9.0%
|
12.0%
|
12.6%
|
Earned 2016 PSUs, as % of Target
|
0
|
50
|
100
|
200
|
200
|
Weighted-Average (50%) Earned 2016 PSUs, as % of Target
|
|
|
|
|
100
|
|
|
|
|
|
|
Relative Average Sales Growth
|
Percentile Ranking
|
Actual
|
|||
Goal
|
Below 33rd
|
33rd
|
50th
|
75th and Above
|
100th
|
Earned 2016 PSUs as % of Target
|
0
|
50
|
100
|
200
|
200
|
Weighted-Average (50%) Earned 2016 PSUs, as % of Target
|
|
|
|
|
100
|
|
|
|
|
|
|
Total 2016 PSUs earned, as % of Target
(1)
|
|
|
|
|
200
|
Impact of Decisions Regarding One Compensation Element on Decisions Regarding Other Compensation Elements
|
Equity Plans and Equity-Based Compensation Award Granting Policy
|
•
|
The annual grant of stock awards for employees will generally be made on the date of the February meeting of the Board. Beginning in 2018, the annual grant of stock awards for non-employee directors will generally be made on the date of the Board meeting that coincides with our annual meeting of shareholders. Any change in the annual grant date for employees or non-employee directors must be made with the prior approval of the Board.
|
•
|
Off-cycle awards may be granted by the Chief Executive Officer, pursuant to delegated authority from the Compensation Committee, on the first business day of May, August or November following the date of hire or the determination that an award is warranted in other circumstances. Off-cycle awards are reported to the Compensation Committee and the Board at their next regular meetings.
|
Executive and Non-Employee Director Stock Ownership Guidelines
|
Position
|
Market Value of Stock Owned
|
Expected Time Period to Comply
|
Non-Employee Directors
|
$500,000
|
5 years
|
Chief Executive Officer
|
5 times salary
|
5 years
|
Other NEOs
|
3 times salary
|
5 years
|
Recoupment Policy
|
Employment Agreements and Severance Policy
|
Company Tax and Accounting Issues
|
2019 Compensation Decisions
|
Name
|
Annualized Base Salary ($)
|
Target Bonus ($)
(1)
|
Number of Stock Options (#)
(2)
|
Number of Performance
Stock Units at Target (#) (3) |
Kevin A. Lobo
|
1,236,000
|
1,854,000
|
146,360
|
29,272
|
Glenn S. Boehnlein
|
660,000
|
594,000
|
37,635
|
7,528
|
Timothy J. Scannell
(4)
|
775,000
|
775,000
|
69,695
|
13,940
|
Viju S. Menon
|
515,000
|
437,750
|
24,395
|
4,878
|
Michael D. Hutchinson
|
545,000
|
408,750
|
19,515
|
3,902
|
(1)
|
Each NEO bonus plan for 2019 includes an opportunity to earn an overachievement bonus of up to an additional 100% of target bonus based on sales on a constant currency basis and adjusted earnings metrics.
|
(2)
|
Stock options to purchase shares of the Company's Common Stock were granted at an exercise price of $179.35 per share (the closing price as reported for NYSE Composite Transactions on February 5, 2019, the last trading day before the grant date).
|
(3)
|
Key design features for the 2019 performance stock units include the following:
|
•
|
In order to earn any shares, a pre-established threshold level of three-year average adjusted diluted net earnings per share growth must be achieved, with the actual number of shares earned based on actual average adjusted diluted net earnings per share growth and sales growth relative to a comparison group of companies over the three-year performance period;
|
•
|
Payout range of 0% to 200% of the target award; and
|
•
|
Settled in Common Stock in early 2022 following the completion of the three-year performance period.
|
(4)
|
In connection with Mr. Scannell's 2018 promotion, Mr. Lobo recommended that the Compensation Committee approve an award to Mr. Scannell of stock options and performance stock units having a grant date fair value of approximately $5,000,000 (comprised of 50% stock options and 50% performance stock units), in each case, in accordance with the structure and terms of the annual awards granted to other senior executives on the regular annual stock award grant date in February 2019. These awards are reflected in the table above.
|
Submitted by:
|
|
Roch Doliveux, DVM, Chair
|
Srikant M. Datar, Ph.D.
