(Amendment No. )
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material §240.14a-12 |
Charter)
Registrant)
☒ | No fee required. | |||
☐ | ||||
| ||||
| ||||
| ||||
| ||||
| ||||
Fee paid previously with preliminary materials. | ||||
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act 14a-6(i)(1) and0-11. |
Street Address | Mailing Address | |||
9120 Lockwood Boulevard | P.O. Box 27626 | |||
Mechanicsville, Virginia 23116 |
| |||
| ||||
|
Notice of
2018
Annual Meeting
and
Proxy Statement
WHETHER OR NOT YOU PRESENTLY PLAN TO ATTEND THE MEETING IN
PERSON, THE BOARD OF DIRECTORS URGES YOU TO VOTE.
Owens & Minor, Inc.
9120 Lockwood Boulevard
Mechanicsville, Virginia 23116
|
March 26, 201827, 2024
Dear Shareholders:
It is a pleasure to invite you to ourthe Owens & Minor, Inc. Annual Meeting of Shareholders on Tuesday,Thursday, May 8, 20189, 2024 at 9:00 a.m. Eastern Daylight Time. The meetingAnnual Meeting will be held at The Jefferson Hotel, Empire Room, 101 West Franklin Street, Richmond, Virginia, 23220. Directionsin a virtual meeting format only, via the Internet, which allows us to The Jefferson Hotel aremake participation accessible for shareholders from any geographic location while reducing the costs and environmental impact associated with holding an in-person meeting. Information regarding attending the virtual Annual Meeting can be found on the last page 77 of the proxy statement.Proxy Statement.
The Notice of 20182024 Annual Meeting of Shareholders and Proxy Statement describe the items of business for the meeting. In addition to considering these matters, we will review significant accomplishments and events since our last shareholders’ meeting, as well as future opportunities and initiatives we intend to pursue. Our Board of Directors and management team will be therepresent to discuss items of interest and to answer any questions.
The Notice of 20182024 Annual Meeting of Shareholders contains instructions on how to access our proxy materials and our 20172023 Annual Report/Form10-K over the Internet, as well as how shareholders can receive paper copies of such documents, if they so desire.
You may vote your shares byvia the Internet or by telephone or, if you prefer, you may request paper copies of the proxy materials and submit your vote by mail by following the instructions on the proxy card. We encourage you to vote via the Internet. Whichever method you choose, your vote is important so please vote as soon as possible. All of us at Owens & Minor appreciate your continued interest and support.
Warm regards,
P. CODY PHIPPS
Chairman, PresidentMark A. Beck
Chair of the Board of Directors
Owens & Chief Executive OfficerMinor, Inc.
WHETHER OR NOT YOU PRESENTLY PLAN TO ATTEND THE MEETING,
THE BOARD OF DIRECTORS URGES YOU TO VOTE.
Proxy Statement
Page | ||||
i | ||||
1 | ||||
5 | ||||
8 | ||||
10 | ||||
11 | ||||
11 | ||||
12 | ||||
17 | ||||
17 | ||||
18 | ||||
20 | ||||
20 | ||||
21 | ||||
22 | ||||
Proposal 2: | ||||
| 27 | |||
27 | ||||
28 | ||||
Proposal 3: Approval of Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan | 30 |
Page | |||||
39 | |||||
39 | |||||
39 | |||||
40 | |||||
41 | |||||
42 | |||||
| 58 | ||||
59 | |||||
61 | |||||
62 | |||||
63 | |||||
64 | |||||
65 | |||||
70 | |||||
71 | |||||
Proposal 4: Advisory Shareholder Vote to Approve Executive Compensation | 75 | ||||
76 | |||||
76 | |||||
| 77 | ||||
78 | |||||
Annex A | A-1 |
YOUR VOTE IS IMPORTANT
Your Vote Is Important
Whether or not you plan to attend the annual meeting,Annual Meeting, please vote your shares promptly, as instructed in the Notice of InternetRegarding the Availability of Proxy Materials, by the Internet or by telephone. You may also request a paper proxy card to submit your vote by mail, if you prefer. We encourage you to vote via the Internet.
Non-GAAP measures. This document contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). In general, the measures exclude items and charges that (i) management does not believe reflect Owens & Minor, Inc.’s (the Company) core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company’s performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation. Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company’s performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The non-GAAP financial measures disclosed by the Company should not be considered substitutes for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated. A description of these non-GAAP financial measures and a reconciliation to the most comparable GAAP equivalent financial measures are included in the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2024.
Notice of Annual Meeting of Shareholders
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Tuesday,Thursday, May 8, 20189, 2024
TO THETHE SHAREHOLDERS OFOF OWENS & MINOR, INC.:
The Annual Meeting of Shareholders of Owens & Minor, Inc. (the “Company” or, “Owens & Minor”, “we”, “us”, “our”, etc.) will be held virtually, via the Internet, on Tuesday,Thursday, May 8, 20189, 2024 at 9:00 a.m. EDTEastern Daylight Time (“EDT”). You will be able to attend the Annual Meeting online, listen to the meeting live, submit questions and vote. To be admitted to the Annual Meeting at The Jefferson Hotel, Empire Room, 101 West Franklin Street, Richmond, Virginia, 23220.www.meetnow.global/MQUPCLA you must enter the control number found on your proxy card, voting instruction form or notice you previously received. We encourage you to access the meeting in advance of the designated start time.
The purposes of the meeting are:
1. | To elect the |
2. |
To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, |
3. | To approve the amendment to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan; |
4. | To conduct an advisory vote to approve the compensation of the Company’s named executive officers; and |
5. | To transact any other business properly before the |
Shareholders of record as of March 13, 201814, 2024 will be entitled to vote at the annual meeting.Annual Meeting.
Your attention is directed to the attached proxy statement.Proxy Statement. The Notice of InternetRegarding the Availability of Proxy Materials is being distributed on or about March 26, 2018.27, 2024. This proxy statement,Proxy Statement, the proxy card and Owens & Minor’s 20172023 AnnualReport/Form10-KForm 10-K are being furnished on the Internet on or about March 26, 2018.27, 2024.
BY ORDER OFOF THETHE BOARD OFOF DIRECTORS,
NHICHOLASEATH J. PH. GACEALLOWAY
Executive Vice President, General Counsel &
Corporate Secretary & Communications
Owens & Minor, Inc.●2024 Proxy Statementi
Proxy Statement Summary
This summary highlights information contained in this Proxy Statement. This summary does not contain all the information that you should consider, and you should carefully read the entire Proxy Statement before voting.
