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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Under §240.14a-12 |
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No fee required. |
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Fee paid previously with preliminary materials. |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
NuVasive at a Glance
NuVasive, Inc. is a global medical technology company focused on developing, manufacturing, selling and providing procedural solutions for spine surgery, with a guiding purpose to transform surgery, advance care and change lives. We offer a comprehensive portfolio of procedurally integrated spine surgery solutions, including surgical access instruments, spinal implants, fixation systems, biologics, and enabling technologies, as well as systems and services for intraoperative neuromonitoring. In addition, we develop and sell magnetically adjustable implant systems for spine and specialized orthopedic procedures. Since our incorporation in 1997, we have grown from a small developer of specialty spinal implants into a leading medical technology company delivering procedurally integrated solutions for spine surgery. A key driver of our growth has been our focus on innovative products and technologies that drive reproducible outcomes for patients, surgeons and providers.
2022 Accomplishments and Achievements
Financial Results and Growth of our Core Business |
We reported global net sales of $1.202 billion in 2022, an increase of 5.5% on a reported basis, compared to the prior year. Although we continued to experience challenges associated with the COVID-19 pandemic and global macroeconomic conditions, we remained focused on executing our growth strategy, both in the near and long term. Full-year 2022 net sales growth was driven by further adoption of the Pulse platform and new products within the C360 portfolio, as well as continued strong growth in our international business. | |
New Product Launches and Technology Development |
We have continued to focus on bringing to market innovative and enabling technologies to drive increased adoption of less-invasive surgery and improve clinical, operational and financial outcomes. In 2022, we launched the P360 portfolio, a comprehensive solution for surgery from the prone position, including the NuVasive Tube System. Additionally, our goal is to use technology and data to make spine surgery more intelligent, and we made investments to expand the Pulse platform to include applications and technologies designed to improve pre-operative treatment selection and planning and post-operative workflow and analytics, as well as intra-operative surgical automation. | |
Advancing our ESG Initiatives |
We recognize the growing interest of our investors, employees, patients, surgeons and hospital customers in corporate responsibility and sustainability, including environmental, social and governance (“ESG”) matters. In February 2022, we published our inaugural ESG Report, which shares our progress on key ESG topics and provides a platform to further strengthen and integrate sustainability into our core business practices. We also established an ESG Steering Committee to ensure guidance and support of NuVasive’s corporate responsibility and sustainability initiatives. | |
Enhanced Clinical Education and Training |
We believe that our surgeon education and training program is a strategic differentiator for us, and our Clinical Professional Development team has developed comprehensive, in-person training labs and virtual content to demonstrate the benefits of our innovative products and procedures. In 2022, we announced the opening of our Singapore Experience Center for the Asia-Pacific region, supporting our growth strategy to globalize our business and providing surgeons with a dedicated demonstration site of our Pulse platform. Education and training of surgeons will continue to be a focus as we advance our less-invasive solutions integrated with enabling technology. |
Proposed Transaction with Globus Medical
On February 8, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Globus Medical, Inc. (“Globus Medical”) and Zebra Merger Sub, Inc., a wholly-owned subsidiary of Globus Medical (“Merger Sub”). The Merger Agreement provides, among other things, that subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into NuVasive (the “Merger”), with NuVasive surviving the Merger as a wholly-owned subsidiary of Globus Medical. If the Merger is completed, the business of NuVasive will continue as the business of the combined company. On April 27, 2023, NuVasive and Globus Medical announced that the stockholders of each company had approved all proposals related to the Merger at each company’s respective special meeting of stockholders held on April 27, 2023. Completion of the Merger is subject to the satisfaction of the remaining customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended . As NuVasive and Globus Medical will continue to operate as separate companies until the closing of the Merger, we intend to hold our annual meeting of stockholders on June 9, 2023, unless the closing of the Merger occurs prior to such date. For additional information related to the Merger, please refer to the Definitive Merger Proxy Statement on Schedule 14A filed by NuVasive with the U.S. Securities and Exchange Commission (the “SEC”) on March 28, 2023, and other relevant materials in connection with the proposed transaction that we may file with the SEC.
Notice of 2023
Annual Meeting of Stockholders
2023 Annual Meeting of Stockholders | ||||||
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Date: June 9, 2023 |
Time: 9:00 a.m. MT |
Place: Virtual |
Record Date: April 25, 2023 |
Items of Business
Proposal 1 | Election of Directors: To elect three “Class I” Directors to hold office until the 2026 Annual Meeting of Stockholders and until their successors are elected and qualified; | |
Proposal 2 | Ratification of Independent Auditor: To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023; | |
Proposal 3 | Annual “Say-on-Pay” Vote: To hold a non-binding advisory vote on the compensation of the Company’s named executive officers for the fiscal year ended December 31, 2022; | |
Proposal 4 | “Say-on-Pay” Frequency: To hold a non-binding advisory vote on the frequency of the stockholders’ advisory vote on the compensation of the Company’s named executive officers; and |
To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.
The Annual Meeting will be held in a virtual meeting format only. You will not be able to attend the Annual Meeting in-person. The accompanying proxy materials include instructions on how to participate in the meeting and how you may vote your shares.
Our Board of Directors recommends a vote “FOR” each of the Director nominees, “FOR” Proposals 2 and 3, and “One Year” for Proposal 4. Only stockholders of record at the close of business on April 25, 2023, the Record Date, will be entitled to notice of, and to vote at, the 2023 Annual Meeting. For ten days prior to the Annual Meeting, a complete list of the stockholders of record on April 25, 2023, will be available at our principal executive offices, located at 12101 Airport Way, Broomfield, CO 80021, for examination during ordinary business hours by any stockholder for any purpose relating to the Annual Meeting.
Your vote is important. Whether or not you plan to attend the Annual Meeting virtually via the internet, we encourage you to vote your shares. You can vote your shares via the internet, telephone or mail, and instructions regarding all three methods of voting are provided on the proxy card. If you hold shares through an account with a brokerage firm, bank or other nominee, please follow the instructions you receive from such firm, bank or other nominee to vote your shares.
By order of the Board of Directors,
J. Christopher Barry, Chief Executive Officer
May 8, 2023
Solicitation of Proxies for Annual
Meeting of Stockholders
This proxy statement (this “Proxy Statement”) and the accompanying proxy are furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of NuVasive, Inc. (the “Company” or “NuVasive”) for use at the Company’s 2023 Annual Meeting of Stockholders (the “Annual Meeting”), and any adjournments or postponements thereof, for the purposes described in the Notice of 2023 Annual Meeting of Stockholders.
The Annual Meeting will be held virtually on June 9, 2023 at 9:00 a.m. Mountain time. You will be able to attend the Annual Meeting virtually via the internet and vote and submit questions by visiting www.proxydocs.com/NUVA. The Board of Directors has delivered printed proxy materials to you, in connection with the solicitation of proxies by the Board for use at the Annual Meeting, and has also made proxy materials available on the internet at www.proxydocs.com/NUVA. The Proxy Statement for the Annual Meeting was filed with the U.S. Securities and Exchange Commission on May 8, 2023, which is also the approximate date on which the Proxy Statement and the accompanying proxy were first sent to stockholders.
This Proxy Statement only relates to the Annual Meeting. As previously disclosed, on February 8, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Globus Medical, Inc. (“Globus Medical”) and Zebra Merger Sub, Inc., a wholly-owned subsidiary of Globus Medical (“Merger Sub”). The Merger Agreement provides, among other things, that subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into NuVasive (the “Merger”), with NuVasive surviving the Merger as a wholly-owned subsidiary of Globus Medical. If the Merger is completed, the business of NuVasive will continue as the business of the combined company. On April 27, 2023, NuVasive and Globus Medical announced that the stockholders of each company had approved all proposals related to the Merger at each company’s respective special meeting of stockholders held on April 27, 2023. Completion of the Merger is subject to the satisfaction of the remaining customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. As NuVasive and Globus Medical will continue to operate as separate companies until the closing of the Merger, we intend to hold our annual meeting of stockholders on June 9, 2023, unless the closing of the Merger occurs prior to such date. For additional information related to the Merger, please refer to the Definitive Merger Proxy Statement on Schedule 14A filed by NuVasive with the U.S. Securities and Exchange Commission (the “SEC”) on March 28, 2023, and other relevant materials in connection with the proposed transaction that we may file with the SEC.
Your Vote is Important
All stockholders of record at the close of business on April 25, 2023 are invited to attend and vote their shares at the NuVasive, Inc. 2023 Annual Meeting of Stockholders to be held virtually on June 9, 2023.
Whether or not you plan to attend the Annual Meeting virtually via the internet, we encourage you to read the accompanying Proxy Statement and submit your proxy or voting instructions as soon as possible to vote your shares.
Vote by internet, telephone, mail, or at the annual meeting.
For specific instructions on how to vote your shares, please refer “How do I Vote my Shares?” in this Proxy Statement and your enclosed proxy card. This will ensure the presence of a quorum at the Annual Meeting. If you attend the Annual Meeting virtually, you may vote via the internet during the meeting if you wish to do so, even if you have previously submitted your proxy or voting instructions.
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2023 Annual Meeting of Stockholders | NuVasive, Inc. Proxy Statement |
Proxy Statement Summary
The following summary information is provided to assist you in reviewing the Proxy Statement for the Annual Meeting. It does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
2023 Annual Meeting Highlights
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Date: June 9, 2023 |
Time: 9:00 a.m. MT |
Place: Virtual |
Record Date: April 25, 2023 |
Proposals and Voting Recommendations
Proposal 1 |
Election of Directors: To elect three “Class I” Directors to hold office until the 2026 Annual Meeting of Stockholders and until their successors are elected and qualified (see page 1)
The Board recommends a vote “FOR” each Director Nominee | |
Proposal 2 |
Ratification of Independent Auditor: To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023 (see page 32)
The Board recommends a vote “FOR” Proposal 2 | |
Proposal 3 |
Annual “Say-on-Pay” Vote: To hold a non-binding advisory vote on the compensation of the Company’s named executive officers for the fiscal year ended December 31, 2022 (see page 35)
The Board recommends a vote “FOR” Proposal 3 | |
Proposal 4 |
“Say-on-Pay” Frequency: To hold a non-binding advisory vote on the frequency of the stockholders’ advisory vote on the compensation of the Company’s named executive officers (see page 73)
The Board recommends a vote for “One Year” |
Director Nominee Background/Skills
Director Name |
Member Since |
Director Background/Skills | Current Committee Service | |||||||||||||
Healthcare | Public Co. Leadership |
Finance | Global | Law | Government | |||||||||||
J. Christopher Barry |
Nov 2018 |
✓ | ✓ | ✓ | — | |||||||||||
Leslie V. Norwalk, Esq. (Independent) |
May 2014 |
✓ | ✓ | ✓ | Audit: Member Nominating: Chair | |||||||||||
Amy Belt Raimundo (Independent) |
Aug 2021 |
✓ | ✓ | ✓ | ✓ | Compensation: Member |
At the Annual Meeting, we are asking our stockholders to elect three individuals nominated for re-election to our Board as “Class I” Directors. Our Board currently consists of nine Directors and is divided into three classes. Our current Class I Directors are J. Christopher Barry, Leslie V. Norwalk, Esq., and Amy Belt Raimundo, and each of their terms as a Director will expire at the Annual Meeting. Our Board nominated Mr. Barry and Mses. Norwalk and Raimundo for re-election as Class I Directors at the Annual Meeting.
2023 Annual Meeting of Stockholders | i | NuVasive, Inc. Proxy Statement |
PROXY STATEMENT SUMMARY (CONT.)
Compensation and Governance Highlights
Our executive compensation program emphasizes pay-for-performance and is designed to motivate our executives to achieve overall Company goals, specific business goals and individual performance goals. During 2022, net sales growth was driven by further adoption of the Pulse platform and new products within the C360 portfolio, as well as continued strong growth in our international business. Overall, we reported global net sales of $1.202 billion in 2022, an increase of 5.5% on a reported basis. However, we continued to experience challenges associated with the COVID-19 pandemic and global macroeconomic conditions, including inflationary pressures, disruptions to the global supply chain, higher freight and labor costs, and weakness in economic conditions generally. Additionally, our operating results for 2022 were negatively impacted due to significant and unanticipated fluctuations in foreign currency exchange rates compared to the prior year. As a result, we did not achieve certain financial targets established for our 2022 annual bonus plan, and the 2022 annual bonus plan was funded below target.
96% of NuVasive stockholders voted in favor of |
Compensation Practices and Policies (see page 51)
✓ Clawback policy for incentive compensation,
✓ Stock Ownership Guidelines for Directors
✓ Independent compensation consultant |
✓ Compensation risk assessment
✓ Hedging transactions prohibited under |
Corporate Governance Practices and Policies (see page 18)
Our Directors exhibit an effective mix of skills, |
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Healthcare
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Public Co. |
Finance
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Innovation
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Global
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Law
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Government
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Hospital
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Composition of our Board: |
89% |
5.6 years |
59 years |
33% |
11% | ||||
of Board members |
average Director |
average Director age |
of Board members |
of Board members |
✓ Our Board structure provides for a Lead
✓ Our independent Directors meet frequently
✓ Our Board and Committees engage in |
✓ Our Chief Executive Officer does not serve as
✓ Our Board service is limited by our retirement age
✓ We have majority voting for uncontested |
2023 Annual Meeting of Stockholders | ii | NuVasive, Inc. Proxy Statement |
Proposal 1
Election of Directors
At the Annual Meeting, we are asking our stockholders to elect three individuals nominated for re-election to our Board. Our Board is divided into three classes, and our “Class I” Directors are subject to election at the Annual Meeting for a three-year term. Our current Class I Directors are J. Christopher Barry, Leslie V. Norwalk, Esq., and Amy Belt Raimundo, and each has been nominated for re-election to the Board, as discussed further below.
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Our Board recommends you vote “FOR” each of J. Christopher Barry, Leslie V. Norwalk, Esq., and Amy Belt Raimundo to serve as a Class I Director. |
Our Board, upon the recommendation of our Nominating, Corporate Governance and Compliance Committee (the “Nominating Committee”), nominated each of Mr. Barry and Mses. Norwalk and Raimundo for re-election as Class I Directors at the Annual Meeting. Information regarding Mr. Barry and Mses. Norwalk and Raimundo, including the qualifications, attributes and skills that led our Board to nominate each as a Director, can be found below under “Board Members and Nominees for Election.”
Mr. Barry and Mses. Norwalk and Raimundo have each indicated that they are willing and able to serve as Directors. If any of the Board’s nominees for Director declines to serve or becomes unavailable for any reason, or in the event of a Board vacancy, the Nominating Committee may seek out other potential Director candidates, and one or more of such candidates may be elected as a Director in accordance with the Company’s organizational documents. If Mr. Barry and Mses. Norwalk and Raimundo are elected at the Annual Meeting, each will serve as a Class I Director for a three-year term until the 2026 Annual Meeting of Stockholders, or his or her earlier resignation, death, or removal, and in each case until their respective successors are duly elected and qualified.
As each of the nominees for Director is an incumbent Director, if a nominee fails to receive “FOR” votes representing a majority of votes cast, the Director shall promptly tender his or her resignation to the Board, subject to acceptance by the Board. The Nominating Committee of the Board would then be charged with making a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board will act on the tendered resignation, taking into account the recommendation of the Nominating Committee, and publicly disclose its decision regarding the tendered resignation and the rationale behind the decision. If the Board determines not to accept the resignation of the incumbent Director, the incumbent Director will continue to serve until his or her successor is duly elected, or his or her earlier resignation, death, or removal.
As previously disclosed, on February 8, 2023, we entered into the Merger Agreement with Globus Medical. If the Merger with Globus Medical is consummated, NuVasive will become a wholly-owned subsidiary of Globus Medical and will no longer operate as a standalone publicly-traded company. Accordingly, the term of service of our Board members will cease upon the closing of the Merger. Pursuant to the Merger Agreement, Globus Medical has agreed to increase the size of the Globus Medical Board of Directors from eight to eleven directors and to appoint three additional directors proposed by the NuVasive Board. As a result, if the Merger is consummated, the composition of the Board of Directors of the combined company will be determined pursuant to the terms of the Merger Agreement rather than the composition presented in this Proxy Statement. As of the date of this Proxy Statement, the members of the NuVasive Board who will serve on the Globus Medical Board following the closing of the Merger have not yet been identified.
Vote Required and Board Recommendation
Directors are elected by a majority of the votes cast at the Annual Meeting. A majority of votes cast means that the number of shares voted “FOR” a nominee exceeds the number of votes cast “AGAINST” that nominee. Votes to “ABSTAIN” and broker non-votes are not counted as votes cast with respect to that Director and will have no direct effect on the outcome of the election of Directors.
The Board of Directors recommends that stockholders vote “FOR” the election of each of J. Christopher Barry, Leslie V. Norwalk, Esq., and Amy Belt Raimundo as a “Class I” Director. |
2023 Annual Meeting of Stockholders | 1 | NuVasive, Inc. Proxy Statement |
Board Members and
Nominees for Election
In this section of the Proxy Statement, we discuss the composition of our Board of Directors, the Directors standing for election at the Annual Meeting, and Directors not standing for election at the Annual Meeting and continuing in office.