|
Louise L. Francesconi
|
Sherilyn S. McCoy
|
|
Members of the Compensation Committee
|
Summary Compensation Table
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock Awards ($)
|
Option Awards ($)
|
Non-Equity Incentive Plan Compensation ($)
|
All Other Compensation ($)
|
Total ($)
|
|
Kevin A. Lobo
|
2018
|
1,194,833
|
—
|
|
4,984,747
|
4,608,048
|
2,709,720
|
413,717
|
13,911,065
|
Chairman and CEO
|
2017
|
1,163,333
|
—
|
|
6,176,092
|
4,342,112
|
1,891,746
|
431,803
|
14,005,086
|
|
2016
|
1,129,167
|
—
|
|
5,387,926
|
3,667,315
|
2,276,723
|
336,268
|
12,797,399
|
Glenn S. Boehnlein
(1)
|
2018
|
595,000
|
—
|
|
1,196,475
|
1,105,914
|
767,754
|
123,430
|
3,788,573
|
Vice President, CFO
|
2017
|
577,628
|
—
|
|
999,110
|
914,182
|
527,090
|
123,192
|
3,141,202
|
|
2016
|
517,333
|
—
|
|
964,323
|
870,955
|
542,299
|
91,390
|
2,986,300
|
Timothy J. Scannell
(2)
|
2018
|
691,250
|
—
|
|
3,380,331
|
1,428,526
|
985,980
|
146,091
|
6,632,178
|
President and COO
|
2017
|
631,667
|
—
|
|
1,910,856
|
1,325,524
|
636,851
|
154,164
|
4,659,062
|
|
2016
|
610,333
|
—
|
|
1,914,393
|
1,329,381
|
769,827
|
146,195
|
4,770,129
|
Viju S. Menon
(3)
|
2018
|
344,697
|
130,000
|
|
1,688,549
|
1,691,550
|
443,474
|
95,916
|
4,394,186
|
Group President, GQO
|
|
|
|
|
|
|
|
|
|
Michael D. Hutchinson
|
2018
|
520,833
|
—
|
|
598,084
|
553,028
|
592,751
|
73,538
|
2,338,234
|
Vice President,
|
|
|
|
|
|
|
|
|
|
Chief Legal Officer
|
|
|
|
|
|
|
|
|
|
David K. Floyd
(4)
|
2018
|
636,667
|
—
|
|
1,395,631
|
1,290,305
|
692,621
|
173,954
|
4,189,178
|
Group President and
|
2017
|
613,333
|
—
|
|
1,700,943
|
1,234,140
|
606,419
|
133,532
|
4,288,367
|
Advisor to the CEO
|
2016
|
575,000
|
—
|
|
1,600,717
|
1,146,064
|
600,595
|
127,201
|
4,049,577
|
Lonny J. Carpenter
(5)
|
2018
|
540,833
|
—
|
|
1,196,475
|
1,105,914
|
688,112
|
116,039
|
3,647,373
|
Group President and
|
2017
|
516,667
|
—
|
|
1,445,912
|
1,051,259
|
510,908
|
108,979
|
3,633,725
|
Advisor to the CEO
|
2016
|
497,500
|
—
|
|
1,331,468
|
962,658
|
573,121
|
93,945
|
3,458,692
|
(1)
|
Mr. Boehnlein became Vice President, Chief Financial Officer effective April 1, 2016. The Salary and Non-Equity Incentive Plan Compensation values for 2016 consist of nine months for Mr. Boehnlein's current role of Vice President, Chief Financial Officer and three months for his prior role of Vice President, Chief Financial Officer for the MedSurg and Neurotechnology group.
|
(2)
|
Mr. Scannell was promoted to President and Chief Operating Officer effective August 1, 2018. Prior to his promotion, Mr. Scannell served as Group President, MedSurg and Neurotechnology.
|
(3)
|
Mr. Menon joined the Company as Group President, Global Quality and Operations on April 23, 2018.
|
(4)
|
Mr. Floyd retired from his role as Group President, Orthopaedics effective August 1, 2018 and will continue to be employed as Group President and Advisor to the Chief Executive Officer from August 1, 2018 through June 30, 2019.
|
(5)
|
Mr. Carpenter retired from his role as Group President, Global Quality and Business Operations effective April 30, 2018 and will continue to be employed as Group President and Advisor to the Chief Executive Officer from April 30, 2018 through March 31, 2019.
|
•
|
401(k) Plan matching contributions and discretionary contributions made in March 2019 pertaining to the 2018 Plan year, in the amount of $28,500 for each NEO.
|
•
|
Supplemental Plan matching contributions and discretionary contributions made in March 2019 pertaining to the 2018 Plan year, in the amounts of $311,024, $94,930, $117,591, $23,717, $45,038, $108,239 and $76,674 for Mr. Lobo, Mr. Boehnlein, Mr. Scannell, Mr. Menon, Mr. Hutchinson, Mr. Floyd and Mr. Carpenter, respectively.
|
•
|
In accordance with SEC disclosure requirements, perquisites and personal benefits received by any NEO must be identified by type if the total value was $10,000 or more. Mr. Lobo, Mr. Menon, Mr. Floyd and Mr. Carpenter each had perquisites and personal benefits that exceeded $10,000 in 2018.
|
•
|
These benefits for Mr. Lobo include costs associated with an executive physical examination; a gift, similar to all other attendees, received in connection with his attendance at an internal sales force meeting; and the aggregate incremental cost of $72,877 for personal use of our corporate aircraft. Mr. Lobo was accompanied by family members on certain flights. The incremental cost is based on the average variable operating cost, which includes the cost of fuel, aircraft maintenance, engine reserves, crew travel, landing fees, ramp fees and other miscellaneous variable costs. Because the Company’s corporate aircraft is used primarily for business travel, we excluded from this calculation pilot salaries, insurance, depreciation and other fixed costs that do not change based on usage. The benefit to Mr. Lobo associated with personal use of Company aircraft was imputed as income for tax purposes at Standard Industry Fare Level rates and he paid the associated taxes.
|
•
|
These benefits for Mr. Menon include costs associated with an executive physical examination and relocation assistance in 2018. The relocation process for Mr. Menon was not completed in 2018 and is continuing in 2019. The relocation benefits provided to Mr. Menon in 2018 were considered personal income and Mr. Menon received a tax gross-up payment of $17,099 in 2018 to offset the income taxes on these relocation benefits.