Annual Meeting of Shareholders
• | Time and Date: Virtually at 9:00 a.m., EDT, Thursday, May 9, 2024 |
• | Place: Audio webcast at www.meetnow.global/MQUPCLA |
• | Record Date: Close of business on March 14, 2024 |
• | Voting: Shareholders as of the record date are entitled to vote; each share of common stock (“Common Stock”) is entitled to one vote for each director nominee and one vote for each of the other proposals |
Voting Matters and Recommendations
Items of Business | Board Recommendation | Page | ||||
1 | Election of nine director nominees to serve one-year terms | “FOR” Each Nominee | 21 | |||
2
| Ratification of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2024 | “FOR” | 27 | |||
3 | Approval of Amendment No. 1 to the 2023 Omnibus Incentive Plan | “FOR” | 30 | |||
4 | Advisory vote on the compensation of our named executive officers | “FOR” | 75 |
Director Nominees
Committee Memberships | ||||||||||||||||||||||||||||||
Name | Primary Occupation | Age | Director Since | Independent | Audit | Exec | Gov & Nom | OP&C | ||||||||||||||||||||||
Mark A. Beck | Chair of the Board, Owens & Minor, Inc. Co-founder and Owner of B-Square Precision, LLC
|
| 58
|
|
| 2019
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Gwendolyn M. Bingham
| Retired United States Army Lieutenant General (three stars)
|
| 64
|
|
| 2020
|
|
|
|
|
|
|
| |||||||||||||||||
Kenneth Gardner-Smith
| Chief People Officer, DaVita, Inc.
|
| 43
|
|
| 2022
|
|
|
| |||||||||||||||||||||
Robert J. Henkel
| Retired President and Chief Executive Officer, Ascension Healthcare
|
| 69
|
|
| 2019
|
|
|
|
|
|
|
| |||||||||||||||||
Rita F. Johnson-Mills
| President (Southern Region), CINQCARE
|
| 65
|
|
| 2022
|
|
|
|
|
| |||||||||||||||||||
Stephen W. Klemash
| Retired Partner, Ernst & Young LLP Former Lead Partner, Ernst & Young Americas Center for Board Matters
|
| 63
|
|
| 2021
|
|
|
|
|
|
|
| |||||||||||||||||
Teresa L. Kline
| Retired President and Chief Executive Officer of Health Alliance Plan of Michigan and Executive Vice President of Henry Ford Health System
|
| 65
|
|
| 2022
|
|
|
|
|
| |||||||||||||||||||
Edward A. Pesicka
| President & Chief Executive Officer, Owens & Minor, Inc.
|
| 57
|
|
| 2019
|
|
|
| |||||||||||||||||||||
Carissa L. Rollins
| Chief Information Officer, Illumina, Inc.
|
| 54
|
|
| 2022
|
|
|
|
|
|
Audit = Audit Committee Exec = Executive Committee Gov & Nom = Governance & Nominating Committee
OP&C = Our People & Culture Committee
Owens & Minor, Inc.●2024 Proxy Statement1
Proxy Statement Summary |
Director Nominee Group Information
Our Corporate Governance Highlights
|
• Only independent directors serve on the Audit, Governance & Nominating, and Our People & Culture Committees • The independent directors on our Board and our Board committees conduct regular executive sessions without management | |
Board Evaluation, |
• The Governance & Nominating Committee identifies Board candidates based on selection criteria and considers candidates with diversity of experiences, gender, ethnicity and race for director vacancies • Our Bylaws provide that no director nominee can stand for election if the nominee is over age 72 • 5 of 9 director nominees are women and/or racially diverse • Average age of director nominees is 60 | |
Board and Committee Oversight |
• The Board and its committees perform risk oversight of our Company, including our ERM program, ESG framework and governance structure, cybersecurity and information security risks • Each Board committee oversees the specific financial, compensation and governance risks related to its functions and responsibilities | |
Governance Practices | • Annual review of our Corporate Governance Guidelines and Board committee charters • Our insider trading policy prohibits hedging or pledging Owens & Minor stock • Recoupment (“clawback”) policy for incentive compensation, including performance-based cash compensation and all equity compensation • Maintain substantial stock ownership requirements for directors and executive officers • Our Code of Honor applies to our directors, executive officers and all teammates • Corporate Governance Guidelines limit director membership on other public company boards | |
Shareholder Rights | • Declassified Board with annual election of our directors serving one-year terms • Majority voting standard for uncontested director elections (plurality voting in contested elections) • Proxy access allowing holders of 3% of our stock for at least three years to include the greater of two nominees or nominees representing 20% of board seats in our proxy statement if they satisfy the requirements in our Company Bylaws • Annual shareholder advisory vote on the compensation of our named executive officers |
PROXY STATEMENT
2Owens & Minor, Inc.●2024 Proxy Statement
Proxy Statement Summary |
Our Executive Compensation Highlights
Executive Compensation Philosophy
Our executive compensation program which is described in more detail in our “Compensation Discussion and Analysis” section is designed with a pay-for-performance philosophy that aligns with the business’s strategy and goals, both short and long-term, and pays for sustained performance, profitable growth, and achievement of results. We generally target the 50th percentile of our peer group and the relevant market as a reference point for positioning target total compensation for our executives,1 with the ability to earn above or below the 50th percentile based on Company and/or individual performance. Key considerations when determining an executive’s compensation include experience, size and scope of role, pay position relative to the market, internal equity, and talent retention.
We designed our executive compensation program framework to reward for Company and individual performance and focus on the following objectives:
• | Reasonable but market-competitive base salaries to attract, motivate and retain executives. |
• | Appropriate balance between short- and long-term incentives and fixed and at-risk incentive compensation, to weigh cost against expected benefit and to align with the creation of shareholder value, including: |
• | Annual cash incentives to drive critical business results each year; and |
• | Long-term incentive equity awards to retain management and focus executives on longer-term financial performance and execution of our operational and strategic plans. |
• | Retirement, severance, and other market-competitive benefits to attract executive talent and encourage retention. |
1 | This is a reference point, not a policy, and actual compensation may be above or below the target level based on corporate and/or individual performance. |
Compensation Components
We base a significant portion of compensation on the achievement of objective financial measures to create a strong link between pay and performance. We have no specific policies on the percentage of total compensation that should be “performance-based,” but consider this relationship in determining the overall balance and reasonableness of the executives’ total direct compensation packages. In 2023, our President & CEO’s total target compensation was 87% performance-based and 13% fixed, and our other named executive officers’ (“NEOs”) total target compensation was 81% performance-based and 19% fixed.