Board of Directors Overview
As we continue to focus on developing innovative and enabling technologies to drive increased adoption of less-invasive surgery and help improve clinical, operational and financial outcomes, we rely on our talented and experienced Board to provide leadership, guidance and oversight. Our Board is comprised of individuals with a strong background in executive leadership and management, accounting and finance, and Company and industry knowledge. We believe that the diversity of our Directors’ backgrounds and experiences results in different perspectives, ideas, and viewpoints, which make our Board more effective in carrying out its duties. We believe that our Directors hold themselves to the highest standards of integrity and that they are committed to representing the long-term interests of our stockholders.
Our Directors exhibit an effective mix of skills, experience, diversity and perspectives. |
89% | 5.6 years | 59 years | 33% | 11% | ||||
of Board members are independent |
average Director tenure |
average Director age | of Board members are female |
of Board members are underrepresented minorities |
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Healthcare Nine have significant healthcare |
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Public Company Leadership Seven have leadership experience as public | |||||
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Finance Three have accounting and finance |
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Innovation Four have significant product development | |||||
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Global Seven have significant |
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Law One is a lawyer with compliance and | |||||
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Government One has prior government leadership experience |
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Hospital One has prior hospital system leadership |
2023 Annual Meeting of Stockholders | 2 | NuVasive, Inc. Proxy Statement |
BOARD MEMBERS AND NOMINEES FOR ELECTION (CONT.)
Our Board of Directors
The table below lists the name, age and certain other information of each member of the Board, as of April 25, 2023, the Record Date for our Annual Meeting. We have also included below a summary of the business experience of each of our Directors and their educational background, including a discussion of the qualifications, attributes and skills that led our Board to the conclusion that each of our Directors should serve as a Director of NuVasive. There are no family relationships among any of the Company’s Directors or executive officers.
Board Member |
Age | Director Class | Term Expires(1) | Committee Membership(2) | ||||||||||||||||||||||||||
Audit |
Compensation | Nominating | ||||||||||||||||||||||||||||
J. Christopher Barry |
51 | I | 2023 | — | — | — | ||||||||||||||||||||||||
Vickie L. Capps+ |
61 | II | 2024 | Chair | — |
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John A. DeFord, Ph.D.+ |
61 | II | 2024 | — | — |
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Robert F. Friel+ |
67 | III | 2025 | — |
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— | ||||||||||||||||||||||||
R. Scott Huennekens+ |
59 | II | 2024 |
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— | — | ||||||||||||||||||||||||
Siddhartha C. Kadia, Ph.D.+ |
53 | II | 2024 | — | — |
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Leslie V. Norwalk, Esq.+ |
57 | I | 2023 |
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— | Chair | ||||||||||||||||||||||||
Amy Belt Raimundo+ |
49 | I | 2023 | — |
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— | ||||||||||||||||||||||||
Daniel J. Wolterman+ † |
66 | III | 2025 | — | Chair | — |
+ | Denotes an independent Director. |
† | Mr. Wolterman currently serves as Board Chair. |
(1) | Term expires at Annual Meeting of Stockholders in year indicated. |
(2) | Reflects membership as of the Record Date on each of the Board’s three standing committees: Audit Committee, Compensation Committee and Nominating, Corporate Governance and Compliance Committee. |
As previously disclosed, on February 8, 2023, we entered into the Merger Agreement with Globus Medical. If the Merger with Globus Medical is consummated, NuVasive will become a wholly-owned subsidiary of Globus Medical and will no longer operate as a standalone publicly-traded company. Accordingly, the term of service of our Board members will cease upon the closing of the Merger. Pursuant to the Merger Agreement, Globus Medical has agreed to increase the size of the Globus Medical Board of Directors from eight to eleven directors and to appoint three additional directors proposed by the NuVasive Board. As a result, if the Merger is consummated, the composition of the Board of Directors of the combined company will be determined pursuant to the terms of the Merger Agreement rather than the composition presented in this Proxy Statement. As of the date of this Proxy Statement, the members of the NuVasive Board who will serve on the Globus Medical Board following the closing of the Merger have not yet been identified.
2023 Annual Meeting of Stockholders | 3 | NuVasive, Inc. Proxy Statement |
BOARD MEMBERS AND NOMINEES FOR ELECTION (CONT.)
Directors Standing for Election at the Annual Meeting
Set forth below is information as of April 25, 2023, regarding the three Director nominees for election as Class I Directors at the Annual Meeting: J. Christopher Barry, Leslie V. Norwalk, Esq., and Amy Belt Raimundo.
Board member since
Chief Executive Officer |
J. Christopher Barry
Mr. Barry has served as our Chief Executive Officer and a Director since November 2018.
Prior to joining NuVasive, Mr. Barry served as Senior Vice President and President of Surgical Innovations for Medtronic plc, a global medical technology company, from January 2015 to October 2018. Mr. Barry joined Medtronic following its January 2015 acquisition of Covidien plc, a global healthcare technology and medical supplies provider. Mr. Barry previously spent 15 years with Covidien in various sales and leadership roles, most recently as President, Advanced Surgical Technologies, from October 2013 to January 2015.
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Mr. Barry’s executive experience in the medical technology industry, including his experience as a strategic operator who has led teams globally, managed complex research and development programs and driven commercial initiatives, provides operational and strategic knowledge in the medical technology industry and valuable leadership experience to our Board. |
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Business Experience
• NuVasive, Inc., CEO
• Medtronic plc, Senior Vice President and President of Surgical Innovations
• Covidien plc, President, Advanced Surgical Technologies
Current Public Company Boards
• N/A
Educational/Professional Background
• Bachelor’s Degree in environmental science from Texas Tech University
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2023 Annual Meeting of Stockholders | 4 | NuVasive, Inc. Proxy Statement |
BOARD MEMBERS AND NOMINEES FOR ELECTION (CONT.)
Board member since
Chair of
Member of |
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Leslie V. Norwalk, Esq.
Ms. Norwalk is currently Strategic Counsel to Epstein Becker & Green, P.C., EBG Advisors and National Health Advisors. She also serves as a healthcare, regulatory and policy advisor to several private equity firms.
Ms. Norwalk previously served the Bush Administration as the Acting Administrator for the Centers for Medicare & Medicaid Services (CMS). She managed the day-to-day operations of Medicare, Medicaid, State Child Health Insurance Programs, Survey and Certification of health care facilities and other federal health care initiatives. For four years prior to that, she was the agency’s Deputy Administrator, responsible for the implementation of the hundreds of changes made under the Medicare Modernization Act, including the Medicare Prescription Drug Benefit. Prior to serving the Bush Administration, she practiced law in the Washington, D.C. office of Epstein Becker & Green, P.C. where she advised clients on a variety of health policy matters. She also served in the first Bush administration in the White House Office of Presidential Personnel, and the Office of the U.S. Trade Representative. Ms. Norwalk currently sits on the boards of directors of several private companies, and she is a member of APCO Worldwide’s International Advisory Council.
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Ms. Norwalk’s deep knowledge of, and experience with, the healthcare industry and government regulations provides valuable guidance and insight to our Board. Additionally, with her legal background, she brings important compliance and risk management experience to the Board. |
Healthcare
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Law
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Government
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Business Experience
• Epstein Becker & Green, P.C., EBG Advisors and National Health Advisors, Special Counsel
• Centers for Medicare and Medicaid Services, Acting Administrator
Current Public Company Boards
• Arvinas, Inc. (Member of Audit Committee)
• ModivCare Inc. (Chair of Nominating and Governance Committee, Member of Audit Committee)
• Neurocrine Biosciences, Inc. (Chair of Nominating / Corporate Governance Committee)
Educational/Professional Background
• Bachelor’s Degree, cum laude, in economics and international relations from Wellesley College
• Juris Doctor Degree from the George Mason University School of Law
Additional Information
• Previously served on Board of Directors of Centene Corporation (2022), Press Ganey Associates, Inc. (2012-2016), Volcano Corporation (2011-2015), Endologix, Inc. (2015-2020), and Magellan Health, Inc. (2019-2022)
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2023 Annual Meeting of Stockholders | 5 | NuVasive, Inc. Proxy Statement |
BOARD MEMBERS AND NOMINEES FOR ELECTION (CONT.)
Board member since
Member of |
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Amy Belt Raimundo
Ms. Raimundo is currently a Managing Director of Kaiser Permanente Ventures, a venture capital arm of Kaiser Permanente that focuses on investments in health information technology, digital health, healthcare services, medical devices and diagnostics and precision medicine.
Prior to joining Kaiser Permanente Ventures, Ms. Raimundo was the Chief Business Officer of Evidation Health, a health analytics data company, from March 2015 through October 2016. Prior to joining Evidation Health, Ms. Raimundo served as Vice President of Covidien Ventures from September 2010 through February 2015, and as Vice President of Advanced Technology Ventures from November 2006 through September 2010. She also previously held operating roles at Guidant Corporation and served as a management consultant for APM/CSC Healthcare where she optimized clinical workflow and guidelines for major hospital systems. Ms. Raimundo is a Kauffman Venture Fellow as well as founder and President of Medtech Women, a nonprofit organization dedicated to highlighting women leaders in the medical technology industry.
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Ms. Raimundo brings to our Board extensive knowledge of health information technology, digital health, and diagnostics and precision medicine, having experience investing into and commercializing novel healthcare technology for more than 20 years. |
Healthcare
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Public Co. Leadership |
Finance
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Global
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Business Experience
• Kaiser Permanente Ventures, Managing Director
• Evidation Health, Chief Business Officer
• Covidien Ventures, Vice President
• Advanced Technology Ventures, Vice President
Current Public Company Boards
• N/A
Educational/Professional Background
• Bachelor’s Degree in economics from Yale University
• Master of Business Administration Degree from University of California at Berkeley
|
2023 Annual Meeting of Stockholders | 6 | NuVasive, Inc. Proxy Statement |
BOARD MEMBERS AND NOMINEES FOR ELECTION (CONT.)
Directors Continuing in Office
Set forth below is information as of April 25, 2023, regarding the six Directors continuing in office and who are not up for election at the Annual Meeting: Vickie L. Capps, John A. DeFord, Ph.D., Robert F. Friel, R. Scott Huennekens, Siddhartha C. Kadia, Ph.D., and Daniel J. Wolterman.
Board member since June 2015
Chair of Audit Committee
Member of Nominating Committee |
|
Vickie L. Capps
Ms. Capps previously served as chief financial officer of several public and private companies. From 2002 to 2013, Ms. Capps served as the Executive Vice President, Chief Financial Officer and Treasurer at DJO Global, Inc. a leading global provider of medical device solutions for musculoskeletal health, vascular health and pain management, where she was recognized as CFO of the Year by the San Diego Business Journal in 2009 and 2010. Earlier in her career, she served as a senior audit and accounting professional at Ernst & Young LLP.
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Ms. Capps’ executive leadership at global companies in the healthcare industry, including her financial expertise as a chief financial officer, provide valuable financial and accounting experience to our Board. |
Healthcare
|
Public Co. Leadership
|
Finance
|
Global
| ||||||||||
| ||||||||||||||
Business Experience
• Consonance Capital Partners, Senior Advisory Board Member
• DJO Global, Inc., Chief Financial Officer
• Ernst & Young LLP
Current Public Company Boards
• Amedisys, Inc. (Chair of Audit Committee, Member of Compensation Committee)
• Janux Therapeutics, Inc. (Chair of Audit Committee)
Educational/Professional Background
• Bachelor’s Degree in business administration/accounting from San Diego State University
• California Certified Public Accountant
Additional Information
• Board of Directors, San Diego State University Research Foundation
• Previously served on Board of Directors of Otonomy, Inc. (2014-2023), Silverback Therapeutics, Inc. (2020-2022), Synthorx, Inc. (2018-2020) and Connecture, Inc. (2014-2018)
|
2023 Annual Meeting of Stockholders | 7 | NuVasive, Inc. Proxy Statement |
BOARD MEMBERS AND NOMINEES FOR ELECTION (CONT.)
Board member since
Member of |
|
John A. DeFord, Ph.D.
Dr. DeFord is currently Chairman, CEO and President of Samothrace Medical Innovations, Inc.
Dr. DeFord previously served as the Executive Vice President and Chief Technology Officer for Becton, Dickinson and Company (BD), a global medical technology company, from June 2018 until his retirement in May 2021. Dr. DeFord served as Senior Vice President, Research and Development, Interventional Segment for BD from December 2017 to June 2018 following its acquisition of C.R. Bard, Inc., where he had served as Senior Vice President, Science, Technology and Clinical Affairs since June 2007. Dr. DeFord joined Bard in 2004, and served in science and technology roles of increasing responsibility since that time. Prior to joining Bard, Dr. DeFord was Managing Director of Early Stage Partners LP, a venture capital fund. Prior to joining Early Stage Partners, Dr. DeFord was President and CEO of Cook Incorporated, a privately held medical device manufacturer.
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Dr. DeFord brings to our Board valuable strategy, technology development and clinical affairs leadership experience within the medical device industry, having served as an executive at large global healthcare companies. |
Healthcare
|
Public Co. Leadership |
Innovation
|
Global
| ||||||||||
| ||||||||||||||
Business Experience
• Samothrace Medical Innovations, Inc., Chairman, CEO and President
• Becton, Dickinson and Company, Executive Vice President and Chief Technology Officer (prior roles include Senior Vice President, Research and Development)
• C.R. Bard, Inc., Senior Vice President, Science, Technology and Clinical Affairs
Current Public Company Boards
• Nordson Corporation (Member of Audit Committee)
Educational/Professional Background
• Bachelor’s Degree and Master’s Degree in electrical engineering from Purdue University
• Ph.D. in electrical/biomedical engineering from Purdue University
Additional Information
• Co-chair of the Becton, Dickinson and Company (BD) Scientific Advisory Board
• Published in numerous scientific journals and holds numerous patents and multiple industry honors
|
2023 Annual Meeting of Stockholders | 8 | NuVasive, Inc. Proxy Statement |
BOARD MEMBERS AND NOMINEES FOR ELECTION (CONT.)
Board member since
Member of |
|
Robert F. Friel
Mr. Friel most recently served as the Chairman and Chief Executive Officer of PerkinElmer, Inc., a global leader focused on improving the health and safety of people and the environment, until his retirement in December 2019.
Mr. Friel served as PerkinElmer’s Chief Executive Officer from February 2008 until December 2019 and Chairman from April 2009 until December 2019. From August 2007 to January 2019, Mr. Friel also served as PerkinElmer’s President. Since joining PerkinElmer in February 1999 as Chief Financial Officer, Mr. Friel also held the roles of Chief Operating Officer and Vice Chairman and President of PerkinElmer’s Life and Analytical Sciences unit. Prior to joining PerkinElmer, he held several senior management positions with AlliedSignal, Inc., now Honeywell International.
| ||||||||||||
Mr. Friel’s executive experience with a global human and environmental health company, including experience as a chief financial officer, provide valuable leadership and financial experience to our Board. |
Healthcare
|
Public Co. Leadership |
Finance
|
Global
| ||||||||||
| ||||||||||||||
Business Experience
• PerkinElmer, Inc., Chairman and CEO (prior roles include President and CFO)
• AlliedSignal, Inc., Vice President, Treasurer
Current Public Company Boards
• West Pharmaceutical Services, Inc. (Member of Nominating and Corporate Governance Committee, Member of Innovation and Technology Committee, Member of Finance Committee)
• Xylem, Inc. (Chairman of the Board, Member of Nominating and Governance Committee)
Educational/Professional Background
• Bachelor’s Degree in economics from Lafayette College
• Master’s Degree in taxation from Fairleigh Dickinson University
Additional Information
• Previously served on Board of Directors of PerkinElmer, Inc. (2006-2019) and CareFusion Corporation (2009-2015)
|
2023 Annual Meeting of Stockholders | 9 | NuVasive, Inc. Proxy Statement |
BOARD MEMBERS AND NOMINEES FOR ELECTION (CONT.)
Board member since
Member of |
|
R. Scott Huennekens
Mr. Huennekens most recently served as the interim President and CEO of Hyperfine, Inc., a medical technology company focused on creating access to life-saving diagnostics and actionable data at the point of care, from June 2022 to October 2022.
From August 2015 to December 2018, Mr. Huennekens served as the President, Chief Executive Officer and Chairman of the Board of Verb Surgical, a start-up company formed by Google and Johnson & Johnson to develop an advanced digital surgery platform. Prior to joining Verb Surgical, Mr. Huennekens was the President, Chief Executive Officer and a member of the Board of Directors of Volcano Corporation, a medical technology company focused on diagnostic and therapeutic solutions for coronary and peripheral artery disease, from 2002 until Volcano was acquired by Royal Philips in February 2015. Prior to joining Volcano, Mr. Huennekens served as the President and Chief Executive Officer of Digirad Corporation, a diagnostic imaging solutions provider, and previously served as its Chief Financial Officer.
| ||||||||||||
Mr. Huennekens brings to our Board medical device leadership experience and strategic insight, as well as significant knowledge and experience in robotics, data analytics and advanced surgical technologies. Additionally, his experience as a former chief financial officer brings valuable financial expertise to our Board.
|
|
Healthcare
|
Public Co. Leadership
|
Innovation
|
Finance
| |||||||||
Business Experience
• Hyperfine, Inc., Interim President and CEO
• Verb Surgical, President, CEO and Chairman
• Volcano Corporation, President and CEO
Current Public Company Boards
• Acutus Medical, Inc. (Chairman of the Board)
• Envista Holdings Corporation (Chairman of the Board, Member of Audit Committee)
• Hyperfine, Inc. (Executive Chairperson of the Board)
Educational/Professional Background
• Bachelor’s Degree in business administration from the University of Southern California
• Master of Business Administration Degree from Harvard Graduate School of Business
Additional Information
• Previously served on Board of Directors of ViewRay, Inc. (2018-2021), Reva Medical Corp. (2015-2018), Endochoice Holdings, Inc. (2013-2016) and Volcano Corporation (2006-2015)
• Member of the Board of Directors and past Chairman of the Medical Device Manufacturers Association
|
2023 Annual Meeting of Stockholders | 10 | NuVasive, Inc. Proxy Statement |
BOARD MEMBERS AND NOMINEES FOR ELECTION (CONT.)