|
•
|
These benefits for Mr. Floyd include costs associated with an executive physical examination, a personal benefit attributed to certain meeting expenses associated with attending and presenting at an Orthopaedics sales force meeting in 2018 and costs associated with his spouse's attendance at that meeting and gifts received in connection with his announced retirement from the Company.
|
•
|
These benefits for Mr. Carpenter include costs associated with an executive physical examination and a gift received in connection with his announced retirement from the Company.
|
Name
|
Salary
|
Bonus Plan
Payment |
Performance Stock Units Grant Date Value
(1)
|
Restricted Stock Units Grant Date
Value (%) (1) |
Stock Option Grant Date Value using Black-Scholes
(1)
|
|||||
Kevin A. Lobo
|
9
|
%
|
20
|
%
|
37
|
%
|
—
|
|
34
|
%
|
Glenn S. Boehnlein
|
16
|
%
|
21
|
%
|
33
|
%
|
—
|
|
30
|
%
|
Timothy J. Scannell
(2)
|
11
|
%
|
15
|
%
|
24
|
%
|
28
|
%
|
22
|
%
|
Viju S. Menon
(3)
|
8
|
%
|
11
|
%
|
—
|
|
40
|
%
|
41
|
%
|
Michael D. Hutchinson
|
23
|
%
|
26
|
%
|
26
|
%
|
—
|
|
25
|
%
|
David K. Floyd
|
16
|
%
|
17
|
%
|
35
|
%
|
—
|
|
32
|
%
|
Lonny J. Carpenter
|
15
|
%
|
20
|
%
|
34
|
%
|
—
|
|
31
|
%
|
(1)
|
Uses aggregate grant date fair value in accordance with the
Compensation
—
Stock Compensation
Topic of the FASB Codification for 2018 awards of performance stock units, restricted stock units and stock option grants. See "Grant Date Fair Value of Stock and Option Awards" beginning on page 29.
|
(2)
|
Amounts reflected here include an award of restricted stock units granted to Mr. Scannell in connection with his promotion to President and COO.
|
(3)
|
Amounts reflected here include an award of restricted stock units granted to Mr. Menon in connection with his commencement of employment, but do not include the one-time cash signing bonus provided to Mr. Menon in connection with his commencement of employment.
|
2018 Grants of Plan-Based Awards
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts
Under Equity Incentive Plan Awards |
All Other Stock Awards: Number of Shares of Stock or Units (#)
|
All Other Option Awards: Number of Securities Underlying Options (#)
|
Exercise or Base Price of Option Awards ($/sh)
|
Closing Market Price on Grant Date
($/sh) |
Grant Date Fair Value of Stock and Option Awards ($)
|
||||||||||||||
Name
|
Grant Date
|
Threshold ($)
|
Target
($) |
Maximum ($)
|
Threshold (#)
|
Target (#)
|
Maximum (#)
|
|||||||||||||||
K. Lobo
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Annual Bonus
|
—
|
|
720,000
|
|
1,800,000
|
|
3,600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
PSUs
|
2/7/2018
|
|
|
|
|
|
|
|
16,219
|
|
32,438
|
|
64,876
|
|
|
|
|
|
|
|
4,984,747
|
|
Stock Options
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162,190
|
|
154.14
|
153.67
|
4,608,048
|
|
G. Boehnlein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Bonus
|
—
|
|
204,000
|
|
510,000
|
|
1,020,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
PSUs
|
2/7/2018
|
|
|
|
|
|
|
|
3,893
|
|
7,786
|
|
15,572
|
|
|
|
|
|
|
|
1,196,475
|
|
Stock Options
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,925
|
|
154.14
|
153.67
|
1,105,914
|
|
T. Scannell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Bonus
|
—
|
|
255,102
|
|
637,756
|
|
1,275,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
PSUs
|
2/7/2018
|
|
|
|
|
|
|
|
5,028
|
|
10,056
|
|
20,112
|
|
|
|
|
|
|
|
1,545,306
|
|
RSUs
|
7/9/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,977
|
|
|
|
|
|
1,835,025
|
|
Stock Options
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,280
|
|
154.14
|
153.67
|
1,428,526
|
|
V. Menon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Bonus
|
—
|
|
117,836
|
|
294,589
|
|
589,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
RSUs
|
5/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,329
|
|
|
|
|
|
1,688,549
|
|
Stock Options
|
5/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,645
|
|
169.42
|
168.94
|
1,691,550
|
|
M. Hutchinson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Bonus
|
—
|
|
157,500
|
|
393,750
|
|
787,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
PSUs
|
2/7/2018
|
|
|
|
|
|
|
|
1,946
|
|
3,892
|
|
7,784
|
|
|
|
|
|
|
|
598,084
|
|
Stock Options
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,465
|
|
154.14
|
153.67
|
553,028
|
|
D. Floyd
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Bonus
|
—
|
|
217,600
|
|
544,000
|
|
1,088,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
PSUs
|
2/7/2018
|
|
|
|
|
|
|
|
4,541
|
|
9,082
|
|
18,164
|
|
|
|
|
|
|
|
1,395,631
|
|
Stock Options
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,415
|
|
154.14
|
153.67
|
1,290,305
|
|
L. Carpenter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Bonus
|
—
|
|
185,300
|
|
463,250
|
|
926,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
PSUs
|
2/7/2018
|
|
|
|
|
|
|
|
3,893
|
|
7,786
|
|
15,572
|
|
|
|
|
|
|
|
1,196,475
|
|
Stock Options
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,925
|
|
154.14
|
153.67
|
1,105,914
|
|
(1)
|
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Expected stock price volatility is based on historical volatility of the Company's stock. The expected option life, representing the period of time that options are expected to be outstanding, is based on historical option exercise and employee termination data.