We believe our proportionate mix of compensation opportunities is appropriate in that we provide a slightly greater relative percentage of incentive-based compensation tied to financial performance and long-term objectives to the CEO versus other NEOs because the CEO is able to more directly impact financial results and the creation of long-term shareholder value.
Owens & Minor, Inc.●2024 Proxy Statement3
Proxy Statement Summary |
Compensation Factors and Governance
The Our People & Culture Committee (“OP&C Committee”) applies several corporate governance features related to executive compensation, which are summarized below. We believe that these mechanisms help to assure the alignment of executive and shareholder interests.
WHAT WE DO | ||
| Pay for Performance. We link pay to performance and a significant portion of our executives’ potential total annual compensation, both cash and equity, is based on the achievement of objective, simple, and transparent financial measures designed to enhance short- and long-term performance. | |
| Performance-Based Equity Awards. At least half of our annual equity award grants are performance share units (“PSUs”) with multi-year performance requirements. | |
| Share Ownership Guidelines. We have established stock ownership guidelines for our officers, and our tenured NEOs meet or exceed the established ownership guidelines. Newly appointed NEOs are in the process of attaining the required ownership level. | |
| Limited Perquisites. We provide limited perquisites to executive officers. | |
| Double-Trigger Change in Control Provisions. Equity vesting and severance benefits resulting from a change in control are “double-trigger” and require a qualifying termination of employment following the change in control. | |
| Recoupment Policy. We maintain a recoupment policy to recover all performance-based cash compensation and all equity-based compensation (including both time- and performance-vesting equity awards) paid to current and former executive officers and other senior executives and teammates designated as subject to the policy under circumstances involving restatement of our financial statements. | |
| Risk Mitigation. We mitigate risks associated with compensation by establishing caps on incentive compensation, multiple performance targets for incentive compensation, and ongoing processes to identify and manage risk. | |
| Independent Compensation Consulting Firm. The OP&C Committee receives advice about its compensation programs and practices from an independent consulting firm that provides no other services to the Company, and the Company is not aware of any conflicts of interest with respect to its work. |
WHAT WE DON’T DO | ||
| No Employment Agreements. We do not have employment agreements with our executive officers. | |
| No Hedging. We prohibit our executive officers and directors from hedging against the economic ownership of Company stock. | |
| No Pledging. We prohibit our executive officers from pledging Company stock. | |
| No Repricing of Equity Awards. Our stock plans do not permit the repricing of equity awards without shareholder approval. | |
| No Tax Gross-Ups. We do not provide excise tax gross-ups. |
4Owens & Minor, Inc.●2024 Proxy Statement
Proxy Statement
Annual Meeting of Shareholders
to be held on May 8, 20189, 2024
ABOUT THE MEETINGAbout the Meeting
When and Where the Annual Meeting Will Be Held
The Annual Meeting will be held virtually on Thursday, May 9, 2024 at 9:00 a.m. EDT at www.meetnow.global/MQUPCLA through a live audio webcast. We have adopted a virtual format for our Annual Meeting which allows us to make participation accessible for shareholders from any geographic location with Internet connectivity, while reducing costs and environmental impact associated with arranging and holding for an in-person meeting.
How to Attend the Virtual Annual Meeting
Shareholders at the close of business on March 14, 2024 (the “Record Date”) have a right to attend the Annual Meeting. In order to be admitted to the Annual Meeting at www.meetnow.global/MQUPCLA, registered shareholders must enter the 15-digit control number found in the shaded bar on your Notice of Internet Availability or proxy card. Further information regarding attending the virtual Annual Meeting can be found at page 77 of this Proxy Statement.
What You Are Voting On
Proxies are being solicited by the Board of Directors for purposes of voting on the following proposals and any other business properly brought before the meeting:
Proposal 1: | Election of the |
Proposal 2: |
Ratification of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, |
Proposal 3: | Approval of the amendment to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan. | |
Proposal 4: | Advisory vote to approve the compensation of our named executive |
Who is Entitled to Vote
Shareholders of Owens & Minor, Inc. (the “Company” or “Owens & Minor”) as of the close of business on March 13, 2018 (the “Record Date”)the Record Date are entitled to vote. Each share of the Company’s common stock (“Common Stock”)Stock is entitled to one vote with respect to each matter to be voted upon at the meeting. As of March 13, 2018, 61,822,27714, 2024, 76,598,351 shares of Common Stock were issued and outstanding.
Owens & Minor, Inc.●2024 Proxy Statement5
About the Meeting |
How to Vote
You can vote via the Internet, by telephone or by mail.
By Internet. You may vote via the Internet by following the specific instructions on the Notice of Internet Availability of Proxy Materials. Shareholders who have requested a paper copy of a proxy card by mail may submit proxies over the Internet by following the instructions on the proxy card. We encourage you to vote via the Internet. If your shares are held by your bank or broker in street name, please refer to the instruction form that you receive from your bank or broker or contact your bank or broker to determine whether you will be able to vote via the Internet.
By Telephone. You may vote by telephone by calling the toll-free number on the proxy card and following the instructions. Shareholders will need to have the control number that appears on their proxy card or notice available when voting. If your shares are held by your bank or broker in street name, please refer to the instruction form that you receive from your bank or broker or contact your bank or broker to determine whether you will be able to vote by telephone.
By Mail. Shareholders who have requested a paper copy of a proxy card by mail may submit proxies by completing, signing, and dating the enclosed proxy card and returning it in the postage-paid envelope provided.
However you choose to vote, you may revoke a proxy prior to the meeting by (1) submitting a subsequently dated proxy by any of the methods described above, (2) giving notice in writing to the Corporate Secretary of the Company or (3) voting in person at the virtual meeting (attendance at the meeting will not itself revoke a proxy).
What Happens if You Do Not Make Selections on Your Proxy
If your proxy contains specific voting instructions, those instructions will be followed. However, if you sign and return your proxy card by mail or submit your proxy by telephone or via the Internet without making a selection on one or more proposals, you give authority to the individuals designated on the proxy card to vote on the proposal(s) for which you have not made specific selections or given instructions and any other matter that may arise at the meeting. If no specific selection is made or instructions given, it is intended that all proxies that are signed and returned or submitted via telephone or Internet will be voted “FOR” the election of all nominees for director, “FOR” approval of the 2018 Stock Incentive Plan, “FOR” the ratification of KPMG LLP as our independent registered public accounting firm in 20182024, “FOR” approval of the amendment to the 2023 Omnibus Incentive Plan, and “FOR” the approval on an advisory basis, of the compensation of our named executive officers (together, the “NEOs,” and, individually, an “NEO”).Say-on-Pay Proposal.