Board member since
Member of |
|
Siddhartha C. Kadia, Ph.D.
Dr. Kadia is currently the Chief Executive Officer of PhenomeX Inc., a medical technology company empowering scientists to leverage the full potential of each cell and driving the next era of functional cell biology that will advance human health.
Prior to joining PhenomeX, Dr. Kadia served as President and CEO of EAG Laboratories, a global scientific services company providing analytical testing and consulting solutions, from 2014 through 2018. Prior to joining EAG Laboratories, Dr. Kadia spent nine years with Life Technologies Corporation and its predecessor Invitrogen Corporation. Dr. Kadia held a number of management positions, including President of the Life Sciences Division, Chief Marketing Officer, President of Life Technologies Greater China and President of Life Technologies Japan Ltd. Prior to joining Life Technologies, Dr. Kadia was a management consultant at McKinsey & Company in the Healthcare Practice, assisting global medical device companies, local and state governments and healthcare providers.
| ||||||||||||
Dr. Kadia brings to our Board medical technology leadership experience, including international leadership experience, as well as significant knowledge and experience commercializing disruptive medical technology. |
Healthcare
|
Public Co. Leadership |
Innovation
|
Global
| ||||||||||
| ||||||||||||||
Business Experience
• PhenomeX Inc., CEO
• EAG Laboratories, President and CEO
• Life Technologies, President, Life Sciences Division
• McKinsey & Company, Management Consultant
Current Public Company Boards
• ALS Limited (Member of Sustainability and Innovation Committee, Member of the People Committee, Member of the Nomination Committee)
• PhenomeX Inc.
Educational/Professional Background
• Bachelor’s Degree in electronics and telecommunications from Gujarat University (India)
• Master’s Degree in biomedical engineering from Rutgers University
• Ph.D. in biomedical engineering from Johns Hopkins University
Additional Information
• Previously served on Board of Directors of IsoPlexis Corporation (2021-2022), Horizon Discovery Group plc (2020), Newport Corporation (2014-2016), and Volcano Corporation (2013-2015)
|
2023 Annual Meeting of Stockholders | 11 | NuVasive, Inc. Proxy Statement |
BOARD MEMBERS AND NOMINEES FOR ELECTION (CONT.)
Board member since
Chairman of the Board
Chair of |
|
Daniel J. Wolterman
Mr. Wolterman is currently Chief Executive Officer of Wolterman Consulting LLC, a provider of strategic and operational consulting services to healthcare providers and other entities.
From January 2018 to May 2019, Mr. Wolterman served as Chief Executive Officer of ColubrisMX, Inc. and X-Cath, Inc., both privately held medical device companies. Mr. Wolterman previously served as President and Chief Executive Officer of Memorial Hermann Health System, the largest not-for-profit health system in Southeast Texas, from 2002 until his retirement from Memorial Hermann in May 2016. He has more than 40 years of experience in the healthcare industry and a long history of community involvement.
| ||||||||||
Mr. Wolterman’s extensive knowledge of the healthcare industry and his leadership of a large health system provide valuable perspective and guidance to our Board. Additionally, as a leader of and consultant for medical device companies, he brings product and technology experience to the Board. |
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Healthcare
|
![]()
Innovation
|
![]()
Hospital
| ||||||||
| ||||||||||||
Business Experience
• Wolterman Consulting, LLC, CEO
• ColubrisMX, Inc., CEO
• X-Cath, Inc., CEO
• Memorial Hermann Health System, President and CEO
Current Public Company Boards
• Hyperfine, Inc. (Member of Audit Committee, Chair of Nominating and Corporate Governance Committee)
Educational/Professional Background
• Bachelor’s Degree in business administration and a Master of Business Administration Degree in finance from the University of Cincinnati
• Master’s Degree in healthcare administration from Xavier University
Additional Information
• Previously served on Board of Directors of Invuity, Inc. (2017-2018) and Volcano Corporation (2013-2015)
|
2023 Annual Meeting of Stockholders | 12 | NuVasive, Inc. Proxy Statement |
Director Identification,
Selection and Evaluation
In this section of the Proxy Statement, we discuss how Director nominees are identified and considered for election to our Board, as well as our process for evaluating Board effectiveness.
Identification and Evaluation of Director Nominees
One of the Nominating Committee’s key responsibilities is the identification and evaluation of Director nominees. The Nominating Committee believes that the Company is well served by its current Directors, but also believes that Board refreshment is important as our business grows and evolves over time, and that fresh viewpoints and perspectives are regularly considered. Since 2018, the Nominating Committee has helped identify and recruit five new Directors to join our Board.
Our Board has demonstrated a commitment to Board refreshment, and since 2018, five new Directors have joined our Board.
The average Board tenure is 5.6 years.
|
In the ordinary course, absent special circumstances, the Nominating Committee will generally re-nominate incumbent Directors who continue to be qualified for Board service and are willing to continue as Directors. From time to time, the Nominating Committee may also consider and evaluate potential new Director candidates who meet the criteria for selection as a Board nominee and have specific qualities or skills identified by the Board, and one or more of such candidates may be appointed as Directors as appropriate and in accordance with the Company’s organizational documents.
Director candidates will be selected based on input from members of the Board, senior management of the Company and, if the Nominating Committee deems appropriate, a third-party search firm. The Nominating Committee will evaluate each candidate’s qualifications and check relevant references. In addition, candidates will be interviewed by members of the Nominating Committee. Candidates meriting serious consideration will also meet other members of the Board. Based on this input, the Nominating Committee will evaluate whether a prospective candidate is qualified to serve as a Director and whether the Nominating Committee should recommend to the Board whether such candidate should be appointed to fill a vacancy on the Board, or presented for approval of the stockholders, as appropriate.
2023 Annual Meeting of Stockholders | 13 | NuVasive, Inc. Proxy Statement |
DIRECTOR IDENTIFICATION, SELECTION AND EVALUATION (CONT.)
Board Membership Criteria
In identifying and evaluating Director candidates for appointment or re-election to the Board, the Nominating Committee considers the appropriate balance of experience, skills and characteristics required of the Board, seeks to ensure that at least a majority of the Directors are independent under the rules of the Nasdaq Stock Market (“Nasdaq”), and that members of the Audit Committee meet the financial literacy and sophistication requirements under Nasdaq and SEC rules (including that at least one member qualifies as an “audit committee financial expert” under the rules of the SEC). Nominees for Director are selected based on their depth and breadth of experience, integrity, ability to make independent analytical inquiries, understanding of the Company’s business environment, and willingness to devote adequate time to Board duties. Additionally, the Nominating Committee will consider diversity in personal and professional backgrounds and seeks diverse individuals, such as women and individuals from underrepresented minority groups, to include in the pool of candidates for Board nomination; however, there is no formal policy with respect to diversity considerations in identifying Director nominees. In assessing Director candidates, the Nominating Committee will also consider the retirement age policy under our Corporate Governance Guidelines. The Company’s retirement age policy provides that a Director may not stand for re-election after age 72, but need not resign until the end of his or her term.
Our Board, upon the recommendation of the Nominating Committee, nominated each of Mr. Barry, Ms. Norwalk and Ms. Raimundo for re-election as Class I Directors at the Annual Meeting. The Nominating Committee and the Board believe that each of Mr. Barry, Ms. Norwalk, and Ms. Raimundo brings a strong and unique set of qualifications, attributes and skills and provides the Board as a whole with a balance of experience, leadership and competencies in areas of importance to our Company. In the section of this Proxy Statement captioned “Board Members and Nominees for Election”, we provide an overview of each Director nominee’s principal occupation, business experience and other directorships, together with other key attributes that we believe provide value to the Board, the Company and its stockholders.
Director Diversity
NuVasive is committed to director diversity and we believe it is important to have a balanced and diverse Board with members who bring a range of expertise, perspectives, experiences, and personal characteristics, including with regard to age, race, gender and ethnicity. In recent years, our Nominating Committee has made diversity a focus in its nominations process and, as a result, the diversity of our Board has increased.
Under Nasdaq Rule 5605(f) (Diverse Board Representation), Nasdaq-listed companies are required, subject to certain exceptions and transition periods, to: (1) have at least one director who self-identifies as a female, and (2) to have at least one director who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities, or as LGBTQ+, or (3) to explain why the reporting company does not have at least two directors on its board who self-identify in the categories listed above. In addition, Rule 5606 (Board Diversity Disclosure) requires each Nasdaq-listed company, subject to certain exceptions, to provide statistical information about such company’s Board of Directors, in a uniform format, related to each director’s self-identified gender, race, and self-identification as LGBTQ+. As of the Record Date, the Company is in compliance with the diversity requirements under Nasdaq Rule 5605(f).
2023 Annual Meeting of Stockholders | 14 | NuVasive, Inc. Proxy Statement |
DIRECTOR IDENTIFICATION, SELECTION AND EVALUATION (CONT.)
Pursuant to Nasdaq Rule 5605(f), the matrix below reports the diversity statistics of our Board based on the self-identified characteristics of our Directors:
Board Diversity Matrix (as of May 8, 2023)
Total number of Directors: 9
|
Female | Male | Non-Binary | Did Not Disclose Gender | ||||
Part I: Gender Identity |
|
|
|
| ||||
Directors |
3 | 5 | - | 1 | ||||
Part II: Demographic Background |
|
|
|
| ||||
– African American or Black |
- | - | - | - | ||||
– Alaskan Native or Native American |
- | - | - | - | ||||
– Asian |
- | 1 | - | - | ||||
– Hispanic or Latinx |
- | - | - | - | ||||
– Native Hawaiian or Pacific Islander |
- | - | - | - | ||||
– White |
3 | 4 | - | - | ||||
– Two or More Races or Ethnicities |
- | - | - | - | ||||
– LGBTQ+ |
- | - | - | - | ||||
– Did Not Disclose Demographic Background |
- | - | - | 1 |
Director Independence
Under our Corporate Governance Guidelines and Nasdaq rules, our Board is required to be comprised of a majority of independent Directors. The Nominating Committee evaluates our Directors’ compliance with Nasdaq rules regarding independence, as well as other factors, in making a recommendation to the Board as to whether Directors can be considered independent. Under applicable SEC and Nasdaq rules, the existence of certain “related party” transactions between a Director and the Company with dollar amounts above certain thresholds are required to be disclosed and preclude a finding by the Board that the Director is independent. In addition to transactions required to be disclosed under SEC and Nasdaq rules, the Board considered certain other relationships in making its independence determinations, and determined, in each case, that such other relationships did not impair the Director’s ability to exercise independent judgment on behalf of the Company. Based on the recommendation of the Nominating Committee, the Board determined that except for J. Christopher Barry, our Chief Executive Officer, all of our current Directors are independent under the Nasdaq rules and our Corporate Governance Guidelines.
2023 Annual Meeting of Stockholders | 15 | NuVasive, Inc. Proxy Statement |
DIRECTOR IDENTIFICATION, SELECTION AND EVALUATION (CONT.)
Stockholder Recommendations for Director Nominees
In nominating candidates for election as a Director, the Nominating Committee will consider written proposals from stockholders for Director nominees. Any such nominations should be submitted to the Nominating Committee, care of the Secretary of the Company, and should include the following information: (a) all information relating to such nominee that is required to be disclosed pursuant to Regulation 14A under the Securities Exchange Act of 1934 (including such person’s written consent to being named in the Proxy Statement as a nominee and to serving as a Director if elected), and (b) all information required by the Company’s Restated Bylaws, as amended (the “Bylaws”) (including the names and addresses of the stockholders making the nomination and the appropriate biographical information and a statement as to the qualification of the nominee). For more information, see the discussion under the caption “Other Information.”
The Company has never received a proposal from a stockholder to nominate a Director. Although the Nominating Committee has not adopted a formal policy with respect to stockholder nominees, the Nominating Committee expects that the evaluation process for a stockholder nominee would be similar to the process outlined above.
Consideration of Director Board Service and “Over-Boarding”
As discussed above, in identifying and evaluating Director candidates for appointment or re-election to the Board, the Nominating Committee takes into consideration a candidate’s willingness to devote adequate time to Board duties. As part of the Board’s evaluation and assessment process, the Board considers individual Director performance, including attendance, participation and engagement at Board meetings. This is particularly important when considering Director candidates that serve on multiple boards of directors. As of the Record Date for the Annual Meeting, none of the Company’s Directors serve on more than five public company boards (including the NuVasive Board).
Certain proxy advisory firms have adopted over-boarding policies, where they will recommend a vote against directors who serve on what the proxy advisory firm believes to be too many boards. Further, certain institutional investors will vote against directors if they believe they are over-boarded. These policies are generally intended to address concerns that directors on multiple boards may lack sufficient time to perform their board duties effectively. The Board acknowledges these concerns, but believes additional factors should be considered in determining whether a director on multiple boards should continue to serve on the Company’s Board. Among other things, the Board believes that consideration should be given to the skills and abilities that a Director brings to the Board, how a Director contributes to Board diversity and the overall mix of perspectives and backgrounds on the Board, and whether the Director dedicates the appropriate time, attention and energy to his or her Director duties. The Board discusses these considerations generally in connection with its evaluation and assessment process and specifically with both current Board members and Director candidates who serve on multiple boards of directors.
Evaluation of Board Effectiveness
On an annual basis, the Nominating Committee oversees a comprehensive Board evaluation and assessment process. The Board believes that an annual evaluation process is an important component of strong corporate governance practices and promoting ongoing Board effectiveness. Each year, the Board conducts a comprehensive evaluation and assessment process to review Board, Committee and Director effectiveness. The Board and each of its Committees performs a self-assessment to evaluate their effectiveness in fulfilling their obligations. As part of the process for the 2022 annual evaluation, each Director completed individual questionnaires to evaluate Board and Committee effectiveness, as well as individual Director effectiveness. The results were compiled and summarized by outside corporate governance counsel and presented and discussed with the Board. The Board, Committee and individual Director evaluations cover a wide range of topics, including, among others, the fulfillment of the Board and Committee responsibilities identified in the Corporate Governance Guidelines and charters for each Committee.
2023 Annual Meeting of Stockholders | 16 | NuVasive, Inc. Proxy Statement |
DIRECTOR IDENTIFICATION, SELECTION AND EVALUATION (CONT.)
Our Board has implemented a comprehensive annual process to
review Board, Committee and Director effectiveness.
The Board believes that the overall annual evaluation process works well and that using outside corporate governance counsel to assist with the evaluations and to present the results and findings to the Board and the Committees leads to candid feedback and discussion. When feedback warrants follow-up with individual Directors, the Chair of the Nominating Committee will work directly with each Director, as appropriate. As a result of the Board evaluation process, the Company will often update its Board topical calendar and meeting planner for the ensuing year to incorporate feedback from the Board. For example, the Company recently modified the frequency and time allocation for certain meeting topics and dedicated more time for hands-on demonstrations and discussions of Company products and technology. Further, the process can help elevate discussion topics to action items, including matters related to Board composition, Board diversity, and Board succession planning.
2023 Annual Meeting of Stockholders | 17 | NuVasive, Inc. Proxy Statement |
Board Governance and
Corporate Responsibility
In this section of the Proxy Statement, we discuss our approach to Board governance and corporate responsibility and sustainability. We also discuss how our Board and Company have taken steps to respond to COVID-19 and global macroeconomic conditions.
Our Board has adopted a number of governance best practices:
Our Board structure provides for a Lead Independent Director
|
|
Our Independent Directors meet frequently in executive session
|
|
Our Board and Committees engage in annual self- evaluations
| ||||
Our Chief Executive Officer does not serve as our Board Chair
|
Our Board service is limited by our retirement age policy (Directors may not stand for election after age 72)
|
We have majority voting for uncontested Director elections
|
We are committed to maintaining the highest standards of corporate governance. As discussed below under “Board Leadership and Organization Structure,” our Board has established three standing committees to assist in fulfilling its responsibilities to the Company and its stockholders: the Audit Committee, the Compensation Committee and the Nominating Committee. In addition to its responsibilities related to Director nominations, Board structure and composition, and corporate governance matters, the Nominating Committee also has oversight responsibilities for quality and regulatory matters, ethics and compliance matters, and other related matters. Additionally, the Nominating Committee has responsibility for periodically reviewing and revising our Code of Conduct and addressing any violations thereof.
Corporate Governance Guidelines
Our Corporate Governance Guidelines are designed to address effective corporate governance of our Company. Our Corporate Governance Guidelines cover topics including, but not limited to, Director independence and qualification criteria, Director responsibilities, Director compensation, Board evaluation, Committee matters, and succession planning. Our Corporate Governance Guidelines are reviewed regularly by the Nominating Committee and revised when appropriate.
2023 Annual Meeting of Stockholders | 18 | NuVasive, Inc. Proxy Statement |
BOARD GOVERNANCE AND CORPORATE RESPONSIBILITY (CONT.)
In recent years, we have revised our Corporate Governance Guidelines to clarify the role of the Lead Independent Director, and to update language regarding Director independence and executive sessions of independent Directors. We also made other changes to clarify the process for the Chief Executive Officer performance review and compensation determinations, including the role of the Compensation Committee and the independent compensation consultant. Overall, we believe these changes help further advance corporate governance and improve the overall organization and readability of the Corporate Guidelines.