|
Outstanding Equity Awards at 2018 Fiscal Year-End
|
|
|
Option Awards
(1)
|
|
Stock Awards
|
||||||||||||||
Name
|
Grant
Date
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
Option
Exercise
Price
($/sh)
|
Option
Expiration
Date
|
|
Number of Shares or Units of Stock That Have Not Vested (#)
(2)
|
Market Value of Shares or Units of Stock That Have Not Vested ($)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
(3)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units
or Other Rights That Have Not Vested ($)
|
||||||||
Kevin A. Lobo
|
4-26-11
|
25,855
|
|
—
|
|
58.02
|
|
4-25-21
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-21-12
|
27,985
|
|
—
|
|
53.60
|
|
2-20-22
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
10-01-12
|
107,795
|
|
—
|
|
55.66
|
|
9-30-22
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-13-13
|
187,470
|
|
—
|
|
64.01
|
|
2-12-23
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-12-14
|
128,172
|
|
32,043
|
|
81.14
|
|
2-11-24
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-11-15
|
94,134
|
|
62,756
|
|
93.06
|
|
2-10-25
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-10-16
|
82,782
|
|
124,173
|
|
96.64
|
|
2-09-26
|
|
|
82,780
|
|
12,975,765
|
|
—
|
|
—
|
|
|
2-08-17
|
38,772
|
|
155,088
|
|
122.51
|
|
2-07-27
|
|
|
—
|
|
—
|
|
77,544
|
|
12,155,022
|
|
|
2-07-18
|
—
|
|
162,190
|
|
154.14
|
|
2-06-28
|
|
|
—
|
|
—
|
|
64,876
|
|
10,169,313
|
|
Glenn S. Boehnlein
|
2-13-13
|
14,515
|
|
—
|
|
64.01
|
|
2-12-23
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-12-14
|
9,564
|
|
2,391
|
|
81.14
|
|
2-11-24
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-11-15
|
6,513
|
|
4,342
|
|
93.06
|
|
2-10-25
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-10-16
|
19,660
|
|
29,490
|
|
96.64
|
|
2-09-26
|
|
|
19,660
|
|
3,081,705
|
|
—
|
|
—
|
|
|
2-08-17
|
8,163
|
|
32,652
|
|
122.51
|
|
2-07-27
|
|
|
—
|
|
—
|
|
16,324
|
|
2,558,787
|
|
|
2-07-18
|
—
|
|
38,925
|
|
154.14
|
|
2-06-28
|
|
|
—
|
|
—
|
|
15,572
|
|
2,440,911
|
|
Timothy J. Scannell
|
2-23-10
|
58,102
|
|
—
|
|
53.09
|
|
2-22-20
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-09-11
|
34,555
|
|
—
|
|
59.70
|
|
2-08-21
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-21-12
|
36,100
|
|
—
|
|
53.60
|
|
2-20-22
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-13-13
|
62,490
|
|
—
|
|
64.01
|
|
2-12-23
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-12-14
|
41,408
|
|
10,352
|
|
81.14
|
|
2-11-24
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-11-15
|
34,173
|
|
22,782
|
|
93.06
|
|
2-10-25
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-10-16
|
30,008
|
|
45,012
|
|
96.64
|
|
2-09-26
|
|
|
30,008
|
|
4,703,754
|
|
—
|
|
—
|
|
|
2-08-17
|
11,836
|
|
47,344
|
|
122.51
|
|
2-07-27
|
|
|
—
|
|
—
|
|
23,672
|
|
3,710,586
|
|
|
2-07-18
|
—
|
|
50,280
|
|
154.14
|
|
2-06-28
|
|
|
—
|
|
—
|
|
20,112
|
|
3,152,556
|
|
|
7-09-18
|
—
|
|
—
|
|
—
|
|
—
|
|
|
10,977
|
|
1,720,645
|
|
—
|
|
—
|
|
Viju S. Menon
|
5-01-18
|
—
|
|
51,645
|
|
169.42
|
|
4-30-28
|
|
|
10,329
|
|
1,619,071
|
|
—
|
|
—
|
|
Michael D. Hutchinson
|
2-10-09
|
5,000
|
|
—
|
|
42.00
|
|
2-09-19
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-23-10
|
5,190
|
|
—
|
|
53.09
|
|
2-22-20
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-09-11
|
5,805
|
|
—
|
|
59.70
|
|
2-08-21
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-21-12
|
6,530
|
|
—
|
|
53.60
|
|
2-20-22
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-13-13
|
9,770
|
|
—
|
|
64.01
|
|
2-12-23
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-12-14
|
9,860
|
|
2,465
|
|
81.14
|
|
2-11-24
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-11-15