Whether Your Shares Will be Voted if You Don’t Provide Your Proxy
Whether your shares will be voted if you do not provide your proxy depends on how your ownership of shares of Common Stock is registered. If you own your shares as a registered holder, which means that your shares of Common Stock are registered in your name, and you do not provide your proxy, your shares will not be represented at the meeting, will not count toward the quorum requirement, which is explained below, and will not be voted.
If you own your shares of Common Stock in street name, your shares may be voted even if you do not provide your broker with voting instructions. Brokers have the authority under New York Stock Exchange (“NYSE”) rules to vote shares for which their beneficial owner customers do not provide voting instructions on certain “routine” matters. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a brokernon-vote.
The Company believes that only the proposal to ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 20182024 is a routine matter for which brokerage firms will have discretionary voting power if you do not give voting instructions with respect to this proposal. The proposal to elect directors, the proposal to approve the 2018 Stockamendment to the 2023 Omnibus Incentive Plan and the proposal to approve, on an advisory basis, the compensation of our NEOs,Say-on-Pay Proposal arenon-routine matters for which brokerage firms will not have discretionary voting power and for which specific voting instructions from their customers are required. As a result, brokerage firms will not be allowed to vote on thesenon-routine matters on behalf of their customers if the customers do not return specific voting instructions.
6Owens & Minor, Inc.●2024 Proxy Statement
About the Meeting |
What Constitutes a Quorum
A majority of the outstanding shares of Common Stock present or represented by proxy constitutes a quorum. A quorum is required to conduct the annual meeting.Annual Meeting. If you vote your proxy, you will be considered part of the quorum. Abstentions and shares held by brokers or banks in street name (“broker shares”) that are voted on any matter are included in the quorum. Broker shares that are not voted on any matter will not be included in determining whether a quorum is present.
The Vote Required to Approve Each Item
Election of Directors. The affirmative vote of a majority of the votes cast at the meeting is required for the election of each director. A majority of votes cast means that the number of votes cast “FOR” a nominee’s election must exceed the number of votes cast “AGAINST” that nominee’s election. Abstentions and brokernon-votes will not be counted as votes cast and will have no effect on the results of this vote.
Approval of 2018 Stock Incentive Plan. The approval of the 2018 Stock Incentive Plan requires the affirmative vote of a majority of the votes cast on this proposal. Abstentions will be considered as votes cast under the rules of the NYSE and will have the effect of a vote against this proposal for purposes of the rules of the NYSE. Brokernon-votes will not be counted as votes cast on this proposal and will have no effect on the results of this vote.
Ratification of Appointment of KPMG LLP. The appointment of KPMG LLP will be ratified if the votes cast “FOR” this proposal exceed the number of votes cast “AGAINST” this proposal. Abstentions will not be counted as votes cast on this proposal and will have no effect on the results of this vote. There should be no brokernon-votes because this is considered a routine matter under the rules of the NYSE.
Approval of the Amendment to the 2023 Omnibus Incentive Plan. The approval of the amendment to the 2023 Omnibus Incentive Plan requires the affirmative vote of a majority of the votes cast on this proposal. A majority of votes cast means that the number of votes cast “FOR” this proposal must exceed the number of votes cast “AGAINST” this proposal. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the results of this vote.
Advisory Vote to Approve Executive Compensationthe Say-on-Pay Proposal. The compensation of our executive officers named in the Summary Compensation Table will be approved on an advisory basis if the votes cast “FOR” this proposal exceed the number of votes cast “AGAINST” this proposal. Abstentions and brokernon-votes will not be counted as votes cast on this proposal and will have no effect on the results of this vote.
How to Obtain a Paper Copy of the Proxy Materials
Shareholders will find instructions about how to obtain a paper copy of the proxy materials on the notice they received in the mail about the Internet availability of proxy materials.
What it Means if You Get More Than One Notice about the Internet Availability of Proxy Materials
Your shares are probably registered differently or are held in more than one account. Please vote all proxies to ensure that all your shares are voted. Also, please have all of your accounts registered in the same name and address. You may do this by contacting our transfer agent, Computershare, Inc., at1-866-252-0358.
Costs of Soliciting Proxies
Owens & Minor will pay all costs of this proxy solicitation. The Company has retained Georgeson, LLC to aid in the distribution and solicitation of proxies for approximately $6,000$8,500 plus expenses. The Company will reimburse brokers and other custodians, nominees, and fiduciaries for their expenses in forwarding proxy and solicitation materials.
Owens & Minor, Inc.●2024 Proxy Statement7
Corporate Governance
General. The Company is managed under the direction of the Board of Directors (the “Board”), which has adopted Corporate Governance Guidelines to set forth certain corporate governance practices.practices applicable to the Board. Each year, we review our corporate governance policies and practices relative to applicable laws, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Sarbanes-Oxley Act of 2002, and rules and regulations promulgated thereunder or adopted by the Securities and Exchange Commission (“SEC”(the “SEC”) and the NYSE, the exchange on which the Common Stock is listed, as well as the policies and practices recommended by groups and authorities active in corporate governance.
Corporate Governance Materials. The Company’s Bylaws, Corporate Governance Guidelines, Code of Honor, and the charters of the Audit Committee, the CompensationGovernance & BenefitsNominating Committee (the “Compensation Committee”), and the Governance & NominatingOP&C Committee are available on our website athttp://www.owens-minor.com under “Corporate Governance” in the “Investor Relations” tab. The information available on, or that can be accessed through, our website is not a part of, or incorporated by reference into, this proxy statement.Proxy Statement.
Code of Honor. The Board of Directors has adopted a Code of Honor that is applicable to all employeesteammates of the Company, including the principal executive officer, the principal financial officer and the principal accounting officer, as well as the members of the Board of Directors.Board. We intend towould post any amendments to or waivers from our Code of Honor (to the extent applicable to the Company’s principal executive officer, principal financial officer, principal accounting officer, any other executive officer, or any director) on our website http://www.owens-minor.com under “Corporate Governance” in the “Investor Relations” tab.