Code of Conduct
We have adopted a Code of Conduct, which includes our code of ethics for our senior financial officers. The Code of Conduct applies to all of our officers, employees and Directors and establishes policies pertaining to, among other things, employee conduct in the workplace, workplace safety, confidentiality, conflicts of interest, accuracy of books, records and financial statements, securities trading, anti-corruption, competition laws, interactions with health care professionals and political and charitable activities. In February 2021, we revised the Code of Conduct to, among other things, reflect our commitment to diversity and inclusion and discuss our belief in responsible economic, social and environmental practices.
The Nominating Committee and the Audit Committee share oversight responsibilities related to the Code of Conduct. The Nominating Committee is responsible for oversight of compliance programs related to ethics and compliance and related matters, including the Company’s policies, procedures and practices designed to ensure compliance with applicable laws and regulations related to federal healthcare program requirements; the Fraud and Abuse Laws and other medical device laws; the Foreign Corrupt Practices Act; the Anti-Kickback Statute and other anti-bribery and anti-corruption laws. The Audit Committee is responsible for oversight of compliance matters relating to financial reporting, accounting, internal accounting controls, auditing and related matters.
The Audit Committee reviews and approves all waivers of the Code of Conduct for executive officers or Directors and provides for prompt disclosure of all waivers required to be disclosed under applicable law. We will disclose future amendments to the Code of Conduct, or waivers required to be disclosed under applicable law from the Code of Conduct for our principal executive officer, principal financial officer, principal accounting officer or controller, and our other executive officers and our Directors, on our website, www.nuvasive.com, within four business days following the date of the amendment or waiver.
In addition, we maintain an Integrity Hotline by which employees and third parties may report violations of the Code of Conduct or seek guidance on business conduct matters. The Integrity Hotline is a third-party hosted service and has multi-lingual representatives available to take calls 24 hours a day, seven days a week.
Information about corporate governance at NuVasive, including our key
| ||
Corporate Governance Guidelines | Charters of the Board Committees | |
Code of Conduct | Charter of the Lead Independent Director |
Printed copies may be obtained upon request to our Investor Relations Department. Any stockholder may request copies of these materials in print, without charge, by contacting our Investor Relations Department at investorrelations@nuvasive.com.
2023 Annual Meeting of Stockholders | 19 | NuVasive, Inc. Proxy Statement |
BOARD GOVERNANCE AND CORPORATE RESPONSIBILITY (CONT.)
Corporate Responsibility and Sustainability
We recognize the growing interest of our investors, employees, patients, surgeons and hospital customers in corporate responsibility and sustainability, including environmental, social and governance (“ESG”) matters. Our focus as a Company is developing innovative and enabling technologies to drive increased adoption of less-invasive surgery and help improve clinical, operational and financial outcomes. Our guiding purpose is to transform surgery, advance care and change lives, and enabling safer, more reproducible surgical procedures is at the heart of what we do. When our less-invasive surgical solutions are utilized, it helps improve procedural workflow in the operating room, while reducing intra-operative risks and cost of care. This is good for the patient, but also good for the hospital and the overall healthcare system. Through our enabling technologies, we help surgeons work more efficiently, reduce operating room time, achieve more reproducible patient outcomes, and reduce costs. With the Pulse platform, we have integrated key technologies for spine surgery in one condensed footprint in the operating room. Pulse is designed to increase safety, efficiency, and procedural reproducibility, while addressing some of the most common clinical challenges in spine surgery such as radiation exposure, nerve and spinal cord injury, and time spent in the operating room. We believe that this focus, which benefits patients, surgeons and hospitals, will also benefit our investors as we continue to grow our business and create long-term stockholder value.
We also recognize the value associated with building our human capital and believe that success comes from investing in our people. We have expanded our efforts to advance diversity, inclusion and engagement, while providing professional development opportunities for our employees. We are committed to supporting and driving diversity and inclusion initiatives that continue to evolve our workplace culture, policies and processes, while creating an environment that leverages differences. Our long-term diversity and inclusion roadmap includes: (i) attracting and retaining talent from different backgrounds, worldviews, and ways of thinking, (ii) driving holistic change by making diversity and inclusion a core part of our organization, (iii) creating a workplace where employees feel valued, heard and respected, and (iv) becoming a recognized leader in healthcare innovation, supported by our diversity efforts. With dedicated resources focused on our diversity and inclusion vision, strategy and priorities, and through the establishment of employee resource groups and committees, we are working to reinforce and build upon our culture of inclusion. Additionally, we have committed resources and personnel to ensure a healthy and safe environment for our employees and our communities. Our key objectives in this area include corporate compliance with responsible hazardous waste management, recycling, emergency preparedness, as well as various initiatives to improve our environmental health and safety programs. This became a significant area of focus, as we worked to ensure the safety and wellbeing of employees during the COVID-19 pandemic.
We are advancing environmental stewardship through a range of initiatives that build on our environmental compliance and lean manufacturing programs. Our facilities implement environmental compliance, hazardous waste management, recycling, emergency preparedness, and environmental health and safety (EHS) programs, and our corporate EHS team monitors and assesses compliance to local and global requirements. We have embraced lean manufacturing to reduce our environmental impact. By implementing practices like 3D printing of our titanium spinal implants, we are creating innovative designs to help improve clinical outcomes for patients, while conserving resources.
We are also giving back to our community. Our employees and sales representatives have a long history of supporting the communities where we have facilities, donating time, resources and funds to local causes. Since 2009, we have leveraged our expertise in spine care to give back to local and global communities through the NuVasive Spine Foundation™ (“NSF”). NSF supports life-changing spine surgery for individuals around the world with limited access to high quality medical treatment by working with surgeons to advance the quality of spine care in disadvantaged communities. In addition, through our grants program, we support medical research and education, charitable and philanthropic endeavors. We believe in giving back, and we also believe it is important to operate our Company in a socially responsible manner.
To ensure guidance and support of NuVasive’s corporate responsibility and sustainability initiatives, we created an ESG Steering Committee. The ESG Steering Committee is a management committee comprised of a cross-functional team of senior leaders and is intended to support NuVasive’s on-going commitment to corporate responsibility and sustainability, including ESG matters. The ESG Steering Committee, with oversight from the Nominating Committee, is responsible for formalizing the Company’s policies and disclosures and making recommendations for evolving the Company’s ESG practices, while working with existing programs and activities to support and advance overall corporate responsibility and sustainability at NuVasive. In February 2022, we published our inaugural ESG Report, which shares our progress on key ESG topics and provides a platform to further strengthen and integrate sustainability into our core business practices. Although not incorporated by reference into this Proxy Statement, the report can be accessed on our website at www.nuvasive.com, by clicking the “About” link and then “Corporate social responsibility”.
2023 Annual Meeting of Stockholders | 20 | NuVasive, Inc. Proxy Statement |
BOARD GOVERNANCE AND CORPORATE RESPONSIBILITY (CONT.)
COVID-19 and Global Macroeconomic Challenges
The COVID-19 pandemic significantly impacted our business and results of operations during fiscal year 2022. Additionally, the COVID-19 pandemic and global macroeconomic conditions have led to disruptions in the global supply chain. While we have largely been able to mitigate the impact, we have experienced challenges associated with material and component availability for certain product lines, longer shipping and delivery times for raw materials and components, constrained logistics capacity related to the movement of our products, availability of skilled labor and increased costs of raw materials, components, labor, and freight and courier services. Our net sales and profitability from our foreign operations have also been negatively affected by the unfavorable foreign currency exchange impact of the strengthened U.S. dollar against a number of currencies.
Despite the impact COVID-19 and global macroeconomic factors has had on our business, we continue to invest in research and development, invest in our people, improve operating processes, and take steps to position ourselves for long-term success. During 2022, we remained focused on developing innovative solutions and enabling technologies to drive increased adoption of less-invasive surgery and continued to train and educate surgeons on our products and surgical techniques through live and virtual settings. Further, we continued to make investments in the Pulse platform to support our global commercialization plan for the technology and build-out the platform to enable further improvement of the spine care pathway. Our goal is to use technology and data to make spine surgery more intelligent, and we are investing to develop and expand the Pulse platform to include applications and technologies designed to improve pre-operative treatment selection and planning and post-operative workflow and analytics, as well as intra-operative surgical automation and robotics. Although the COVID-19 pandemic and global macroeconomic conditions continue to evolve and the impact on our business will depend on several factors that are highly uncertain and unpredictable, we believe these actions will better position the Company for long-term success.
2023 Annual Meeting of Stockholders | 21 | NuVasive, Inc. Proxy Statement |
Board Leadership and
Organization Structure
In this section of the Proxy Statement, we discuss our Board leadership structure, including how our Board and Board Committees are organized to carry out their duties, including oversight responsibilities. We also discuss how stockholders can communicate with the Board.
Board Structure
We are committed to independent leadership on our Board. Our CEO does not serve as our Board Chair,
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Audit Committee | Nominating, Corporate Governance and Compliance Committee |
Compensation Committee |
Board Leadership Structure
Under our current Board leadership structure, our CEO does not serve as Board Chair. The Board believes that there is no single, generally accepted leadership structure and maintains flexibility to determine which leadership structure best serves the interest of the Company based on circumstances and the evolving needs of the Company. Accordingly, although the Company believes that the separation of the Board Chair and CEO roles is appropriate at this time based upon the current circumstances, the Company’s Corporate Governance Guidelines do not establish this approach as a policy. As such, our Board periodically reviews its leadership structure to confirm that it is an appropriate structure for the Company at such time.
If the offices of the Board Chair and CEO of the Company are held by the same person, or if the Board Chair is not an independent Director, our Board leadership structure provides for a Lead Independent Director to preside at meetings of the independent Directors, preside at all meetings of the Board at which the Board Chair is not present and perform such other functions as the Board may direct, including advising the Board Chair with respect to Board meeting agendas. The Lead Independent Director is to be elected by a majority of the independent Directors for a renewable term of two years. We currently do not have a Lead Independent Director as Mr. Wolterman serves as Board Chair and is an independent Director.
The authority and responsibilities of the Lead Independent Director are described in the charter of the Lead Independent Director. The full text of the charter for the Lead Independent Director can be accessed in the “Investor Relations” section of our website at www.nuvasive.com, by clicking the “Governance” link and then “Governance Documents”.
2023 Annual Meeting of Stockholders | 22 | NuVasive, Inc. Proxy Statement |
BOARD LEADERSHIP AND ORGANIZATION STRUCTURE (CONT.)
Executive Sessions of Independent Directors
Each of the Directors other than Mr. Barry is independent, and the Board believes that the independent Directors provide effective oversight of management. Executive sessions of independent Directors are held in connection with each regularly scheduled Board meeting and at other times as necessary. The Board’s policy is to hold executive sessions without the presence of management, including the CEO and other non-independent Directors, if any. The Committees of our Board also generally meet in executive session at the end of each Committee meeting.
Role of Board in Risk Oversight Process
The responsibility for the day-to-day management of risk lies with the Company’s management, while the Board is responsible for overseeing the risk management process to ensure that it is properly designed, well-functioning and consistent with the Company’s overall corporate strategy. Each year, the Company’s management identifies what it believes are the top individual risks facing the Company. These risks are then discussed and analyzed with the Board. This enables the Board to coordinate the risk oversight role, particularly with respect to risk interrelationships. Information technology and cybersecurity is a key area of focus for the Company and our Board is actively involved in overseeing cybersecurity risk management activities. Specifically, the Nominating Committee meets frequently with members of management to review our information technology and data security policies and practices, and to assess current and projected threats, cybersecurity incidents, and related risks. Additionally, the Committees of the Board consider the risks within their areas of responsibility. The Audit Committee oversees the risks associated with financial reporting, accounting, internal accounting controls, auditing and related matters. The Compensation Committee oversees the risks associated with the succession planning for key management positions. In addition, the Compensation Committee determines whether any compensation practices create risk-taking incentives that are reasonably likely to have a material adverse effect on the Company. The Nominating Committee oversees the Company’s global risk assessment process, as well as the risks associated with regulatory affairs, quality assurance, information technology and cybersecurity, corporate governance and ethics, environmental, social and governance, and compliance matters.
The Board’s risk oversight function complements the Company’s leadership structure. The Company’s CEO, who also serves as a Director, is able to promote open communication between management and Directors relating to risk as well as combine the operational focus of management with the risk oversight capabilities of the Board.
Role of Board in Succession Planning
A key responsibility of the Board is succession planning for the CEO and other members of the senior leadership team. The Compensation Committee regularly discusses senior management talent, including the readiness of individuals to take on additional leadership roles and developmental opportunities needed to prepare senior leaders for greater levels of responsibility. Additionally, the full Board holds a formal succession planning and talent review session annually, which includes succession planning for the CEO and other senior leaders.
In support of the Company’s commitment to investing in its employees, high-potential leaders are provided with the opportunity to meet with Board members through formal presentations, technology showcases and at informal events. This engagement gives the Board insight into the Company’s talent and helps to facilitate a regular review and discussion of leadership development and succession planning at Board meetings.
2023 Annual Meeting of Stockholders | 23 | NuVasive, Inc. Proxy Statement |
BOARD LEADERSHIP AND ORGANIZATION STRUCTURE (CONT.)
Board and Committee Membership and Structure
Each of the Board’s three standing Committees acts pursuant to a written charter, which can be accessed in the “Investor Relations” section of our website at www.nuvasive.com, by clicking the “Governance” link and then “Governance Documents”. Each Committee reviews its charter on an annual basis. In addition to the three standing Committees, the Board may approve from time to time the creation of special or ad hoc committees to assist the Board in carrying out its duties.
Each of our current Directors attended at least 75% of the aggregate number of meetings of the Board and the Committees on which they served during 2022. The Company does not have a formal policy regarding Director attendance at annual meetings of stockholders, however, we encourage all of our Directors to attend each annual meeting. All of the Directors serving on our Board at the 2022 Annual Meeting of Stockholders held on May 11, 2022 attended the meeting with the exception of Mr. Rosenberg, who retired from the Board effective as of May 11, 2022.
Audit Committee. As of the date of this Proxy Statement, the Audit Committee consists of Vickie L. Capps (Chair), Leslie V. Norwalk and R. Scott Huennekens. The Board has determined that all members of the Audit Committee satisfy the independence and qualification standards for audit committee membership under Nasdaq rules and SEC rules and each of them is able to read and fundamentally understand financial statements. The Board has determined that Vickie L. Capps qualifies as an “audit committee financial expert” as defined by the rules of the SEC. The purpose of the Audit Committee is to oversee both the accounting and financial reporting processes of the Company, as well as audits of its financial statements. The responsibilities of the Audit Committee include appointing and approving the compensation of the independent registered public accounting firm selected to conduct the annual audit of our accounts, reviewing the scope and results of the independent audit, reviewing and evaluating internal accounting policies, and approving all professional services to be provided to the Company by its independent registered public accounting firm. The Audit Committee is governed by a written charter approved by the Board. The Audit Committee report is included in this Proxy Statement under the caption “Audit Committee Report.” |
Board and Committee Meetings
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The Board of Directors met 13x
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The Audit Committee met 4x
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The Compensation Committee met 5x
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The Nominating, Corporate Governance and Compliance Committee met 4x
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Compensation Committee. As of the date of this Proxy Statement, the Compensation Committee consists of Daniel J. Wolterman (Chair), Robert F. Friel, and Amy Belt Raimundo. The Board has determined that all members of the Compensation Committee satisfy the independence and qualification standards for compensation committee membership under Nasdaq rules and SEC rules. The Compensation Committee administers the Company’s benefit and stock plans, reviews and administers all compensation arrangements for senior executive officers, and establishes and reviews general policies relating to the compensation and benefits of our executive officers and employees. The Compensation Committee meets several times a year and consults with independent compensation consultants, as it deems appropriate, to review, analyze and approve compensation packages for our executive officers, and in the case of the CEO, make compensation recommendations to the Board for approval. In addition, the Compensation Committee determines whether any compensation policies create risk-taking incentives that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee has determined that the risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. For more information, please see below under “Compensation Discussion and Analysis.” The Compensation Committee is governed by a written charter approved by the Board. The Compensation Committee report is included in this Proxy Statement under the caption “Compensation Committee Report.”
Nominating, Corporate Governance and Compliance Committee. As of the date of this Proxy Statement, the Nominating Committee consists of Leslie V. Norwalk (Chair), Vickie L. Capps, John A. DeFord, Ph.D., and Siddhartha Kadia, Ph.D. The Board has determined that all members of the Nominating Committee are independent Directors under Nasdaq rules. The Nominating Committee’s responsibilities include recommending to the Board nominees for possible election to the Board and providing oversight with respect to corporate governance matters. The Nominating Committee is responsible for oversight of quality and regulatory matters, ethics and compliance matters, and other related matters, including the Company’s policies, procedures and practices designed to ensure
2023 Annual Meeting of Stockholders | 24 | NuVasive, Inc. Proxy Statement |
BOARD LEADERSHIP AND ORGANIZATION STRUCTURE (CONT.)
compliance with applicable laws and regulations related to federal healthcare program requirements; the fraud and abuse laws and other medical device laws; the Foreign Corrupt Practices Act; the Anti-Kickback Statute and other anti-bribery and anti-corruption laws. The Nominating Committee is governed by a written charter approved by the Board.
Communications with the Board of Directors
Any stockholder who desires to contact any member of the Board or management can send an e-mail to investorrelations@nuvasive.com or write to:
NuVasive, Inc.