|
8,382
|
|
5,588
|
|
93.06
|
|
2-10-25
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-10-16
|
7,760
|
|
11,640
|
|
96.64
|
|
2-09-26
|
|
|
7,760
|
|
1,216,380
|
|
—
|
|
—
|
|
|
2-08-17
|
4,081
|
|
16,324
|
|
122.51
|
|
2-07-27
|
|
|
—
|
|
—
|
|
8,164
|
|
1,279,707
|
|
|
2-07-18
|
—
|
|
19,465
|
|
154.14
|
|
2-06-28
|
|
|
—
|
|
—
|
|
7,784
|
|
1,220,142
|
|
David K. Floyd
|
2-12-14
|
—
|
|
7,888
|
|
81.14
|
|
2-11-24
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-11-15
|
—
|
|
16,764
|
|
93.06
|
|
2-10-25
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-10-16
|
—
|
|
38,805
|
|
96.64
|
|
2-09-26
|
|
|
25,868
|
|
4,054,809
|
|
—
|
|
—
|
|
|
2-08-17
|
—
|
|
44,080
|
|
122.51
|
|
2-07-27
|
|
|
—
|
|
—
|
|
22,040
|
|
3,454,770
|
|
|
2-07-18
|
—
|
|
45,415
|
|
154.14
|
|
2-06-28
|
|
|
—
|
|
—
|
|
18,164
|
|
2,847,207
|
|
Lonny J. Carpenter
|
2-12-14
|
—
|
|
6,655
|
|
81.14
|
|
2-11-24
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-11-15
|
—
|
|
15,474
|
|
93.06
|
|
2-10-25
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2-10-16
|
—
|
|
32,595
|
|
96.64
|
|
2-09-26
|
|
|
21,732
|
|
3,406,491
|
|
—
|
|
—
|
|
|
2-08-17
|
—
|
|
37,548
|
|
122.51
|
|
2-07-27
|
|
|
—
|
|
—
|
|
18,772
|
|
2,942,511
|
|
|
2-07-18
|
—
|
|
38,925
|
|
154.14
|
|
2-06-28
|
|
|
—
|
|
—
|
|
15,572
|
|
2,440,911
|
|
(1)
|
All stock option awards vest as to 20% of the shares on each of the first five anniversary dates of the date of grant.
|
(2)
|
The following table presents information related to the vesting schedules of restricted stock units ("RSUs") and the 2016 PSUs for which the three-year performance period had concluded as of December 31, 2018 for each of the NEOs:
|
Name
|
Grant Date
|
Award Type
|
Vesting Schedule
|
Kevin A. Lobo
|
2-10-16
|
PSUs
|
100% on 3-21-19
|
Glenn S. Boehnlein
|
2-10-16
|
PSUs
|
100% on 3-21-19
|
Timothy J. Scannell
|
2-10-16
|
PSUs
|
100% on 3-21-19
|
|
7-9-18
|
RSUs
|
One-third on each of the first three anniversaries of the grant date
|
Viju S. Menon
|
5-1-18
|
RSUs
|
One-third on each of the first three anniversaries of the grant date
|
Michael D. Hutchinson
|
2-10-16
|
PSUs
|
100% on 3-21-19
|
David K. Floyd
|
2-10-16
|
PSUs
|
100% on 3-21-19
|
Lonny J. Carpenter
|
2-10-16
|
PSUs
|
100% on 3-21-19
|
(3)
|
The performance stock units awarded in 2017 and 2018 will be earned based on the achievement of pre-established goals covering the performance periods of 2017-2019 and 2018-2020, respectively. The numbers shown represent the maximum number of units that can be earned, excluding dividend equivalents that cannot be calculated until the date of vesting. If earned, the 2017 PSUs vest on March 21, 2020 and the 2018 PSUs vest on March 21, 2021.
|
2018 Option Exercises and Stock Vested
|
|
Option Awards
|
|
Stock Awards
|
||||||
Name
|
Number of Shares
Acquired on
Exercise (#)
|
Value Realized
on Exercise ($)
(1)
|
|
Number of Shares
Acquired on
Vesting (#)
|
Value Realized
on Vesting ($)
(2)
|
||||
Kevin A. Lobo
|
—
|
|
—
|
|
|
80,669
|
|
13,432,195
|
|
Glenn S. Boehnlein
|
35,529
|
|
4,285,930
|
|
|
904
|
|
150,525
|
|
Timothy J. Scannell
|
10,568
|
|
1,199,151
|
|
|
30,639
|
|
5,105,643
|
|
Viju S. Menon
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Michael D. Hutchinson
|
—
|
|
—
|
|
|
7,182
|
|
1,195,875
|
|
David K. Floyd
|
55,119
|
|
4,290,735
|
|
|
22,273
|
|
3,710,781
|
|
Lonny J. Carpenter
|
173,213
|
|
13,039,329
|
|
|
21,247
|
|
3,541,781
|
|
(1)
|
Represents the difference between the market price of the underlying shares at exercise and the exercise price of the option established at the time of grant.
|
(2)
|
Represents the market price of the underlying shares on the date of vesting.