Director Independence. The Board of Directors has determined that the following Board members and/or nominees are “independent” within the meaning of the NYSE listing standards and the Company’s Corporate Governance Guidelines: StuartMark A. Beck, Gwendolyn M. Essig, JohnBingham, Kenneth Gardner-Smith, Robert J. Henkel, Rita F. Johnson-Mills, Stephen W. Gerdelman, Barbara B. Hill, Lemuel E. Lewis, Martha H. Marsh, Mark F. McGettrick, Eddie N. Moore, Jr., James E. Rogers, David S. Simmons, Robert C. SleddKlemash, Teresa L. Kline, and Anne Marie Whittemore.Carissa L. Rollins. To assist it in making determinations of independence, the Board has adopted categorical standards which are included in the Company’s Corporate Governance Guidelines available on our website at http://www.owens-minor.com under “Corporate Governance” in the “Investor Relations” tab. The Board has determined that all directors and/or nominees identified as independent in this proxy statementProxy Statement meet these standards.
Structure and Leadership of the Board.Board. The Board of Directors does not have a firm policy with respect to the separation of the offices of ChairmanChair of the Board and the Chief Executive Officer. Instead, the Board believes that it is in the best interests of the Company for the Board to make this determination from time to be madetime taking into account many factors including the make-up of the Board, the performance of the business, the tenure of the CEO, or as part of the succession planning process when it selects a new Chief Executive Officer or when a ChairmanChair ceases his or her service on the Board. At the time of Mr. Phipps’ commencement as Chief Executive Officer of the Company, the Board believed that maintaining anon-executive as Chairman of the Board was in the best interests of the Company because it preserved continuity in the Board’s performance of its duties, assisted in the transition of Mr. Phipps to the Chief Executive Officer position and management of the succession plan and provided a strong source of institutional knowledge and history of operations of the Company. In 2017, thenon-executive Chairman notified the Board that he would retire and not stand forre-election to our Board. In connection therewith, the Board evaluated the separation of the offices of the Chairman and Chief Executive Officer. As part of that evaluation, the Board determined that, based on Mr. Phipps’ then18-plus months of Board service and his performance and leadership as the Chief Executive Officer through a period of strategic transformation and repositioning of the Company, it would be in the best interest of the Company to have Mr. Phipps serve as Chairman.
The Board believes that the combinationseparation of the ChairmanChair and Chief Executive Officer roles also currently serves the best interests of the Company for the following reasons:
this structure results in the most effective leadershipby allowing a non-executive, independent director to helplead the Board discharge its oversight duties during a period of transformation and repositioning of the Company;
thewhile our current Chief Executive Officer is well situated to identifyfocuses on the key risks facing our organizationCompany’s performance, day-to-day operations, customer service, teammate engagement, Company culture, leadership, and the successimplementation of its transformation and repositioning, and ensure that these risks are brought to the attention of the Board; and
having one leader serving as both the Chairman and Chief Executive Officer provides decisive leadership while reducing the likelihood of confusion about leadership roles and duplication of efforts, and allows the Company to speak with a unified voice.
Our Corporate Governance Guidelines also provide for the annual election of ana lead independent lead director by ournon-management directors to, among other things, presideif the Chair is not independent. The lead independent director primarily presides at Board meetings in the absence of the Chairman, presideChair, presides at meetings of the independent directors, serveserves as the principal liaison between the independent directors and the ChairmanChair and Chief Executive Officer, and adviseadvises the ChairmanChair with respect to agendas and information requirements relating to the Board and committee meetings. The Board believes that the lead independent lead director, when the Chair is not independent, enhances communications between Board members (including the Chairman)Chair) and committees as well as the overall functioning of the Board’s leadership.
Majority Vote Requirement for Election of Directors.Directors. The Company’s Bylaws and Corporate Governance Guidelines provide for the election of directors by majority vote in uncontested elections. Under the Company’s Corporate Governance Guidelines, with respect to director nominations, the Board will only nominate those incumbent directors who submit irrevocable resignations effective upon the failure of such director nominee to receive the required vote forre-election and the Board’s acceptance of such resignation. In the event an incumbent director fails to receive a majority of the votes cast, the Governance & Nominating Committee (or such other committee designated by the Board) will make a recommendation to the Board as to whether to accept or reject the resignation. The Board must act on the resignation, taking into accountconsidering the Governance & Nominating Committee’s recommendation, and publicly disclose its decision regarding the resignation, including, if applicable, its rationale for rejecting a resignation, in a press release and an appropriate disclosure with the SEC within 90 days following certification of the election results. The Governance & Nominating Committee in making its recommendation, and the Board in making its decision, may each consider any factors or other information that it considers appropriate and relevant.
8Owens & Minor, Inc.●2024 Proxy Statement
Corporate Governance |
The Board’s Role in Risk Oversight.Oversight. The Board of Directors currently administers its risk oversight function through the full Board and not through a separate risk committee of the Board. However, each of the Audit Committee, the CompensationOP&C Committee and the Governance & Nominating Committee oversees the specific financial, compensation and governance risks, respectively, relating to its functions and responsibilities and reports on these matters to the full Board. The Board performs its risk oversight function through regular reporting by the Board committees as well as the officers and management-level personnel who supervise theday-to-day risk management activities of the Company, including an enterprise risk steering committee comprisedcomposed of senior leaders of the Company.Company and is an element of the Company’s enterprise risk management (“ERM”) program.
Risk AssessmentCybersecurity Risks.The Board recognizes the importance of Compensation Programs. With respectoversight of cybersecurity and information security risks and at least annually receives a comprehensive presentation and report from management on the state of the Company’s cybersecurity program and systems protection. The presentation and report address topics and updates on all layers of cybersecurity, technology, applications, threat environment, and processes to prevent, detect and respond to threats. Cybersecurity and information security monitoring, mitigation and threat assessment are also part of the Company’s ERM program. Additionally, the Audit Committee monitors our information security programs and receives updates from management quarterly, or more frequently as determined appropriate, on the cybersecurity program and matters related to cybersecurity incidents, as well as one-on-one discussions with the Chief Information Officer and Chief Information Security Officer.