Attn: Investor Relations
7475 Lusk Boulevard
San Diego, CA 92121
Your correspondence should indicate that you are a stockholder of the Company. Comments or questions regarding the Company’s accounting, internal controls or auditing matters will be referred to members of the Audit Committee. Comments or questions regarding the nomination of Directors and other corporate governance matters will be referred to members of the Nominating Committee. For all other matters, our investor relations personnel will, depending on the subject matter:
• | forward the communication to the Director or Directors to whom it is addressed; |
• | attempt to handle the inquiry directly, for example where it is a request for information about the Company, or it is a stock-related matter; or |
• | not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic. |
2023 Annual Meeting of Stockholders | 25 | NuVasive, Inc. Proxy Statement |
Executive Officers
In this section of the Proxy Statement, we discuss our executive officers. The table below sets forth information about our executive officers, including their ages as of April 25, 2023, the Record Date for our Annual Meeting. We have also included below a brief summary of the business experience of each of our executive officers, as well as their educational background. If the Merger with Globus Medical is consummated, NuVasive will become a wholly-owned subsidiary of Globus Medical and will no longer operate as a standalone publicly-traded company. The Merger Agreement does not provide for the continuation of employment of any NuVasive executive officers, and it is expected that Globus Medical’s executive officers will serve as the executive officers of the combined company following the closing of the Merger.
Executive Officer |
Age | Position | ||
J. Christopher Barry |
51 |
Chief Executive Officer | ||
Matthew K. Harbaugh |
52 |
Executive Vice President, Chief Financial Officer | ||
Michael Farrington |
39 |
Senior Vice President, People and Culture | ||
Nathaniel B. Sisitsky, Esq. |
49 |
Senior Vice President, General Counsel and Corporate Secretary | ||
Dale Wolf |
43 |
Senior Vice President, Global Operations |
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J. Christopher Barry
J. Christopher Barry has served as our Chief Executive Officer and as a member of our Board of Directors since November 2018.
Information regarding Mr. Barry can be found above under the caption “Board Members and Nominees for Election - Directors Standing for Election at the Annual Meeting.”
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Matthew K. Harbaugh
Matthew K. Harbaugh has served as our Executive
Prior to joining NuVasive, Mr. Harbaugh served as an executive at Mallinckrodt plc, a global specialty pharmaceutical products company. From May 2018 to September 2019, he served as the President of Mallinckrodt’s Specialty Generics business, and from July 2013 to December 2018, he served as Mallinckrodt’s Executive Vice President and Chief Financial Officer. Mr. Harbaugh previously held a variety of financial management positions at Covidien Pharmaceuticals, which was spun-off from Covidien plc as Mallinckrodt plc in July 2013. Mr. Harbaugh joined Covidien in 2007 and served in several finance and leadership roles, including as Chief Financial Officer and Interim President of Covidien Pharmaceuticals. Prior to joining Covidien, Mr. Harbaugh was a Lead Finance Executive with Cerberus Capital Management, L.P., a New York-based private equity firm. Prior to that Mr. Harbaugh worked nearly ten years for Monsanto Company, where he held various roles in investor relations and finance. |
Educational Background
• Bachelor of Science in Business Administration from St. Louis University
• Executive M.B.A from the Kellogg School of Management at Northwestern University
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2023 Annual Meeting of Stockholders | 26 | NuVasive, Inc. Proxy Statement |
EXECUTIVE OFFICERS (CONT.)
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Michael Farrington
Michal Farrington has served as our Senior Vice President, People and Culture, since September 2022, and is responsible for the Company’s human resources, talent, and total rewards, and corporate marketing, brand and communication functions.
Since joining NuVasive in 2016, Mr. Farrington has held various leadership roles at NuVasive, and most recently served as Senior Vice President, Corporate Marketing, Brand and Communications. Mr. Farrington has played an integral role in shaping the Company’s brand and culture—including architecting The Cheetah Way, serving on Company Employee Resource Group (ERG) advisory boards and leading many enterprise-wide cultural projects and initiatives. Before joining NuVasive, he held a variety of corporate, brand and product marketing positions in global, medical technology companies including Becton Dickinson, CareFusion and Cardinal Health. |
Educational Background
• Bachelor’s Degree in Business Administration from Pepperdine University
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Nathaniel B. Sisitsky, Esq.
Nathaniel B. Sisitsky, Esq. has served as our Senior Vice President, General Counsel and Corporate Secretary since June 2018 and is responsible for leadership of NuVasive’s legal team. In this role, Mr. Sisitsky also oversees the Company’s Global Risk & Integrity team, as well as the NuVasive Spine Foundation.
Mr. Sisitsky previously served as our Vice President and Associate General Counsel, Corporate Affairs from July 2015 to June 2018. Prior to joining NuVasive, Mr. Sisitsky was Vice President and Associate General Counsel at CareFusion Corporation, a global medical technology company focused on medication management and patient safety solutions, from April 2009 until April 2015. From August 2004 until April 2009, Mr. Sisitsky served as Vice President, Legal – Corporate Finance at American Tower Corporation, a global owner and operator of wireless communication sites. Prior to joining American Tower, Mr. Sisitsky was a Junior Partner in the Corporate Department of Wilmer Cutler Pickering Hale and Dorr (WilmerHale), based in Boston, MA.
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Educational Background
• Bachelor’s Degree in Political Science and Economics from Emory University
• Juris Doctor Degree from New York University School of Law
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2023 Annual Meeting of Stockholders | 27 | NuVasive, Inc. Proxy Statement |
EXECUTIVE OFFICERS (CONT.)
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Dale Wolf
Dale Wolf has served as our Senior Vice President, Global Operations since January 2020 and is responsible for NuVasive’s supply chain, distribution, manufacturing, quality assurance and real estate and facilities functions.
Mr. Wolf previously served as the Company’s Vice President, Manufacturing, since August 2018. Prior to joining the Company, Mr. Wolf spent over 15 years with General Electric (GE), including leadership roles in manufacturing, operations and supply chain. Most recently, from October 2014 to June 2018, Mr. Wolf served as an executive plant manager for GE Healthcare.
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Educational Background
• Bachelor’s Degree in Mechanical Engineering from the University of Wisconsin – Madison
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2023 Annual Meeting of Stockholders | 28 | NuVasive, Inc. Proxy Statement |
Security Ownership of Certain Beneficial
Owners and Management
In this section of the Proxy Statement, we provide information about the security ownership of certain beneficial owners and management. The table below sets forth information regarding ownership of our common stock as of April 25, 2023, the Record Date for our Annual Meeting (or such other date as provided below), by (a) each person known to the Company to beneficially own more than 5% of the outstanding shares of our common stock, (b) each Director of the Company, (c) the Company’s Chief Executive Officer, Chief Financial Officer and each other Named Executive Officer, and (d) all Directors and executive officers as a group.
We determined beneficial ownership under rules promulgated by the SEC, based on information obtained from questionnaires, Company records and filings with the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and also any shares which the individual or entity has the right to acquire within 60 days of April 25, 2023. For our Directors and executive officers, this includes shares subject to restricted stock units, performance restricted stock units, and/or shares issuable pursuant to our Employee Stock Purchase Plan that can be acquired (including as a result of expected vesting and/or delivery) within 60 days of April 25, 2023. All percentages are based on 52,348,998 shares of our common stock outstanding as of April 25, 2023. Except as noted below, each holder has sole voting and investment power with respect to all shares listed as beneficially owned by that holder.
Name and Address of Beneficial Owner (1)
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Number of Shares of Common Stock |
Percent of Common Stock |
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Principal Stockholders |
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BlackRock, Inc. (2) 55 East 52nd Street, New York, NY 10055 |
9,100,878 | 17.4 | % | |||||
The Vanguard Group (3) 100 Vanguard Blvd., Malvern, PA 19355 |
6,236,112 | 11.9 | % | |||||
Thrivent Financial for Lutherans (4) 901 Marquette Avenue, Suite 2500, Minneapolis, MN 55402 |
3,219,514 | 6.2 | % | |||||
Directors (other than J. Christopher Barry) |
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Vickie L. Capps (5)(6) |
28,846 | * | ||||||
John A. DeFord, Ph.D. (5)(6) |
15,955 | * | ||||||
Robert F. Friel (5)(6) |
26,307 | * | ||||||
R. Scott Huennekens (5)(6) |
13,522 | * | ||||||
Siddhartha C. Kadia, Ph.D. (5)(6) |
7,527 | * | ||||||
Leslie V. Norwalk, Esq. (5)(6) |
32,530 | * | ||||||
Amy Belt Raimundo (5)(6) |
6,215 | * | ||||||
Daniel J. Wolterman (5)(6) |
27,218 | * |
2023 Annual Meeting of Stockholders | 29 | NuVasive, Inc. Proxy Statement |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (CONT.)
Named Executive Officers |
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J. Christopher Barry |
72,997 | * | ||||||
Matthew K. Harbaugh |
11,081 | * | ||||||
Michael Farrington |
3,117 | * | ||||||
Nathaniel B. Sisitsky, Esq. |
22,423 | * | ||||||
Dale Wolf |
8,943 | * | ||||||
Massimo Calafiore (7) |
1,124 | * | ||||||
All Directors and executive officers as a group (14 persons) (8) |
277,805 | * |
* | Represents beneficial ownership of less than 1% of the outstanding shares of our common stock. |
(1) | Unless otherwise indicated, the address of each beneficial owner is c/o NuVasive, Inc., 12101 Airport Way, Broomfield, CO 80021. |
(2) | Based solely upon Amendment No. 15 to a Schedule 13G filed on January 6, 2023, by BlackRock, Inc. According to the Schedule 13G, BlackRock, Inc. is the beneficial owner of 9,100,878 shares, and has sole voting power with respect to 8,974,965 shares and sole dispositive power with respect to 9,100,878 shares. |
(3) | Based solely upon Amendment No. 13 to a Schedule 13G filed on February 9, 2023, by The Vanguard Group, Inc. (“Vanguard”). According to the Schedule 13G, Vanguard is the beneficial owner of 6,236,112 shares, and has shared voting power with respect to 88,965 shares, sole dispositive power with respect to 6,095,043 shares, and shared dispositive power with respect to 141,069 shares. |
(4) | Based solely upon a Schedule 13G filed on February 13, 2023, by Thrivent Financial for Lutherans (“Thrivent”). According to the Schedule 13G, Thrivent is the beneficial owner of 3,219,514 shares, and has shared voting power with respect to 3,154,365 shares, sole voting power with respect to 65,149 shares, sole dispositive power with respect to 65,149 shares, and shared dispositive power with respect to 3,154,365 shares. |
(5) | Includes 3,788 shares issuable within 60 days of April 25, 2023 pursuant to the vesting of restricted stock units. |
(6) | Includes vested restricted stock units for which share delivery has been deferred, as follows: Ms. Capps – 23,058 shares; Dr. DeFord – 12,167 shares; Mr. Friel – 22,519 shares; Mr. Huennekens – 8,374 shares; Dr. Kadia – 0 shares; Ms. Norwalk – 25,647 shares; Ms. Raimundo – 2,427 shares; and Mr. Wolterman – 23,430 shares. |
(7) | As discussed below in the Compensation Discussion and Analysis, Mr. Calafiore ceased to serve as an executive officer as of August 31, 2022. |
(8) | Includes the following shares owned by our current executive officers and Directors, in the aggregate: (a) 128,761 shares of common stock, (b) 30,304 shares issuable within 60 days of April 25, 2023 pursuant to the vesting of restricted stock units, (c) 117,622 shares issuable pursuant to vested restricted stock units for which delivery has been deferred, and (d) 1,118 shares issuable within 60 days of April 25, 2023 pursuant to our Employee Stock Purchase Plan. |
2023 Annual Meeting of Stockholders | 30 | NuVasive, Inc. Proxy Statement |
Certain Relationships
and Related Transactions
In this section of the Proxy Statement, we discuss our policy regarding transactions involving Directors, executive officers and principal stockholders (“Related Parties”), and certain agreements that we have entered into with Related Parties.
Related-Person Transactions Policy
It is our policy that the Audit Committee approve or ratify transactions involving Related Parties or members of their immediate families or entities controlled by any of them or in which they have a substantial ownership interest. Such transactions include employment of immediate family members of any Director or executive officer. Management advises the Audit Committee on a regular basis of any such transaction that is proposed to be entered into or continued and seeks approval. This policy is set forth in writing in the Company’s Audit Committee charter.
Certain Related-Person Transactions
Since January 1, 2022, there has not been nor are there any currently proposed transactions or series of similar transactions to which the Company was or is to be a party in which the amount involved exceeds $120,000 and in which any Director, executive officer, holder of more than 5% of our common stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest required to be disclosed under SEC rules.
For additional information related to transactions to be entered into in connection with the Merger, please refer to the Definitive Proxy Statement on Schedule 14A filed with the SEC on March 28, 2023, and other relevant materials in connection with the proposed transaction that we may file with the SEC containing important information about the Merger.
2023 Annual Meeting of Stockholders | 31 | NuVasive, Inc. Proxy Statement |
Proposal 2
Ratification of Independent Auditor
At the Annual Meeting, we are asking our stockholders to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm (the “independent auditor”) to audit our financial statements for the fiscal year ending December 31, 2023. Ernst & Yong LLP has served as the Company’s independent auditor for 22 years, and the Audit Committee has selected Ernst & Young LLP as the Company’s independent auditor for 2023. We are asking our stockholders to ratify the appointment of Ernst & Young LLP because we value our stockholders’ views on the Company’s independent auditor, even though the ratification is not required by our Bylaws or otherwise.
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Our Board recommends you vote “FOR” the ratification of Ernst & Young LLP as our independent registered public accounting firm |
If our stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain Ernst & Young LLP as our independent auditor or whether to consider the selection of a different firm. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent auditor at any time during the fiscal year ending December 31, 2023. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will have the opportunity to make statements if they desire to do so. Such representatives are also expected to be available to respond to appropriate questions.
Vote Required and Board Recommendation
Ratification of the appointment of Ernst & Young LLP as our independent auditor requires the affirmative “FOR” vote of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote thereon. A vote to “ABSTAIN” will have the same effect as a vote “AGAINST” the resolution.
The Board recommends a vote “FOR” the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023.
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2023 Annual Meeting of Stockholders | 32 | NuVasive, Inc. Proxy Statement |
Audit Fees and
Audit Committee Report
In this section of the Proxy Statement, we discuss the fees paid to our independent auditor and provide the report of the Audit Committee for the year ended December 31, 2022.
Principal Accountant Fees and Services
The following table presents the fees for professional audit services rendered by Ernst & Young LLP and fees billed for other services rendered by Ernst & Young LLP for fiscal years 2022 and 2021. All fees paid to Ernst & Young LLP for the periods presented were pre-approved by the Audit Committee.
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Fiscal Year 2022 | Fiscal Year 2021 | ||||||||
Audit Fees (1) |
$ | 2,226,925 | $ | 2,128,000 | ||||||
Audit-Related Fees (2) |
$ | — | $ | — | ||||||
Tax Fees (3) |
$ | 74,622 | $ | 77,450 | ||||||
All Other Fees (4) |
$ | — | $ | 7,320 | ||||||
Total |
$ | 2,301,547 | $ | 2,212,770 |
(1) | Audit fees represent fees and out-of-pocket expenses whether or not yet invoiced for professional services provided in connection with the audit of the Company’s financial statements, review of the Company’s quarterly financial statements, and audit services provided in connection with other regulatory filings. |
(2) | Audit Related Fees consist of fees billed in the indicated year for assurance and related services that are reasonably related to the performance of the audit or review of the financial statements but not listed as “Audit Fees”. |
(3) | Tax Fees consist of fees incurred related to tax compliance services and consultation services on various domestic and international tax matters. |
(4) | Includes amounts billed for annual subscriptions to Ernst & Young’s online resource library and online document repository. |
Audit Committee Report
Under the guidance of a written charter adopted by the Board, the purpose of the Audit Committee is to oversee the accounting and financial reporting processes of the Company and audits of its financial statements. The responsibilities of the Audit Committee include appointing and approving the services and related fees of the independent registered public accounting firm. The Audit Committee currently consists of three members, each of whom meets the independence and qualification standards for audit committee membership set forth in the listing standards provided by Nasdaq.
Management has primary responsibility for the system of internal controls and the financial reporting process. The independent registered public accounting firm has the responsibility to express an opinion on the financial statements based on an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). The independent registered public accounting firm is also responsible for auditing the Company’s internal control over financial reporting. The Audit Committee appointed Ernst & Young LLP to audit the Company’s financial statements and the effectiveness of the related systems of internal control over financial reporting for the fiscal year ended December 31, 2022.
The Audit Committee is kept apprised of the progress of the documentation, testing and evaluation of the Company’s system of internal controls over financial reporting, and provides oversight and advice to management. In connection with this oversight, the Audit Committee receives periodic updates provided by management and Ernst & Young LLP at each regularly scheduled Audit Committee meeting. The Audit Committee also holds regular private sessions with Ernst & Young LLP to discuss their audit plan for the year, the financial statements and risks of fraud. At the conclusion of the process, management provides the Audit Committee with, and the Audit Committee reviews, a report on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee also reviewed the report of management contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”), filed with the SEC, as well as the Report of Independent Registered Public Accounting Firm included in the Company’s 2022 Annual Report.
2023 Annual Meeting of Stockholders | 33 | NuVasive, Inc. Proxy Statement |
AUDIT FEES AND AUDIT COMMITTEE REPORT (CONT.)