|
2018 Pension Benefits
|
2018 Nonqualified Deferred Compensation
|
Name
|
Executive Contributions
in Last FY ($) (1) |
Registrant Contributions
in Last FY ($) (2) |
Aggregate Earnings
in Last FY ($) |
Aggregate Withdrawals/
Distributions ($) |
Aggregate
Balance at Last FYE ($) (3) |
||
Kevin A. Lobo
|
222,426
|
|
311,024
|
(242,597)
|
—
|
|
3,124,142
|
Glenn S. Boehnlein
|
87,709
|
|
94,930
|
(82,020)
|
—
|
|
1,769,599
|
Timothy J. Scannell
|
108,310
|
|
117,591
|
(212,247)
|
—
|
|
3,349,997
|
Viju S. Menon
|
168,578
|
|
23,717
|
(13,679)
|
—
|
|
178,616
|
Michael D. Hutchinson
|
—
|
|
45,038
|
2,417
|
—
|
|
176,687
|
David K. Floyd
|
74,313
|
|
108,239
|
(43,146)
|
—
|
|
712,933
|
Lonny J. Carpenter
|
38,605
|
|
76,674
|
(26,655)
|
—
|
|
1,113,345
|
(1)
|
These amounts were reported as compensation in 2018 in the "Salary" column and in 2017 in the "Non-Equity Incentive Plan Compensation" column of the "Summary Compensation Table" on page 27, other than for Mr. Menon and Mr. Hutchinson whose compensation prior to 2018 is not required to be disclosed.
|
(2)
|
These amounts, contributed in March 2019 but earned for 2018, are included in the "All Other Compensation" column of the "Summary Compensation Table" on page 27 (along with 401(k) Plan matching contributions and discretionary contributions in the amount of $28,500 for each NEO).
|
(3)
|
Aggregate balance consists of employee and Company contributions and investment earnings. The 2018 year-end balance includes registrant contributions made in March 2019 that were earned in 2018. The following aggregate contribution amounts, comprised of executive contributions and registrant contributions, for 2017 and 2016 are included in the reported aggregate balance and were previously reported in the "Summary Compensation Table" as Salary, Non-Equity Incentive Plan Compensation or All Other Compensation for the NEOs other than Mr. Menon and Mr. Hutchinson, whose compensation prior to 2018 is not required to be disclosed:
|
Name
|
Aggregate Contributions in 2017 ($)
|
Aggregate Contributions in 2016 ($)
|
|
Kevin A. Lobo
|
601,711
|
529,276
|
|
Glenn S. Boehnlein
|
183,285
|
122,922
|
|
Timothy J. Scannell
|
242,413
|
227,550
|
|
David K. Floyd
|
178,746
|
102,835
|
|
Lonny J. Carpenter
|
122,466
|
98,762
|
|
Potential Payments upon Termination
|
Reason for Employment Termination
|
Vested Options Exercisable
|
Unvested Options or Units
|
Death or Disability
|
For one year from termination
|
Options and restricted stock units are 100% vested and options remain exercisable for one year. Performance stock units have prorated vesting through the termination date and are earned based on performance covering the entire three-year performance period.
|
Retirement
(1)
|
Until original expiration date
|
Options continue to vest according to the original vesting schedule and are exercisable until the original expiration date. Restricted stock units vest according to the original vesting schedule. Performance stock units have prorated vesting through the date of retirement and are earned based on performance covering the entire three-year performance period.
|
Other Reasons
|
For 30 days from termination
|
Forfeited.
(2)
|
(1)
|
Retirement is defined for purposes of our stock plans as termination at or after age 65, or age 60 if the individual has been employed by us for at least 10 years. As of December 31, 2018, none of the NEOs met the age and service requirements for retirement as defined in the stock plans. Stock awards granted prior to 2018 had the following retirement treatment for unvested awards:
|
(2)
|
The estimated value of unvested options, restricted stock units and performance stock units that would have been forfeited by each NEO if his employment had terminated as of December 31, 2018 is the same as the values shown in the table in the following section "Potential Payments Upon Certain Corporate Transactions."
|
|
|
|
|
Restricted Stock Units
|
|
Performance Stock Units
|
||||||||
Name
|
Number of Shares Underlying Unvested
Options (#)
|
Unrealized Value of Unvested Options ($)
(1)
|
|
Number of Shares Underlying Unvested
Units (#)
|
Unrealized Value of Unvested
Units ($)
|
|
Number of Shares Underlying Unvested
Units (#)
|
Unrealized
Value of
Unvested
Units ($)
|
||||||
Kevin A. Lobo
|
536,250
|
|
19,617,269
|
|
|
—
|
|
—
|
|
|
225,200
|
|
35,300,100
|
|
Glenn S. Boehnlein
|
107,800
|
|
3,449,568
|
|
|
—
|
|
—
|
|
|
51,556
|
|
8,081,403
|
|
Timothy J. Scannell
|
175,770
|
|
6,691,661
|
|
|
10,977
|
|
1,720,645
|
|
|
73,792
|
|
11,566,896
|
|
Viju S. Menon
|
51,645
|
|
—
|
|
|
10,329
|
|
1,619,071
|
|
|
—
|
|
—
|
|
Michael D. Hutchinson
|
55,482
|
|
1,851,696
|
|
|
—
|
|
—
|
|
|
23,708
|
|
3,716,229
|
|
David K. Floyd
|
152,952
|
|
5,624,512
|
|
|
—
|
|
—
|
|
|
66,072
|
|
10,356,786
|
|
Lonny J. Carpenter
|
131,197
|
|
4,835,247
|
|
|
—
|
|
—
|
|
|
56,076
|
|
8,789,913
|
|
(1)
|
Represents the difference between the closing price of our Common Stock of $156.75 on December 31, 2018 and the exercise price of the option established at the time of grant.