We model our cybersecurity program to align with practices and standards referenced within the National Institute of Standards and Technology cybersecurity framework. Our information security program includes, but is not limited to:
• | Following the methodology of Identify, Protect, Detect, Respond, and Recover; |
• | Mandatory annual cybersecurity awareness training for all teammates accessing the Company’s network; |
• | Monthly Company-wide phishing prevention and awareness exercises; |
• | Identification and remediation of information security risks and vulnerabilities in our information technology (“IT”) systems, including regular scanning of both internal and externally facing systems and annual third-party penetration testing; |
• | Implementation of security technologies intended to identify and assist in containing and remediating malware risks; |
• | Active monitoring of logs and events for our network perimeter and internal systems; |
• | Due diligence of information security programs for third-party vendors that handle our data; |
• | Partnering with the Cybersecurity and Infrastructure Security Agency (“CISA”)/U.S. Department of Homeland Security/Federal Bureau of Investigation, to leverage their provided sensitive/confidential threat intel and with CISA for weekly vulnerability scans of our key public facing servers; |
• | Maintaining a cyber insurance policy that provides coverage for security breach recovery and response; and |
• | Engagement of third-party consultants to assess the health of our cybersecurity program. |
Additional information related to our overall compensationcybersecurity program is contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Environmental, Social and Governance (“ESG”). The Governance & Nominating Committee reviews and has oversight of the Company’s ESG programs Company management reviews our compensation policies and practices each year to determine whether they create risks that are reasonably likely to have a material adverse effectpractices. The Governance & Nominating Committee and full Board regularly receive reports on the Company. As part of this assessment and with assistance and guidance provided by independent compensation consultant Semler Brossy Consulting Group, LLC (“Semler Brossy”), we reviewed the design and featuresprogress of our compensation and benefits programs and policies, potential risks that could be created by these programs and features of our programs and corporate governance policies that help to mitigate risk. Semler Brossy reviewed and discussed the results of the assessment with the Compensation Committee. Based on this review and assessment, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.ESG programs.
Annual Performance Evaluation.Evaluation.The Board conducts an annual self-evaluation (for the full Board and for each of its committees) to determine whether it and its committees are functioning effectively. The Governance & Nominating Committee receives comments from all directors and reports annually to the Board with an assessment of the Board’s performance. The assessment focuses onexamines the Board’s contribution to the Company and specifically focuses on areas in which the Board or management believes that the Board can improve.
Board Diversity. Consistent with the Company’s Corporate Governance Guidelines, the Governance & Nominating Committee seeks to select directors who reflect a diverse set of skills, technical expertise, educational and professional backgrounds, industry experiences and public service. While the Board has not adopted a formal policy with regard to the
Owens & Minor, Inc.●2024 Proxy Statement9
Corporate Governance |
REPORT OF THE GOVERNANCEconsideration of diversity in identifying director nominees, the Governance & NOMINATING COMMITTEENominating Committee and the Board believe that considering diversity is consistent with the goal of creating a Board that best serves the needs of the Company and the interests of its shareholders, and it is one of the many factors that they consider when identifying individuals for Board membership. The table on page 21 sets forth the diversity, experience, and tenure of our director nominees.
Report of the Governance & Nominating Committee
The Governance & Nominating Committee iswas composed of five directors in 2023, and is currently composed of three directors, all of whom the Board has determined are independent. The Governance & Nominating Committee met four times during 2017.2023. In performing the various duties and responsibilities outlined in its charter, the Governance & Nominating Committee, among other things, received regular reports on the Company’s enterprise quality and regulatory compliance; reviewedESG programs; conducted the performanceannual review of the chief executive officer; reviewed and approved its charter and the Corporate Governance Guidelines; engaged an outside compensation firm to reviewreviewed and assessassessed the Company’s director compensation program relative to comparable peer companies; and implementedled the annual Board and committee assessment process.process; recommended rotation of members for each of the Board’s committees; and reviewed director education for the full Board. During 2017,2023, the Governance & Nominating Committee reviewed and recommended foralong with the full Board approval several changes in the executive management team as presented by the Chief Executive Officer and devoted time to management succession planning, including the review and approval of updates to the CEO emergency replacement plan. In anticipationplan and, in conjunction with the OP&C Committee, reviewed the performance of the retirement of several directors overChief Executive Officer.
THE GOVERNANCE & NOMINATING COMMITTEE |
Gwendolyn M. Bingham, Chair |
Mark A. Beck |
Rita F. Johnson-Mills |
10Owens & Minor, Inc.●2024 Proxy Statement
Corporate Governance |
Our Purpose & Vision
In 2019, we introduced our IDEAL values, which represent who we are at our best and have served as touchstones for how we do our work every day. In 2023, we took the next step in the evolution of our corporate culture and introduced our Purpose and Vision. We believe this work is vital to Owens & Minor’s continued growth and that purposeful organizations have a distinct advantage in achieving long term success. Our purpose captures who we are and the scale of our impact. At Owens & Minor, Life Takes Care.
Our mission articulates how we will advance our purpose and calls our teammates to act like owners and pursue a results-driven culture. At Owens & Minor, our vision is to be the unstoppable and dynamic leader that connects patients and providers to trusted healthcare products and solutions.
Our purpose gives us our true north and our vision focuses our efforts and, together, they help Owens & Minor deliver on our mission to empower our customers to advance healthcare.
Shareholder Engagement
Our Board of Directors and our leadership value our shareholders’ perspectives. Shareholder engagement is an integral part of the Company’s strategy. To help ensure that we understand and focus on the priorities that matter most to our shareholders, our Board of Directors and senior management proactively conduct investor outreach throughout the year.
We engage with shareholders through various outreach initiatives, including:
• | Quarterly earnings releases with corresponding conference calls and webcasts; |
• | Regular reports filed with the SEC, including annual and quarterly reports; |
• | Participation in investor conferences and non-deal roadshows; |
• | In-person and virtual meetings with current and prospective investors and research analysts; |
• | Proactive outreach to institutional investors, pension funds and governance professionals; and |
• | Our annual shareholders’ meeting. |
In addition to discussing business results and initiatives, strategy, and capital structure, we engage with investors on various other matters essential to our business and the Company, such as governance practices, risk management and ESG. Our senior executives regularly share with our Board the feedback received from our shareholders.
Owens & Minor, Inc.●2024 Proxy Statement11
Corporate Governance |
Specific Ways We Engaged with Shareholders in 2023
We actively engaged with shareholders throughout 2023, but the seminal event was our Investor Day in December that was held live in Boston and broadcast through our corporate website. Seventy-eight unique firms participated in the event either in-person or via webcast. During this event, different members of executive management presented the Company’s strategic vision, operating and growth strategy and multi-year financial targets.