The Audit Committee pre-approves all services to be provided by the Company’s independent registered public accounting firm. Pre-approval is required for audit services, audit-related services, tax services and other services. In some cases, the full Audit Committee provides pre-approval for up to one year, related to a particular defined task or scope of work and subject to a specific budget. In other cases, a designated member of the Audit Committee may have delegated authority from the Audit Committee to pre-approve additional services, and such pre-approval is later reported to the full Audit Committee. See “Principal Accountant Fees and Services” for more information regarding fees paid to Ernst & Young LLP for services in fiscal years 2022 and 2021.
In this context and in connection with the audited financial statements contained in the Company’s 2022 Annual Report, the Audit Committee:
• | reviewed and discussed the audited financial statements as of and for the fiscal year ended December 31, 2022 with the Company’s management and Ernst & Young LLP; |
• | discussed with Ernst & Young LLP the matters required to be discussed by the applicable requirements of the PCAOB and the SEC; |
• | received and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, discussed with the independent accountant its independence, and concluded that the non-audit services performed by Ernst & Young LLP are compatible with maintaining its independence; and |
• | based on the foregoing reviews and discussions, recommended to the Board that the audited financial statements be included in the Company’s 2022 Annual Report filed with the SEC. |
The Audit Committee met four times in 2022.
This report for 2022 is provided by the undersigned members of the Audit Committee of the Board.
Vickie L. Capps (Chair)
R. Scott Huennekens
Leslie V. Norwalk, Esq.
The preceding “Audit Committee Report” shall not be deemed to be “soliciting material” or “filed” with the Securities and Exchange Commission, nor shall any information in this report be incorporated by reference into any past or future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates it by reference into such filing.
2023 Annual Meeting of Stockholders | 34 | NuVasive, Inc. Proxy Statement |
Proposal 3
Advisory Executive Compensation
“Say-on-Pay” Vote
At the Annual Meeting, and as required by Section 14A of the Exchange Act, our stockholders will be asked to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers as part of our annual “say-on-pay” proposal.
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Our Board recommends you vote “FOR” the annual “say-on-pay” proposal regarding compensation of our Named Executive Officers. |
As discussed in the Compensation Discussion and Analysis section of this Proxy Statement, our compensation principles and underlying programs are designed to attract, motivate and retain key executive talent who will drive sustainable long-term value for stockholders.
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Our executive compensation programs are designed so that a significant portion of pay is variable or “at risk” and to link the realized value of compensation with Company performance and the returns delivered to stockholders. |
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We require executives to maintain a significant level of equity ownership in NuVasive and provide a meaningful portion of our executives’ total compensation in the form of equity-based, long-term incentives, further driving the link between stockholder value and executive compensation. |
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We regularly monitor our executive compensation programs to ensure best practices against corporate governance standards as well as competitiveness against pay programs at companies in our industry of similar size and complexity. |
As further discussed in the Compensation Discussion and Analysis section, the Compensation Committee and the Board highly value the opinions of our stockholders and, in a continuing effort to better understand their views regarding executive compensation practices, the Company continued its stockholder outreach in 2022 and 2023. These outreach efforts continue to enable the Company to strengthen its executive compensation program. In addition, at the Annual Meeting we are again asking our stockholders to approve holding the advisory vote to approve executive compensation every year as we believe this allows for a meaningful evaluation period of performance against our compensation practices.
The vote on our “say-on-pay” proposal is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our Named Executive Officers, as described in this Proxy Statement in accordance with the disclosure rules of the Securities and Exchange Commission. Because your vote is advisory, it will not be binding on the Board and will not overrule any decision by the Board or require the Board to take any action. In addition, your vote will not create or imply any additional fiduciary duty on the part of the Board and will not restrict or limit the ability of our stockholders to make proposals for inclusion in proxy materials related to executive compensation. However, the Compensation Committee values the opinion of our stockholders and will take into account the outcome of the vote when considering future executive compensation decisions.
Vote Required and Board Recommendation
Approval of the non-binding advisory vote on the compensation of the Company’s NEOs requires the affirmative “FOR” vote of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote thereon. A vote to “ABSTAIN” will have the same effect as a vote “AGAINST” the resolution. Because broker non-votes are not counted as votes “FOR” or “AGAINST” this resolution, they will have no effect on the outcome of the vote.
The Board of Directors recommends a vote “FOR” approval (on a Named Executive Officers as disclosed in this Proxy Statement.
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2023 Annual Meeting of Stockholders | 35 | NuVasive, Inc. Proxy Statement |
Compensation Discussion
and Analysis
In this section of the Proxy Statement, we discuss our executive compensation philosophy and programs, the decisions made by the Compensation Committee (for purposes of this Compensation Discussion and Analysis, the “Committee”) under those programs, and the factors considered in making those decisions for the Company’s Named Executive Officers (the “NEOs”) in 2022. As previously disclosed, on February 8, 2023, we entered into the Merger Agreement with Globus Medical. If the Merger with Globus Medical is consummated, NuVasive will become a wholly-owned subsidiary of Globus Medical and will no longer operate as a standalone publicly-traded company. The Merger Agreement does not provide for the continuation of employment of any NuVasive executive officers, and it is expected that Globus Medical’s executive officers will serve as the executive officers of the combined company following the closing of the Merger. If the Merger is consummated, the Board of Directors of the combined company may adopt new, amended or supplemental policies, practices and plans relating to, among other things, the compensation and benefits afforded to its executive officers, employees and directors. As a result, the following discussion is intended to provide disclosure of our historical executive compensation and director compensation for the year ended December 31, 2022.
Executive Summary
We reported global net sales of $1.202 billion in 2022, an increase of 5.5% on a reported basis, compared to the prior year. Although we continued to experience challenges associated with the COVID-19 pandemic and the global macroeconomic environment, we remained focused on executing our growth strategy, both in the near and long term. Full-year 2022 net sales growth was driven by further adoption of the Pulse platform and new products within the C360 portfolio, as well as continued strong growth in our international business. Throughout 2022, we executed on the fundamentals of our growth strategy which include:
2022 Performance and Compensation Highlights | ||
Core growth
Continuing momentum in our core business and opportunity from globalization |
• Launched Reline Cervical for posterior cervical fusion as part of the C360 portfolio
• Launched the NuVasive Tube System (NTS) and Excavation Micro, a minimally invasive surgery system that provides comprehensive solutions for both TLIF and decompression
• Expanded our Clinical Professional Development (CPD) program with the opening of the Singapore Experience Center for the Asia-Pacific region | |
Intelligent surgery
Extending Pulse with intelligent surgery solutions supporting preoperative to postoperative care |
• Expanded Pulse into multiple international markets and first Pulse case performed in ambulatory surgery center
• Integrated X360 and Reline Cervical with Pulse to deliver optimal solution for surgeons and patients |
2023 Annual Meeting of Stockholders | 36 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
2022 Performance and Compensation Highlights | ||
Market opportunities
Aggressively pursuing attractive market opportunities including outside of traditional spine |
• Established partnership with SMAIO, a French-based technology company that specializes in the use of clinical data and preoperative planning
• Completed successful integration of Simplify Medical, providing us with the ability to offer motion-preserving cervical artificial disc technology for cTDR procedures and extending our procedural offerings in our C360 portfolio | |
2022 bonus plan
Funded at 75% of target |
• During 2022, our financial performance continued to be impacted by challenges associated with the COVID-19 pandemic and the global macroeconomic environment, including reductions in procedural volumes, disruptions in the global supply chain, and unfavorable foreign currency fluctuations
• Did not achieve all of the pre-established financial targets for our 2022 annual bonus plan, and the bonus plan was funded below target at 75%
• 2022 annual bonus to CEO and other NEOs paid within range from 60% - 80% of target | |
No award modifications
No modifications made to long-term incentive awards |
• 2020 performance RSU award did not achieve the minimum threshold for the pre-established financial target over the three-year period 2020 - 2022 and did not vest (0% of target)
• 2020 performance cash award paid at 126.8% of target based on pre-established financial targets for 2020, 2021 and 2022 |
Our Company
We are a global medical technology company focused on developing, manufacturing, selling and providing procedural solutions for spine surgery, with a guiding purpose to transform surgery, advance care and change lives. We offer a comprehensive portfolio of procedurally integrated spine surgery solutions, including surgical access instruments, spinal implants, fixation systems, biologics, and enabling technologies, as well as systems and services for intraoperative neuromonitoring. In addition, we develop and sell magnetically adjustable implant systems for spine and specialized orthopedic procedures.
Our Named Executive Officers
In accordance with SEC rules and regulations, our NEOs for 2022 include our Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers serving as executive officers on December 31, 2022. Also, in accordance with SEC rules, Massimo Calafiore, our former Executive Vice President and Chief Commercial Officer, is included based on his service as an executive officer during 2022 and his 2022 compensation. On August 8, 2022, Mr. Calafiore notified the Company that he was resigning to become the chief executive officer of a privately-held orthopedics technology company. Mr. Calafiore’s resignation was effective August 31, 2022.
J. Christopher Barry, Chief Executive Officer |
Nathaniel B. Sisitsky, Esq., Senior Vice President, General Counsel and Corporate Secretary | |
Matthew K. Harbaugh, Executive Vice President, Chief Financial Officer |
Dale Wolf, Senior Vice President, Global Operations | |
Michael Farrington, Senior Vice President, People and Culture |
Massimo Calafiore, Former Executive Vice President, Chief Commercial Officer (through Aug. 31, 2022) |
A complete list of our current executive officers with accompanying biographical information is included in this Proxy Statement under the caption “Executive Officers”.
2023 Annual Meeting of Stockholders | 37 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
2022 Financial and Business Highlights
During 2022, our financial performance continued to be impacted by challenges associated with the COVID-19 pandemic and the global macroeconomic environment, including reductions in procedural volumes, disruptions in the global supply chain, and unfavorable foreign currency fluctuations. Despite the impact COVID-19 and global macroeconomic conditions has had on our business, we continued to grow our business, release innovative products and technologies, invest in our people, improve operating processes, and take steps to position ourselves for long-term success.
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We reported global net sales of $1.202 billion in 2022, an increase of 5.5% on a reported basis, compared to the prior year. Although we continued to experience challenges associated with the COVID-19 pandemic and global macroeconomic conditions, we remained focused on executing our growth strategy, both in the near and long term. Full-year 2022 net sales growth was driven by further adoption of the Pulse platform and new products within the C360 portfolio, as well as continued strong growth in our international business. |
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We have continued to focus on bringing to market innovative and enabling technologies to drive increased adoption of less-invasive surgery and improve clinical, operational and financial outcomes. In 2022, we launched the P360 portfolio, a comprehensive solution for surgery from the prone position, including the NuVasive Tube System. Additionally, our goal is to use technology and data to make spine surgery more intelligent, and we made investments to expand the Pulse platform to include applications and technologies designed to improve pre-operative treatment selection and planning and post-operative workflow and analytics, as well as intra-operative surgical automation. | ||
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We recognize the growing interest of our investors, employees, patients, surgeons and hospital customers in corporate responsibility and sustainability, including environmental, social and governance (“ESG”) matters. In February 2022, we published our inaugural ESG Report, which shares our progress on key ESG topics and provides a platform to further strengthen and integrate sustainability into our core business practices. We also established an ESG Steering Committee to ensure guidance and support of NuVasive’s corporate responsibility and sustainability initiatives. |
We believe that our surgeon education and training program is a strategic differentiator for us, and our Clinical Professional Development team has developed comprehensive, in-person training labs and virtual content to demonstrate the benefits of our innovative products and procedures. In 2022, we announced the opening of our Singapore Experience Center for the Asia-Pacific region, supporting our growth strategy to globalize our business and providing surgeons with a dedicated demonstration site of our Pulse platform. Education and training of surgeons will continue to be a focus as we advance our less-invasive solutions integrated with enabling technology. |
2023 Annual Meeting of Stockholders | 38 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
The COVID-19 pandemic significantly impacted our business and results of operations in fiscal years 2020, 2021 and 2022. At the height of the COVID-19 pandemic, governments implemented extraordinary measures to slow the spread of the virus, which included the mandatory closure of businesses, restrictions on travel and gatherings, quarantine and physical distancing requirements, and vaccine mandates. In addition, many government agencies in conjunction with hospitals and healthcare systems deferred, reduced, or suspended elective surgical procedures due to COVID-19. Additionally, the COVID-19 pandemic and global macroeconomic conditions have led to disruptions in the global supply chain. While we have largely been able to mitigate the impact, we have experienced challenges associated with material and component availability for certain product lines, longer shipping and delivery times for raw materials and components, constrained logistics capacity related to the movement of our products, availability of skilled labor and increased costs of raw materials, components, labor, and freight and courier services. Global economic conditions also impacted foreign currency exchange rates relative to the U.S. dollar. Although the majority of our net sales and cash generation have been made in the U.S., our business in markets outside of the U.S. has continued to increase in recent years and international net sales (excluding Puerto Rico) were 23% of our total net sales for the year ended December 31, 2022. The increase in net sales from our international business, coupled with significant and unanticipated fluctuations in foreign currency exchange rates had an adverse effect on our 2022 financial results, including our net sales, net sales growth rates, and margins.
Despite the impact COVID-19 and global macroeconomic factors have had on our business, we continued to invest in research and development, invest in our people, improve operating processes, and take steps to position ourselves for long-term success. During 2022, we remained focused on developing innovative solutions and enabling technologies to drive increased adoption of less-invasive surgery and continued to train and educate surgeons on our products and surgical techniques through live and virtual settings. Further, we continued to make investments in the Pulse platform to support our global commercialization plan for the technology and build-out the platform to enable further improvement of the spine care pathway. The combination of our differentiated technologies with our talented, clinically trained commercial teams, helped drive 2022 global net sales of $1.202 billion. While our Total Shareholder Return (“TSR”) was negative in 2022 (-21%), our 2022 financial results reflected an increase in net sales of 5.5% compared to 2021.
The COVID-19 pandemic continues to evolve and its impact on our business will depend on several factors that are highly uncertain and unpredictable, including, the efficacy and adoption of vaccines, future resurgences of the virus and its variants, the imposition of governmental lockdowns, quarantine and physical distancing requirements, patient capacity at hospitals and healthcare systems, the duration and severity of healthcare worker shortages, and the willingness and ability of patients to seek care and treatment due to safety concerns or financial hardship. Additionally, due to the significant uncertainty that exists relative to the duration and overall impact of the macroeconomic factors discussed above, our future operating results may be negatively impacted. For more information about our 2022 financial and business performance, please see “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2022.
2023 Annual Meeting of Stockholders | 39 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
2022 Executive Compensation Highlights
NuVasive’s executive compensation program emphasizes pay-for-performance and places a significant portion of annual direct compensation opportunity in the form of variable incentives designed to motivate our NEOs to achieve overall Company goals, specific business goals and individual performance goals. The compensation awarded to our NEOs for 2022 reflected the financial and operational results mentioned above, including the impact of COVID-19 and global macroeconomic conditions, as well as the Committee’s pay-for-performance compensation philosophy.
Compensation Component | Link to Business Strategy | 2022 Compensation Actions | ||
Base Salary (page 43) |
- Competitive base salaries
- Increases are not automatic or |
- Merit based increases for NEOs continuing in role ranging from 2.7% – 5.3% were approved for 2022.
- Mr. Farrington who was not an NEO in 2021, received a salary adjustment for 2022 in his prior role, and in connection with his promotion to the new role of Senior Vice President, People and Culture, in September 2022, his base salary was increased by 7.7%.
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Annual Incentives (page 43) |
- Annual bonus pool funded
- Metrics and targets are evaluated each year to ensure alignment with business strategy.
- Differentiating award values based on individual performance assists in motivation of key talent. |
- Annual bonus plan funded at 75% of target.
- Annual cash incentive awards for our NEOs were paid at 60% - 80% of target. | ||
Long-Term Incentives (page 49) |
- Award mix and performance metrics are reviewed annually for strategy alignment.
- Consistent with our strategy to drive long-term stockholder value, our 2022 PRSUs use net sales growth as the primary performance metric and non-GAAP* operating margin expansion as a secondary metric.
- Differentiating award values based on individual performance and potential, as well as overlapping vesting periods, assists in motivation and retention of key talent. |
- 2020 LTI Award Vesting:
◯ PRSUs granted in March 2020 with 3-year cliff vesting in March 2023 vested as to 0% of target based on performance below minimum established thresholds for non-GAAP operating margin expansion over the three-year period 2020 - 2022.
◯ Performance cash awards granted in March 2020 with 3-year cliff vesting in March 2023 vested as to 126.8% of target based on performance above target goals established for net sales growth over each of the 3 years 2020, 2021 and 2022.
- No modifications were made to any long-term incentive program. While COVID-19 and global macroeconomic conditions impacted the Company’s net sales and non-GAAP operating margin performance during the period 2020 - 2022, which in turn impacted performance RSU and performance cash awards granted in 2018, 2019, 2020 and 2021, no actions were taken to mitigate the negative impact on payouts of these awards. |
* A reconciliation of certain non-GAAP financial measures is provided in Appendix A.
2023 Annual Meeting of Stockholders | 40 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
The charts below illustrate the mix of target total annual direct compensation for Mr. Barry (our CEO) and other NEOs (excluding Mr. Barry) for 2022. As illustrated below, 87% of the CEO’s target total annual direct compensation and 72% of other NEOs’ target total annual direct compensation is variable with performance, including stock price performance.