|
Ratio of 2018 Compensation of the Chief Executive Officer to that of the Median Employee
|
•
|
The 2018 annual total compensation of our Chief Executive Officer was $13,911,065.
|
•
|
The 2018 annual total compensation of our identified median employee was $68,841.
|
•
|
The ratio of the annual total compensation of our Chief Executive Officer to that of our identified median employee was estimated to be 202 to 1.
|
Item
|
Description
|
Determination date
|
Our global employee population as of October 1, 2017 was used to identify the median employee
|
Employee population
|
The total employee population (excluding the CEO) as of October 1, 2017 was approximately 32,700. When determining the median employee, we excluded approximately 300 employees related to the acquisition of NOVADAQ Technologies Inc. in September 2017. As a result, the employee population used to determine the median employee was approximately 32,400
|
Consistently applied compensation measure
|
Actual cash compensation, measured over the twelve month period of October 2016 to September 2017. Values were converted into United States Dollars using the exchange rates in effect on September 30, 2017
|
•
|
Consistent with prior years, Mr. Lobo received no additional compensation for his service as a director.
|
•
|
Directors who were not employees earned a fixed annual fee of $115,000 in 2018. Previously, there was an annual fee of $60,000 for Board service and an annual fee of $55,000 for Committee service.
|
•
|
Mr. Golston earned an additional $35,000 (increased from $25,000 in 2017) for serving as the Lead Independent Director.
|
•
|
The Audit Committee chair earned an additional $20,000 (consistent with 2017) and all other Committee chairs earned an additional $15,000 (increased from $10,000 in 2017).
|
•
|
On May 2, 2018, each non-employee director was awarded 1,048 restricted stock units, other than Mr. Cox, who did not stand for re-election. Previously, non-employee directors received both stock options and restricted stock unit awards. Beginning in 2018, all of the annual stock award value is granted in the form of restricted stock units, with one-year vesting and the ability for each director to voluntarily defer the settlement of the restricted stock units until his or her departure from the Board or a specified date in the future. In addition, beginning in 2018, in order to align with the annual election to the Board, the grant date of the annual stock awards to non-employee directors was revised to generally be on the date of the Board meeting that coincides with our annual meeting of shareholders rather than at the Board meeting in February of each year.
|
•
|
Stock ownership guidelines for each non-employee director equal to $500,000 with a five-year time frame for compliance. Previously, the stock ownership guideline amount was equal to $300,000.
|
Name
|
Fees Earned
or Paid in Cash ($) |
Stock Awards ($)
(1)
|
Total ($)
|
|
Mary K. Brainerd
|
115,000
|
175,121
|
|
290,121
|
Howard E. Cox, Jr.
(2)
|
38,860
|
—
|
|
38,860
|
Srikant M. Datar, Ph.D.
|
115,000
|
175,121
|
|
290,121
|
Roch Doliveux, DVM
|
130,000
|
175,121
|
|
305,121
|
Louise L. Francesconi
|
130,000
|
175,121
|
|
305,121
|
Allan C. Golston
|
150,000
|
175,121
|
|
325,121
|
Sherilyn S. McCoy
(3)
|
76,456
|
175,121
|
|
251,577
|
Andrew K. Silvernail
|
135,000
|
175,121
|
|
310,121
|
Ronda E. Stryker
|
115,000
|
175,121
|
|
290,121
|
Rajeev Suri
(3)
|
76,456
|
175,121
|
|
251,577
|
(1)
|
The Stock Awards column represents the aggregate grant date fair value of restricted stock units calculated in accordance with the
Compensation
—
Stock Compensation
Topic of the FASB Codification.
|
(2)
|
Mr. Cox served as a director until May 1, 2018 and did not stand for re-election. The fixed annual fee of $115,000 was prorated for his partial year of service.
|
(3)
|
Ms. McCoy and Mr. Suri were each elected a director on May 2, 2018. The fixed annual fee of $115,000 was prorated for their partial year of service.
|
Name
|
Stock Awards
Outstanding at
December 31, 2018 (#)
|
Option Awards
Outstanding at
December 31, 2018 (#)
|
||
Mary K. Brainerd
|
1,048
|
|
3,005
|
|
Howard E. Cox, Jr.
|
—
|
|
53,895
|
|
Srikant M. Datar, Ph.D.