In addition to our Investor Day activity, we remained actively engaged with shareholders and other members of the investment community. We held in-person or telephonic discussions with more than 100 individual firms. Between the individual meetings and our Investor Day, we engaged with current shareholders holding over 50% of our shares. We also continued to meet with prospective shareholders, debtholders and sell-side analysts. Our investment community outreach continues to be in the form of quarterly earnings presentations, attendance at industry conferences, and several years,in-person meetings both at the Committee devoted considerableCompany and at investor locations. We participated in four industry investor conferences in 2023. Presentation materials from our Investor Day, as well as attendance at investor conferences, are available to our shareholders generally through our filings with the SEC or on the “Investors Relations” section of our website at www.investors.owens-minor.com.
Additionally in June 2023, we published our latest annual sustainability report. The 2022 report provides an update on the initiatives we outlined in our past reports and discusses the Company’s ESG focus and contributions. It also provides visibility to our shareholders into the performance metrics and achievements that support the Company’s sustainability focus.
Environmental, Social, and Governance
Introduction.Since our founding in 1882, Owens & Minor has remained committed to our teammates, our customers, and the communities where we do business. As part of this commitment, we recognize the need to identify, prioritize, and manage ESG impacts from our operations.
In 2021, we completed our first ESG materiality assessment to identify and prioritize topics most relevant to our key stakeholders. Using the results of the materiality assessment, we developed a framework to align ESG risks and opportunities with our overall business strategy while striving to improve our ESG-related impacts. To effectively manage the implementation of our strategy, we created a governance structure to define our ESG framework and deliver on our commitments. Since its inception, our ESG governance framework has grown to include our expanded Patient Direct offerings and ensure representation across Owens & Minor.
Owens & Minor’s ESG Framework. Our ESG Framework forms the basis of our ESG program, integrating the priorities identified in our materiality assessment into key aspects of our operations and overall business strategy.
Guided by our Purpose, Life Takes Care™, our ESG Frameworkemphasizes the importance of incorporating ESG commitments into our company culture and IDEAL (Integrity, Development, Excellence, Accountability, Listening) Values. Our framework consists of four focus areas:
Promoting Environmental Stewardship: Minimize the impact of our operations on the environment.
Caring for our Customers and Communities: Deliver superior and easily accessible care for customers and the communities we support.
Operating Responsibly: Demonstrate sound governance, accountability and responsible sourcing.
Empowering our Teammates: Foster an empowering, safe, diverse and inclusive work environment where all teammates can thrive.
Promoting Environmental Stewardship
Minimizing Physical Climate Risk.Owens & Minor is dedicated to serving our customers and communities, while also protecting teammate safety, during times of emergency and natural disasters to ensure the reliability of product supply and patient care. Honoring our commitment to the Health Sector Climate Pledge developed by The White House and U.S. Department of Health and Human Services, and to further strengthen the integrity of our supply chain in the event of
12Owens & Minor, Inc.●2024 Proxy Statement
Corporate Governance |
future climate impacts, Owens & Minor released a Climate Resilience Plan for Continuous Operations. This Plan outlines our strategies to ensure the continuity of our operations despite the unique challenges presented by climate change. Owens & Minor continues to adapt our infrastructure and operations to address the unique challenges presented by climate change through:
• | Prospective risk assessments; |
• | Community engagement and partnership; |
• | Assessing the strength of our infrastructure and operations; |
• | Industry and healthcare organization collaboration; and |
• | Interdisciplinary planning, oversight, and evaluation. |
To increase the transparency of our environmental footprint Owens & Minor released its inaugural disclosure to the CDP (formerly the Carbon Disclosure Project) in 2023, providing further detail on greenhouse gas (“GHG”) emissions related to operations and the programs in place to address those emissions.
Managing Carbon Footprint: Sites & Fleet Efficiency. At our manufacturing sites, we have adopted practices to reduce our environmental impact, including efforts to eliminate waste, reduce our carbon footprint, and increase renewable energy usage. Additionally, we measure GHG emissions, water usage, and waste to set and implement site-specific goals intended to reduce our environmental footprint. Our Emissions Reduction Working Group has made significant progress in expanding data capture associated with energy consumption and GHG emissions from our manufacturing operations and identifying key opportunities to focus emissions reduction efforts.
Our transportation team remains committed to the fleet efficiency targets set for our strategic logistics partners and continues to share fuel efficiency and freight routing information with the U.S. Environmental Protection Agency (“EPA”) SmartWay program to develop more environmentally friendly shipping methods. Our transportation team works closely with freight partners to identify the most efficient routes available. Our ocean freight partners have invested in upgrading their vessels to improve fuel efficiency and have plans in place to meet carbon emissions reduction targets. We continuously work towards reducing our carbon footprint by prioritizing sea and rail routes when practicable.
In 2023, our Patient Direct segment launched a successful pilot program of electric vehicles supporting our fleet in Southern California. Lessons learned from this pilot informed the addition of 24 electric vehicles to contribute to efficiency improvements and reductions in the carbon emissions associated with bringing essential medical supplies to our customers. Additionally, a program targeting reduced vehicle idle time yielded such strong results – cutting idle time nearly in half for participating vehicles – that the program will be rolled out to all Apria branches in 2024. Owens & Minor continues to evaluate freight strategies, optimize transportation modes and delivery routes, and update and upgrade equipment to further our organization’s climate risk mitigation objectives.
Waste & Water Management. Our facilities continue to focus on mitigating the impact of waste generated by production and operations at our sites. Our commitment to protecting the environment is demonstrated in the following areas:
• | Sustaining largely landfill-free operations across our manufacturing sites; |
• | Implementing and maintaining recycling programs at our distribution centers and manufacturing sites; |
• | Focusing on the impact of downstream waste by converting more packaging to Forest Stewardship Council (“FSC”)-certified materials; |
• | Increasing consumer awareness of our product takeback and repair programs; and |
• | Working to enhance the recyclability of our distributed products and packaging materials. |
Our Packaging & Labelling Working Group identified opportunities to remove unnecessary components from various packaging configurations across several product lines to reduce the impact of downstream waste. The team created an updated informational packaging design to improve the handling and reprocessing of packaging materials manufactured through our operations. Our SAFESKIN* Glove Manufacturing Facility has been consistently recognized for environmental best practices, receiving awards for river conservation, fish release programs, and tree planting to prevent soil erosion.