2022 Target Total Annual Direct Compensation
For more information about the 2022 compensation decisions and the factors considered in making these decisions, please see pages 46 – 49.
Say on Pay Results and Stockholder Engagement
The Committee and the Board carefully consider stockholder feedback regarding executive compensation. The Company regularly interacts with stockholders throughout the year on several matters, including executive compensation. Through these and other outreach efforts, we can:
• | Better understand our stockholders’ concerns and interests on executive compensation and governance related issues; |
• | Discuss the evolution of our compensation program; and |
• | Gather stockholder feedback and convey the stockholder opinions and commentary directly to the Committee and the rest of the Board. |
96% of the votes cast at the 2022 Annual Meeting voted in favor of our “say-on-pay” proposal |
At the 2022 Annual Meeting of Stockholders, the advisory vote on the 2021 compensation of our NEOs (the “say-on-pay” vote) received approval from more than 96% of votes cast. Based on our stockholder outreach efforts, we believe this support reflects that our stockholders are pleased with the core design features of the executive compensation program. Leading up to the 2022 Annual Meeting, we reached out to our top stockholders and held conversations with each investor that expressed interest.
Aligned with the feedback received from stockholders, the Committee retained the core compensation design features for 2022, but made adjustments to the Company’s proxy peer group for 2022, as discussed further below. The Committee is committed to listening to stockholders’ views and taking stockholder feedback into account when reviewing the executive compensation program. In addition, our stockholders expressed satisfaction with the following components of our compensation program:
✓ | Focus on net sales growth and operating margin expansion as well as robust target goal setting |
✓ | Use of at least 50% performance-based long-term incentives |
✓ | Responsible share usage and dilution |
Finally, our stockholders were complimentary of the linkage between the compensation program, financial and stock price performance, and the Company’s long-term business strategy.
2023 Annual Meeting of Stockholders | 41 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
Executive Compensation Philosophy and Objectives
Compensation Philosophy. The Company’s executive compensation program is designed to attract, motivate and retain talented executives who drive the Company’s success and enable long-term stockholder value creation by:
• | Profitably growing the business and prudently managing risk; |
• | Linking a significant portion of our NEOs’ target compensation to performance-based results; and |
• | Appropriately aligning compensation with both short- and long-term Company performance goals. |
The deep leadership expertise of each NEO makes our NEOs highly valuable to many of our competitors, making their retention a key priority. Because many of our competitors in the spine industry are divisions of much larger companies, there is a highly competitive market for executive talent. In addition, our NEO compensation must motivate strong performance and drive stockholder returns. For these reasons, the Committee believes NEO compensation should be set at competitive levels to retain a valuable team and attract talent, while placing a strong emphasis on successful attainment of Company performance goals.
Strong Executive Compensation Governance Practices. The Committee regularly reviews best practices in governance and executive compensation. The following chart summarizes executive compensation practices that the Committee believes (i) drive Company performance and (ii) serve our stockholders’ long-term interests.
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2023 Annual Meeting of Stockholders | 42 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
Primary Elements of the Company’s Executive Compensation Program
The target total compensation opportunity for NEOs is comprised of both fixed (base salary) and variable (annual and long-term incentives) compensation. In addition, each NEO is eligible for benefits that are generally offered to Company employees.
Base Salary. Base salary for NEOs recognizes the experience, skills, knowledge and responsibilities required of each executive role. Each year, base salary is evaluated against the peer group, general competitive practices, and an internal assessment of the NEO performance, both individually and relative to other officers. For newly hired executive officers, the Committee considers industry and other competitive hiring factors. The Committee typically reviews base salary once a year and may adjust each NEO’s salary to reflect changes of responsibility, performance, and competitive conditions. The Committee does not apply specific formulae to determine changes. If adjustments are made, they are typically made effective with the first pay period in March of each year.
Annual Performance Bonus Plan. NEOs participate in an annual cash bonus plan intended to provide a financial incentive based on the achievement of specifically defined annual performance measures, including both Company-specific measures and individual performance measures. The Committee establishes an individual target bonus opportunity for each NEO expressed as a percentage of base salary. Target bonus percentages are established at the beginning of the fiscal year (or upon hiring for new hires) based on a review of:
• | Competitive market data for both target bonus opportunity and target total cash opportunity; |
• | The role of each executive, including ability to impact the Company’s overall performance; and |
• | The Committee’s assessment of internal pay equity among executives. |
The Committee may adjust each NEO’s target bonus opportunity during the year to reflect promotions or changes in level of responsibility, performance-based factors, and competitive conditions. The Committee evaluates the performance measures and targets under the plan each year to ensure they align with the Company’s short-term strategy and its long-term objective of creating sustainable stockholder value. Annual cash bonus payments, if any, are typically paid to each NEO in the first quarter of the year following the performance year.
Annual Long-Term Incentive Awards (LTI). LTI awards to our NEOs include grants of restricted stock units (RSUs) and performance restricted stock units (PRSUs). Prior to 2021, LTI awards also included performance cash awards. RSUs and PRSUs enable our NEOs to feel invested in our business and to participate in the long-term success of our Company as reflected in stock price appreciation. Furthermore, LTI awards promote retention through vesting tied to an individual’s continued employment.
In determining each NEO’s grant of LTI awards, the Committee considers:
• | Company performance; |
• | Individual past performance and future potential; and |
• | Competitive pay practices. |
In addition, the Committee evaluates the amount and value of unvested LTI awards held by NEOs to assess the retention value associated with previously granted LTI awards. It is the Committee’s aim to provide significant levels of LTI compensation to NEOs as the Committee feels it is important to the Company’s long-term growth prospects to motivate and retain the Company’s executive management team.
Process for Determining Named Executive Officer Compensation
Except for compensation actions for the CEO, which require full Board approval, the Committee is ultimately responsible for decisions relating to compensation for our NEOs. In making its decisions, the Committee considers recommendations from, and discusses decisions with, its independent compensation consultant and the management team.
Role of the Committee. The Committee has the ultimate responsibility and decision-making authority over all aspects of the executive compensation programs for our NEOs, other than the CEO as described above. The Committee seeks advice from its independent compensation consultant to assist in the assessment of executive pay elements in order to ensure that they are reasonable, aligned with stockholder interests and competitive and meet our key priorities. Additionally, the Committee considers stockholder feedback and recommendations of the CEO referenced below. For a more detailed description of the Committee’s duties and responsibilities, please refer to the Committee’s Charter, which can be found on the Company’s website under the Governance section of the Company’s Investor Relations section on www.nuvasive.com.
2023 Annual Meeting of Stockholders | 43 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
Role of Management. The Committee has full access to the management team for assessing and acting on executive compensation matters. The CEO works closely with the management team to develop management’s recommendations on the alignment of compensation with business strategy. The CEO does not make recommendations or participate in Committee deliberations on matters regarding the CEO’s own compensation. While the Committee considers input from the CEO and management in making compensation decisions, its decisions may or may not reflect management’s recommendations.
Role of Consultants. The Committee retained an independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), to advise the Committee on executive and non-employee Director compensation practices during 2022. The independent compensation consultant reports directly to the Committee and provides advice on program design, performs data and information analyses, and keeps the Committee apprised of changing trends and regulatory requirements in the executive pay arena. In 2022, the Committee concluded that the engagement of FW Cook raised no conflict of interest under applicable SEC and Nasdaq rules that would prevent FW Cook from independently providing services to the Committee.
Competitive Market Data. The Committee considers each element of compensation separately and the total compensation package as a whole to determine whether compensation is consistent with the Committee’s compensation policies, is aligned with Company performance, and is competitive. The Committee considers peer group data, as well as published survey data. While the Committee considers this data in setting executive compensation, the Committee does not solely rely upon benchmarking in relation to a specific peer group. The Committee considers multiple factors in making individual pay decisions, allowing the Committee flexibility in determining the overall compensation (as opposed to being locked into a particular data set and/or percentile target).
Peer Group. The Committee performs an annual assessment of the peer group for compensation benchmarking. In August 2021, the Committee reviewed our 2021 peer group (the “2021 Peer Group”) to determine whether the companies included were appropriate for 2022. Criteria included size (based on revenue and market capitalization), industry, peer groups as listed by proxy advisors and available compensation data. During this review, the Committee noted that the two largest companies in the 2021 Peer Group (Align Technology and IDEXX Laboratories) were significantly larger than the Company based on market capitalization, revenue, and other metrics. The Committee also acknowledged that both companies fell outside of the peer group size constraints that a well-known proxy advisory firm has established, with revenues between 0.4 to 2.5 times that of NuVasive and market capitalization between 0.25 and 4.0 times that of NuVasive. Additionally, Wright Medical Group, N.V. was removed due to its acquisition by Stryker Corporation, which was completed in November 2020. While NuVasive competes with these companies for talent, the Committee, with input from its independent compensation consultant, determined to update the 2022 proxy peer group (the “2022 Peer Group”) to better align NuVasive’s revenue and market capitalization with the median by (i) removing the two largest peers from the 2021 Peer Group, (ii) removing Wright Medical Group, N.V., and (iii) adding four new medical device companies that are similar to or smaller in size than that of NuVasive, as follows:
Removed for 2022 | Added for 2022 | |
Align Technology, Inc. |
Avanos Medical, Inc. | |
IDEXX Laboratories, Inc. |
LivaNova PLC | |
Wright Medical Group, NV |
Merit Medical Systems Inc. | |
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QuidelOrtho Corporation |
When these changes were approved by the Compensation Committee in August 2021, NuVasive approximated the median for revenue and the 25th percentile for market capitalization relative to the sixteen companies comprising the 2022 Peer Group, as follows:
2022 Peer Group |
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Avanos Medical, Inc. |
Haemonetics Corporation | LivaNova PLC | Orthofix Medical, Inc. | |||
CONMED Corporation |
ICU Medical, Inc. | Masimo Corporation | QuidelOrtho Corporation | |||
Dexcom, Inc. |
Integer Holdings Corp | Merit Medical Systems Inc. | ResMed, Inc. | |||
Globus Medical, Inc. |
Integra LifeSciences Holdings Corp | Nevro Corp. | STERIS Plc |
2023 Annual Meeting of Stockholders | 44 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
As part of the annual peer group review process, the Committee reviewed the proxy peer group again in August 2022 to establish the proxy peer group for 2023 compensation benchmarking. Criteria included size (based on revenue and market capitalization), industry, peer groups as listed by proxy advisors and available compensation data. During this review, the Committee noted that Steris was significantly larger than the Company based on market capitalization, revenue, and other metrics. The Committee also acknowledged that Steris fell outside of the peer groups utilized by well-known proxy advisory firms.
The Committee, with input from its independent compensation consultant, determined to update the 2023 proxy peer group (the “2023 Peer Group”) to better align NuVasive’s revenue and market capitalization with the median by removing Steris and maintaining the remaining 15 companies as follows:
2023 Peer Group |
|
|
| |||
Avanos Medical, Inc. |
Haemonetics Corporation | LivaNova PLC | Orthofix Medical, Inc. | |||
CONMED Corporation |
ICU Medical, Inc. | Masimo Corporation | QuidelOrtho Corporation | |||
Dexcom, Inc. |
Integer Holdings Corp | Merit Medical Systems Inc. | ResMed, Inc. | |||
Globus Medical, Inc. |
Integra LifeSciences Holdings Corp | Nevro Corp. |
|
Additional Published Survey Sources. As noted above, the Committee does not rely upon a stated benchmarking percentile in relation to this specific peer group alone, but rather relies upon varied sources of data and other factors in making individual pay decisions. To supplement market data gathered from publicly disclosed filings of our specific peer group, the Committee also considers market information from the Radford Global Technology published compensation survey, which is reflective of the market in which we compete for talent. The identity of the companies comprising the survey data is not disclosed to, or considered by, the Committee in its decision-making process and the Committee does not consider the identity of the companies comprising the survey data to be material for this purpose.
2023 Annual Meeting of Stockholders | 45 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
Determining Executive Compensation for 2022
For 2022, the Committee (and the Board, in the case of the CEO) considered market pay-related data and other factors such as Company performance, performance against individual goals and objectives, realizable pay data, and a multi-year look-back of total compensation through tally sheets (inclusive of annual cash compensation, LTI awards granted and earned, and benefits and perquisites) in determining NEO compensation for 2022.
2022 Base Salary. The table below sets forth base salary rates for the NEOs as of December 31, 2021 and 2022, and the percentage change:
|
2021 Base Salary Rate(1) | 2022 Base Salary Rate(2) | % Change from 2021 | |||
J. Christopher Barry |
$ 875,000 | $ 900,000 | 2.9% | |||
Matthew K. Harbaugh |
$ 535,500 | $ 550,000 | 2.7% | |||
Michael Farrington(3) |
$ 280,000 | $ 350,000 | 25.0% | |||
Nathaniel B. Sisitsky |
$ 401,829 | $ 415,893 | 3.5% | |||
Dale Wolf |
$ 391,000 | $ 404,685 | 3.5% | |||
Massimo Calafiore |
$ 475,000 | $ 500,000 | 5.3% |
(1) | 2021 Base Salary Rate reflects annual base salary rate in effect on December 31, 2021. |
(2) | 2022 Base Salary Rate reflects annual base salary rate in effect on December 31, 2022. |
(3) | In February 2022, Mr. Farrington, who was not an NEO in 2021, received a salary adjustment in his role of Senior Vice President, Corporate Marketing, Brand, and Communications. Mr. Farrington assumed additional responsibilities leading our human resources, talent, and total rewards function in connection with his promotion to the new role of Senior Vice President, People and Culture, in September 2022, at which time his base salary was increased by 7.7%. |
2022 Annual Performance Bonus. In February 2022, the Committee approved the terms of the 2022 annual performance bonus plan (the “2022 Bonus Plan”) under which our NEOs are eligible to receive a cash bonus based on the achievement of Company and individual performance goals. The Committee established an individual target bonus opportunity for each NEO based on peer group and survey data for similar positions, each executive officer’s role, including their ability to impact the Company’s overall performance, and internal pay equity among the executive officers. Consistent with the design of the 2021 annual performance bonus plan, the Committee approved a maximum bonus opportunity under the 2022 Bonus Plan at 200% of target.
For 2022, and consistent with our past practice, the Committee approved funding guidelines that include payout scenarios for various levels of Company financial performance along with achievement of strategic objectives (described below). The weighting of each performance measure for purposes of the 2022 Bonus Plan is set forth in the table below:
2022 Bonus Plan – Performance Measure Weighting
35%
2022 Full-year Net Sales
|
35%
2022 Full-year Non-GAAP Operating Margin |
30%
Achievement of Strategic Objectives |
The Committee selected net sales and non-GAAP operating margin as the metrics for the financial performance components of the 2022 Bonus Plan, each weighted equally, as the Committee believes these performance metrics closely align with both the Company’s short-term strategy and its long-term objective of creating sustainable stockholder value (which is consistent with stockholder feedback).
The Committee defined these metrics for purposes of the 2022 Bonus Plan as follows:
• | Net Sales: Net sales for the fiscal year ended December 31, 2022, calculated from the year-end financial statements, excluding the effect of currency fluctuations and financial impact of substantial acquisitions and divestitures that close after January 1, 2022; and |
2023 Annual Meeting of Stockholders | 46 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
• | Non-GAAP Operating Margin: Non-GAAP operating margin for the fiscal year ended December 31, 2022, calculated from the year-end financial statements (which includes the cost of 2022 Bonus Plan payouts), excluding the financial impact of substantial acquisitions and divestitures that close after January 1, 2022. |
The purpose of these adjustments is to ensure the measurement of performance reflects factors that management can directly control and that payout levels are not artificially inflated or impaired by factors unrelated to the ongoing operation of the business. The Committee feels these definitions appropriately measure core net sales and operating margin performance.
The strategic objectives for the 2022 Bonus Plan consisted of: (i) maximizing procedural participation through adoption of cervical portfolio products, enabling technology, and products manufactured by our NuVasive Specialized Orthopedics (“NSO”) subsidiary, and (ii) enhancing the employee experience through employee engagement, diversity and inclusion initiatives, and improving employee retention and hiring practices.
Results for each performance measure are determined on a scale of 0% - 200%, based on the level of achievement for each performance measure, with a maximum bonus opportunity under the 2022 Bonus Plan at 200% of target.
Demonstration of Rigorous Financial Performance Goal Setting. The chart below sets forth the threshold, target and maximum goals for the financial performance components of the 2022 Bonus Plan established by the Committee:
Metric ($ in millions)
|
2021 Baseline (1)
|
2022 Full-year Financial Performance Goals |
Increase over 2021 Actual | |||||||||||
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum | |||||||||
Net Sales(2) |
$1,139 | $1,162 | $1,266 | $1,393 | +3.0% | +12.2% | +23.5% | |||||||
Non-GAAP Operating Margin(2) |
12.80% | 12.80% | 15.80% | 17.80% | 00 bps | 300 bps | 500 bps |
(1) | 2021 Baseline reflects financial results for the year ended December 31, 2021. |
(2) | Data has been rounded. |
2022 Bonus Plan Results. In determining annual bonus payments for each NEO, the Committee considers individual and Company performance, as reflected in each executive’s leadership, business unit or functional achievements and results against goals and objectives. The evaluation of an executive’s performance relative to these considerations is inherently subjective and is not based on any mathematical calculation or formula; rather, it is based on the collective business experience and judgment of the Committee (and the Board, in the case of the CEO) to holistically consider the performance of each executive and his or her contribution to the overall success of the Company.