|
1,048
|
|
44,850
|
|
Roch Doliveux, DVM
|
1,048
|
|
31,593
|
|
Louise L. Francesconi
|
1,048
|
|
53,895
|
|
Allan C. Golston
|
1,048
|
|
31,525
|
|
Sherilyn S. McCoy
|
1,048
|
|
—
|
|
Andrew K. Silvernail
|
1,048
|
|
16,325
|
|
Ronda E. Stryker
|
1,048
|
|
53,895
|
|
Rajeev Suri
|
1,048
|
|
—
|
|
•
|
Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2018 with Stryker's management;
|
•
|
Discussed with Ernst & Young LLP the matters required to be discussed under Public Company Accounting Oversight Board (PCAOB) Auditing Standard 1301,
Communications with Audit Committees
; and
|
•
|
Received the written disclosures and the letter from Ernst & Young LLP as required by PCAOB Ethics and Independence Rule 3526,
Communications with Audit Committees Concerning Independence
, regarding its communications with the Audit Committee concerning independence and discussed with Ernst & Young LLP its independence.
|
|
Submitted by:
|
|
|
|
Andrew K. Silvernail, Chair
|
|
Mary K. Brainerd
|
|
Allan C. Golston
|
|
Rajeev Suri
|
|
|
|
Members of the Audit Committee
|
Shareholder Proposals for the 2020 Annual Meeting
|
Section 16(a) Beneficial Ownership Reporting Compliance
|
Other Matters
|
Expenses of Solicitation
|
|
|
By Order of the Board of Directors
|
|
|
|
|
|
Dean H. Bergy
|
|
|
Vice President, Corporate Secretary
|
March 20, 2019
|
|
|
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||
|
Net Earnings ($ millions)
|
|||||||||||||||||
Reported
|
$
|
1,006
|
|
$
|
515
|
|
$
|
1,439
|
|
$
|
1,647
|
|
$
|
1,020
|
|
$
|
3,553
|
|
Acquisition and integration-related charges
|
|
|
|
|
|
|
||||||||||||
Inventory stepped-up to fair value
|
21
|
|
15
|
|
4
|
|
23
|
|
20
|
|
9
|
|
||||||
Other acquisition and integration-related charges
|
51
|
|
50
|
|
20
|
|
77
|
|
31
|
|
90
|
|
||||||
Amortization of purchased intangible assets
|
98
|
|
133
|
|
147
|
|
221
|
|
250
|
|
338
|
|
||||||
Restructuring-related and other charges
|
46
|
|
78
|
|
97
|
|
98
|
|
155
|
|
179
|
|
||||||
Medical device regulations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10
|
|
||||||
Recall-related matters
|
460
|
|
628
|
|
210
|
|
127
|
|
131
|
|
18
|
|
||||||
Regulatory and legal matters
|
63
|
|
—
|
|
(46
|
)
|
(7
|
)
|
25
|
|
141
|
|
||||||
Donations
|
15
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Tax matters
|
(46
|
)
|
391
|
|
78
|
|
8
|
|
833
|
|
(1,559
|
)
|
||||||
Adjusted
|
$
|
1,714
|
|
$
|
1,810
|
|
$
|
1,949
|
|
$
|
2,194
|
|
$
|
2,465
|
|
$
|
2,779
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net Earnings Per Diluted Share
|
|||||||||||||||||
Reported
|
$
|
2.63
|
|
$
|
1.34
|
|
$
|
3.78
|
|
$
|
4.35
|
|
$
|
2.68
|
|
$
|
9.34
|
|
Acquisition and integration-related charges
|
|
|
|
|
|
|
||||||||||||
Inventory stepped-up to fair value
|
0.06
|
|
0.04
|
|
0.01
|
|
0.06
|
|
0.05
|
|
0.02
|
|
||||||
Other acquisition and integration-related charges
|
0.13
|
|
0.13
|
|
0.05
|
|
0.20
|
|
0.09
|
|
0.24
|
|
||||||
Amortization of purchased intangible assets
|
0.26
|
|
0.35
|
|
0.39
|
|
0.59
|
|
0.67
|
|
0.89
|
|
||||||
Restructuring-related and other charges
|
0.12
|
|
0.20
|
|
0.26
|
|
0.26
|
|
0.41
|
|
0.47
|
|
||||||
Medical device regulations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.03
|
|
||||||
Recall-related matters
|
1.20
|
|
1.65
|
|
0.55
|
|
0.34
|
|
0.34
|
|
0.05
|
|
||||||
Regulatory and legal matters
|
0.17
|
|
—
|
|
(0.12
|
)
|
(0.02
|
)
|
0.06
|
|
0.37
|
|
||||||
Donations
|
0.04
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Tax matters
|
(0.12
|
)
|
1.02
|
|
0.20
|
|
0.02
|
|
2.19
|
|
(4.10
|
)
|
||||||
Adjusted
|
$
|
4.49
|
|
$
|
4.73
|
|
$
|
5.12
|
|
$
|
5.80
|
|
$
|
6.49
|
|
$
|
7.31
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||
Effective tax rate - Reported
|
17.0
|
%
|
55.6
|
%
|
17.1
|
%
|
14.3
|
%
|
50.6
|
%
|
(50.8
|
)%
|
||||||
Effective tax rate - Adjusted
|
22.7
|
%
|
22.3
|
%
|
17.3
|
%
|
17.3
|
%
|
15.6
|
%
|
16.7
|
%
|
||||||
Weighted average diluted shares outstanding (millions)
|
382.1
|
|
382.8
|
|
380.9
|
|
378.5
|
|
380.1
|
|
380.3
|
|