In February 2023, the Committee (and the Board, in the case of the CEO) reviewed the Company’s financial and business performance and approved payouts under the 2022 Bonus Plan. During 2022, we continued to experience negative impacts as a result of the COVID-19 pandemic and global macroeconomic conditions, including challenges associated with material and component availability for certain product lines, longer shipping and delivery times for raw materials and components, constrained logistics capacity related to the movement of our products, availability of skilled labor and increased costs of raw materials, components, labor, and freight and courier services. Global economic conditions also impacted foreign currency exchange rates relative to the U.S. dollar. Although the majority of our net sales and cash generation have been made in the U.S., our business in markets outside of the U.S. has continued to increase in recent years and international net sales (excluding Puerto Rico) were 23% of our total net sales for the year ended December 31, 2022. The increase in net sales from our international business, coupled with significant and unanticipated fluctuations in foreign currency exchange rates, had an adverse effect on our 2022 financial results, including our net sales, net sales growth rates, and margins. For the year ended December 31, 2022, we reported net sales of $1.202 billion and non-GAAP operating margin of 12.4%, when calculated in accordance with the 2022 Bonus Plan. Accordingly, the Company achieved 97% of the goal established for the financial performance measure for net sales and fell short of the minimum threshold established for the financial performance measure for non-GAAP operating margin. However, the Committee also took into consideration that non-GAAP operating margin, as adjusted for the significant and unanticipated foreign currency exchange impact, would have been 13.2% and would have resulted in the Company achieving 83% of the goal established for the financial performance measure for non-GAAP operating margin.
As it relates to the strategic objectives under the 2022 Bonus Plan, the Committee determined that the Company had achieved its strategic goals of maximizing procedural participation through the commercial launch of Reline Cervical and realizing significant growth from the continued adoption of NSO products. The Company continued to accelerate its enabling technology initiatives, but
2023 Annual Meeting of Stockholders | 47 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
experienced some challenges associated with component shortages for certain product lines. Additionally, the Company achieved its strategic goals of enhancing the employee experience through successful action planning in response to employee survey findings, continuing to advance its diversity and inclusion initiatives, and improving employee retention. Overall, the Committee determined an achievement level of 89% appropriately reflected the Company’s performance against its strategic goals established under the 2022 Bonus Plan.
Based on the Company’s performance relative to its financial goals and its achievement of strategic objectives, the Committee determined to fund the 2022 Bonus Plan at 75% of target. In making such determination, the Committee took into account the calculated performance for full-year net sales and strategic objectives. Given the significant and unanticipated foreign currency volatility in 2023, the Committee took into consideration foreign currency fluctuations in determining the level of achievement of non-GAAP operating margin when funding the 2022 Bonus Plan, noting that foreign currency volatility is outside the control of company employees. The table below presents information relating to the various components of the 2022 Bonus Plan and level of achievement (rounded to the nearest percent):
Performance Measure | Performance Measure Weighting |
Level of Achievement (0% - 200%) |
% of Bonus Funded |
Weighted Funded % | ||||||||||||||||
2022 Full-year Net Sales Performance |
35% | 97% | 80% | 28% | ||||||||||||||||
2022 Full-year Non-GAAP Operating Margin Performance(1) |
35% | 83% | 56% | 20% | ||||||||||||||||
Strategic Objectives Achievement |
30% | 89% | 89% | 27% | ||||||||||||||||
Total Funding (% of Target) |
- | - | - | 75% |
(1) | Reflects 2022 full-year non-GAAP operating margin performance, as adjusted on a constant currency basis, as discussed above. |
For 2022 Bonus Plan payouts for our NEOs, the Committee considered the funding guidelines for the 2022 Bonus Plan, continuing challenges associated with the COVID-19 pandemic and global macroeconomic conditions, and each NEO’s individual contribution to the Company’s 2022 performance. For each of Messrs. Harbaugh, Farrington, Sisitsky, and Wolf, the Committee approved payouts under the 2022 Bonus Plan that range from 60% to 80% of target, and based on the recommendation of the Committee, the Board also approved a 2022 bonus payout for Mr. Barry at 65% of target.
The following table sets forth the bonus target and actual cash bonuses paid to each NEO under the 2022 Bonus Plan:
|
2022 Annual Base Salary Rate(1) |
2022 Target Cash Bonus(1) (% of Base Salary) |
2022 Target Cash Bonus |
2022 Actual Cash Bonus |
2022 Actual Cash Bonus Amount (% of Target) | |||||||||||||
J. Christopher Barry |
$ |
900,000 |
|
|
125% |
|
$ |
1,125,000 |
|
$ |
731,250 |
|
65% | |||||
Matthew K. Harbaugh |
$ |
550,000 |
|
|
90% |
|
$ |
495,000 |
|
$ |
297,000 |
|
60% | |||||
Michael Farrington |
$ |
350,000 |
|
|
60% |
|
$ |
210,000 |
|
$ |
159,879 |
|
80% (2) | |||||
Nathaniel B. Sisitsky |
$ |
415,893 |
|
|
60% |
|
$ |
249,536 |
|
$ |
187,152 |
|
75% | |||||
Dale Wolf |
$ |
404,685 |
|
|
60% |
|
$ |
242,811 |
|
$ |
169,968 |
|
70% | |||||
Massimo Calafiore |
$ |
500,000 |
|
|
80% |
|
$ |
400,000 |
|
$ |
0 |
(3) |
0% |
(1) | Reflects annual base salary rate and target cash bonus as a percentage of base salary in effect on December 31, 2022. |
(2) | Mr. Farrington’s eligible earnings for purposes of the 2022 Bonus Plan are prorated based on his salary increase from $325,000 to $350,000 in connection with his new role of Senior Vice President, People and Culture, effective September 5, 2022. |
(3) | Mr. Calafiore voluntarily separated employment in August 2022 and was not eligible for a bonus under the 2022 Bonus Plan upon his resignation. |
2023 Annual Meeting of Stockholders | 48 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
2022 Long-Term Incentive Awards – Annual Grant. To directly align LTI awards with stockholder value creation, the Committee awarded 2022 LTI awards to NEOs in RSUs (50% of total target award value) and PRSUs (50% of total target award value). The following table summarizes the annual 2022 LTI awards for the NEOs:
|
Total 2022 LTI Target Award Value ($)(1) |
RSUs(1)(2) |
PRSUs(1)(2)(3) | ||||||||||||||||||||||
|
($) |
(# of shares) | ($) | (# of shares) | |||||||||||||||||||||
J. Christopher Barry |
|
$ 5,000,000 |
|
$ 2,500,000 |
|
45,864 |
|
$ 2,500,000 |
|
45,864 |
|||||||||||||||
Matthew K. Harbaugh |
|
$ 1,600,000 |
|
$ 800,000 |
|
14,677 |
|
$ 800,000 |
|
14,677 |
|||||||||||||||
Michael Farrington |
|
$ 400,000 |
|
$ 200,000 |
|
3,670 |
|
$ 200,000 |
|
3,670 |
|||||||||||||||
Nathaniel B. Sisitsky |
|
$ 700,000 |
|
$ 350,000 |
|
6,421 |
|
$ 350,000 |
|
6,421 |
|||||||||||||||
Dale Wolf |
|
$ 700,000 |
|
$ 350,000 |
|
6,421 |
|
$ 350,000 |
|
6,421 |
|||||||||||||||
Massimo Calafiore |
|
$ 1,200,000 |
|
$ 600,000 |
|
11,008 |
|
$ 600,000 |
|
11,008 |
(1) | The LTI grant values represent the economic value on the date of grant, and for performance-based awards, assumes a payout at target. It does not reflect the accounting value under FASB ASC Topic 718, which may differ. The LTI grant values computed in accordance with the FASB ASC Topic 718 can be found in the Summary Compensation Table. The 2022 RSU and PRSU awards were made pursuant to the 2014 Equity Incentive Plan of NuVasive, Inc. (the “2014 Equity Incentive Plan”). |
(2) | The annual 2022 LTI awards were granted on March 1, 2022. The number of RSUs and PRSUs was determined by dividing the economic value by the closing stock price on the date of grant ($54.51 per share). Any resulting fractional share was rounded up to the nearest whole share. |
(3) | Reflects the target number of shares subject to PRSUs, assuming all performance goals and other requirements are met. As described below, the PRSUs earned will range from 0% – 200% of target based on the achievement of performance goals, with payment in shares following the conclusion of the three-year performance period. |
The table below sets forth the 2022 LTI award type, purpose, performance goals and vesting terms. Each of the 2022 LTI awards described below cliff vest on March 1, 2025, subject to the NEO’s continued service with the Company through such date (with the possibility of earlier acceleration in limited circumstances), satisfaction of the applicable performance conditions, and compliance with the terms of the grant agreement. The amount of the performance cash payouts for the 2020 annual LTI awards is included in the Summary Compensation Table as Non-Equity Incentive Plan Compensation for 2022.
2022 LTI Award Types | ||||||
LTI Award Type | Purpose | Performance Goal | Vesting Terms | |||
RSUs
|
Retain and motivate executives to drive long-term stockholder value while feeling personally invested in the business
|
Not applicable; |
Three-year cliff | |||
PRSUs |
Reward executives for the achievement of multi-year performance goals |
Net sales growth over each of the three years 2022, 2023 and 2024, subject to a cap based on non-GAAP Operating Margin expansion as measured at the end of the three-year period |
Three-year cliff vest in 2025 with opportunity that ranges from |
The Committee removed performance cash as an LTI award type in 2021 to simplify the award delivery to executives and place greater emphasis on top-line net sales growth. The Committee selected net sales growth as the primary performance metric and non-GAAP operating margin expansion as a secondary performance metric for the 2022 LTI awards because they are aligned with the Company’s operating plan and the financial objectives communicated to stockholders, which focus on above-market net sales growth while driving improved profitability. The Committee also believes that they are important drivers of long-term stockholder value creation. As RSUs and PRSUs are reflected in the Summary Compensation Table in the year of grant, and performance cash is reflected in the Summary Compensation Table when earned, the removal of performance cash as an LTI award type in 2021 resulted in an increase in annual compensation as reported in the Summary Compensation Table for 2021 and 2022 as compared to annual compensation reported in the Summary Compensation Table for 2020.
2023 Annual Meeting of Stockholders | 49 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
Vesting and Payout of Prior Performance-Based Long-Term Incentive Awards
2020 Performance-Based Long-Term Incentive Awards. In March 2020, as part of the annual LTI award, each of Messrs. Barry, Harbaugh, Farrington, Sisitsky, Wolf and Calafiore was granted (i) a time-based RSU award with three-year cliff vesting, (ii) a PRSU award with a performance condition based on the Company’s improvement in non-GAAP operating margin over the three-year period ending December 31, 2022, and (iii) a performance cash award with a performance condition based on the Company’s growth in revenue (now captioned as “net sales” in Company financial reports) over the three-year period ending December 31, 2022. For the 2020 PRSU awards, attainment of the performance metric is measured over the three-year period ending December 31, 2022. For the 2020 performance cash awards, attainment of the performance metric is measured separately for each calendar year during the three-year measurement period, with each year weighted equally at 33.33%. The tables below set forth the performance goals and payout levels at threshold, target, and maximum for the 2020 PRSU awards and 2020 performance cash awards.
2020 Annual LTI Award Type |
Metric(1) |
Performance Goals | Performance Multiplier(2) | |||||||||||
Threshold |
Target | Maximum | Threshold | Target | Maximum | |||||||||
2020 PRSU |
Non-GAAP operating margin basis improvement over three-year period ended Dec. 31, 2022 | 0 bps | 150 bps | 300 bps | 0% | 100% | 200% | |||||||
2020 Performance Cash |
Annual revenue growth, adjusted to exclude the effect of currency fluctuations and other items, over the three-year period ended Dec. 31, 2022 | +0.0% | +5.0% | +8.0% | 0% | 100% | 200% |
(1) | Achievements between threshold and maximum are based on a linear interpolation between points along the funding curve. |
(2) | The performance multiplier for the 2020 performance cash awards is measured on an annual basis. |
Based on the Company’s performance relative to the performance conditions and as calculated in accordance with the terms of the LTI award agreements, the 2020 PRSU awards did not achieve the minimum threshold established for the financial target and did not vest (0% of target). The calculated payout for the 2020 performance cash awards was 126.8% of target as set forth in the table below.
|
2020 (1) (weighted 33.33%) |
2021 (weighted 33.33%) |
2022 (weighted 33.33%) |
Aggregate Payout | |||||||||||||||||||||||||||||||
2020 Performance Cash(2) | Revenue Growth | Payout % | Revenue Growth | Payout % | Revenue Growth | Payout % | Payout % | ||||||||||||||||||||||||||||
|
< 0.0 |
% |
|
0 |
% |
|
7.4 |
% |
|
180 |
% |
|
8.5 |
% |
|
200 |
% |
|
126.8 |
% |
(1) | For fiscal year 2020, revenue growth is measured against baseline revenue of $1,168 million. |
(2) | Reflects revenue growth, measured as a percentage, compared to the prior year as calculated based on the Company’s annual revenue as determined in accordance with the performance cash award agreement, which includes among other items, adjustments to exclude the effect of currency fluctuations. |
The table below sets forth, for each of Messrs. Barry, Harbaugh, Farrington, Sisitsky, Wolf and Calafiore, the award target and award payout for the PRSU awards and performance cash awards granted as part of the 2020 annual LTI awards. In accordance with the terms for the 2020 annual LTI awards, which provide for three-year cliff vesting, these awards vested and were paid on March 1, 2023.
|
2020 PRSU Award Target (# Shares) |
2020 PRSU Award Payout (# Shares) |
2020 Performance Cash Award Target ($) |
2020 Performance Cash Award Payout ($) | ||||||||||||||||
J. Christopher Barry |
17,142 | 0 | $ | 1,125,000 | $ | 1,426,500 | ||||||||||||||
Matthew K. Harbaugh |
6,095 | 0 | $ | 400,000 | $ | 507,200 | ||||||||||||||
Michael Farrington |
953 | 0 | $ | 62,500 | $ | 79,250 | ||||||||||||||
Nathaniel B. Sisitsky |
2,667 | 0 | $ | 175,000 | $ | 221,900 | ||||||||||||||
Dale Wolf |
2,286 | 0 | $ | 150,000 | $ | 190,200 | ||||||||||||||
Massimo Calafiore(1) |
2,477 | 0 | $ | 162,500 | $ | 0 |
(1) | Mr. Calafiore voluntarily separated employment in August 2022 and all unvested and/or unpaid LTI awards were forfeited and cancelled upon separation. |
2023 Annual Meeting of Stockholders | 50 | NuVasive, Inc. Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (CONT.)
Responsible Share Usage
As illustrated in the chart below, the Company’s annual share usage rate has remained below 2% since stockholders approved the 2014 Equity Incentive Plan.
Annual Share Usage Rate | ||||||||
2018 | 2019 | 2020 | 2021 | 2022 | ||||
1.63% |
1.16% | 1.08% | 1.37% | 1.59% |
(1) | Share Usage Rate is defined as the ratio of the target number of shares subject to equity awards granted in the calendar year (i.e., the number of shares that would be issued at target level for performance-based equity incentives) to the weighted average shares outstanding (basic) at the end of such year. |
Other Elements of the Executive Compensation Program
Perquisites and Other Benefits. Our NEOs participate in our benefit plans on the same terms as our other employees, which include the Company’s 401(k) plan and medical and dental insurance. In addition to these benefits, executives may be provided with certain other incidental benefits (including participation in an executive healthcare program and financial planning benefit) that do not comprise a material portion of any executive’s compensation package. We generally do not provide significant perquisites to the executives that are not available to our other employees.
We do not provide defined benefit pension arrangements or post-retirement health coverage for our U.S. executives or employees. Our NEOs are eligible to participate in our 401(k) defined contribution plan. For all U.S. employees, including our NEOs, we provide a 50% match on employee deferrals up to 8.0% of eligible compensation (a 4.0% effective match) to help attract and retain top talent as well as support our employees’ retirement readiness. We also offer participation in a Deferred Compensation Plan, which is a non-qualified defined contribution plan that provides for the voluntary deferral of cash compensation for individuals holding a position of Vice President or higher, as well as non-employee members of the Board. Eligible employees may defer up to 75% of base salary and/or up to 100% of their annual bonus into the plan, and contributions may be directed into a selection of underlying investment funds. Non-employee members of the Board may defer all or a portion of their cash retainer into the non-qualified plan. In 2022, Mr. Wolf was the only NEO who elected to defer compensation.
Our NEOs may participate in our Employee Stock Purchase Plan, which is available to all our employees, pursuant to which they may purchase shares of our common stock at a discount to market prices (but within limits of Section 423 of the Internal Revenue Code). Additionally, our executive travel and expense policy sets forth guidelines for our NEOs with respect to reimbursable expenses and generally requires: (i) a business purpose for business meals reimbursed by the Company, and (ii) that personal aspects of business travel (other than incidental meals and other expenses) be paid by the executive.
Attributed costs of the personal benefits described above for the NEOs for the fiscal year ended December 31, 2022, if required to be disclosed, are included in the column captioned “All Other Compensation” of the “Summary Compensation Table” below.
Equity Grant Practices. The Company’s practice is to grant annual equity awards to eligible employees, including our NEOs, during the first quarter of the year. The grant date for the Company’s annual LTI award is approved by the Committee well in advance of the date of grant. In the event of grants related to new hires or other off-cycle awards, the grants are generally made on the first trading day of the month following approval of the award.
2023 Annual Meeting of Stockholders | 51 | NuVasive, Inc. Proxy Statement |