Caring for Our Customers and Communities
Product Quality and Safety.Quality is the foundation for everything we do at Owens & Minor. The Quality Assurance and Regulatory Affairs (“QARA”) Team effectively manages a robust Quality System that meets or exceeds all laws, regulations,
Owens & Minor, Inc.●2024 Proxy Statement13
Corporate Governance |
and standards that govern our business. This system serves as a framework to support consistent, high-quality solutions for both internal and external customers. Owens & Minor complies with the U.S. Food & Drug Administration (“FDA”) and European Union Medical Device Regulation and is also certified under the International Organization for Standardization (“ISO”) 13485 and the Medical Device Single Audit Program. In 2023, our QARA team:
• | Enhanced the medical device reporting program; |
• | Established a design control program for our kitting business; |
• | Obtained successful FDA 510k clearances for new product codes; and |
• | Upgraded the electronic Quality Management Systems to support the Owens & Minor Quality System program. |
We manage our internal quality system audits as required by the FDA and ISO, as well as through third-party audits.
The Patient Direct segment holds Centers of Medicare & Medicaid Services Durable Medical Equipment, Prosthetics, Orthotics, and Supplies approved third-party accreditation from the Community Health Accreditation Program; The Joint Commission; Healthcare Quality Association on Accreditation; and Utilization Review Accreditation Commission, as applicable to business operations. These organizations continuously collect safety and key performance indicators to monitor compliance with their requirements. Additionally, client and referral satisfaction is surveyed and reported for evaluation by leadership.
Supporting Our Communities.We invest in the communities where we operate through charitable contributions from The Owens & Minor Foundation (the “Foundation”) and by encouraging our teammates’ volunteerism. Launched in May 2021 with a $10 million endowment, the Foundation is dedicated to making impactful investments to charitable and civic organizations in the communities we serve and focuses primarily in three areas: Environment, with particular attention to director succession planning, including the stewardship of waterways; Healthcare; and Diversity, Equity & Inclusion. Since its inception, the Foundation has contributed more than $2 million to organizations supporting our three focus areas.
In 2021, The Owens & Minor Foundation selected Ronald McDonald House Charities® (“RMHC”) as its flagship charity partner, donating Halyard® products and contributing more than $1 million for multi-year support of RMHC programming that directly improves the health and well-being of children and their families. In 2023, The Foundation’s contribution guaranteed 5,000 overnight stays to ensure families with ill or injured children remained together and close to medical care. In addition, Owens & Minor teammates volunteered nearly 2,000 hours to help feed and nourish RMHC families.
Also in 2023, the Foundation collaborated with our Veterans Teammate Resource Group (“Veterans TRG”) to partner with Hope for the Warriors® to help support active U.S. servicemembers, veterans, and military families, as well as to provide ongoing engagement opportunities for Owens & Minor teammates. The Owens & Minor Veterans TRG provides a forum for active and former U.S. military servicemembers to advocate for veterans and veterans’ causes on behalf of teammates and in local communities. The Foundation’s support will assist more than a thousand Hope for the Warriors clients across a variety of programs.
Further, the Foundation continued engagementits commitment to environmental charities nationwide with contributions to Chattahoochee Riverkeeper™, The Conservation Foundation, FRIENDS of Great Salt Lake, Los Angeles Waterkeepers™, and Save the Sound™ to increase access, education and conservation of the nation’s waterways. In summary, these and other contributions continue Owens & Minor’s longstanding legacy of service to our teammates, customers, and the communities in which we operate.
Operating Responsibly
Regulatory Compliance. We are committed to conducting business in compliance with applicable environmental laws and regulations as well as through environmentally responsible practices. Owens & Minor complies with relevant regulatory standards for air emissions, stormwater, and pollution prevention under the U.S. EPA and other global authorities applicable to where we operate. We also develop and maintain environmental objectives that focus on reducing our impact across our manufacturing sites and vehicle fleets.
14Owens & Minor, Inc.●2024 Proxy Statement
Corporate Governance |
Governance & Transparency. As part of our comprehensive Ethics and Compliance Program that aligns with the fundamental elements of an outside consulting firmeffective compliance program, as outlined by the U.S. Government and healthcare industry best practices, we maintain a Code of Honor. This Code creates a standard for ethical behavior that is required of all our teammates and business partners, including expectations for specific topics such as anti-bribery and anti-corruption. Annually, we require all teammates and our Board of Directors to assistpledge to uphold the Code’s standards.
We monitor corruption and bribery through our corporate internal audit, procurement, compliance, and vendor relations teams, who review various reports from all areas of our business. Owens & Minor prohibits all forms of bribery and corruption and maintains policies and procedures to prevent unethical business practices. Our internal audit, procurement, and vendor relations teams hold various compliance trainings to maintain compliance with all laws and regulations. We also maintain a whistleblower hotline for teammates to report any compliance concerns.
Ethical Supply Chain. The company’s social compliance programs strive to uphold human rights in all our business activities. Owens & Minor supports these programs with elements including, but not limited to:
• | Oversight from our Board and Executive Leadership Team, as well as our Human Resources, Legal, Ethics & Compliance, Privacy, and Supply Chain leadership; |
• | Risk analysis; |
• | Policies and procedures; |
• | Training and communication; |
• | Auditing and monitoring; |
• | Whistleblower hotline; |
• | Anti-bribery and anti-corruption standards; |
• | Modern slavery assessments and safeguards – Including all forms of involuntary labor, trafficked labor, forced labor, and child labor; and |
• | Environmental protections. |
We also work to ensure that both Owens & Minor and our vendors adhere to business integrity fundamentals including, but not limited to:
• | Privacy laws and regulations; |
• | Healthcare law; |
• | Import/export compliance; |
• | Security, both physical and cyber; |
• | Conflict minerals policies; |
• | Antitrust; |
• | Industry standards; and |
• | Transparency. |
Advancing Supplier Diversity. We support a socially responsible supply chain that includes qualified businesses with women-owned, minority, LGBTQ+, disabled, and veteran representation. In addition to our Supplier Diversity Council, Owens & Minor has expanded its program to include Tier 1 and Tier 2 diversity mentoring, adding dedicated leadership for diversity programs, and implementing private label products to be utilized by diverse suppliers. To continue building on our Supplier Diversity Program, in 2023 Owens & Minor established a commercial marketing strategy to optimize supplier diversity. To support and better understand supplier performance, Owens & Minor centralized reporting, increased the visibility of products from our partner diverse suppliers, and tracked the associated usage so that we may better identify opportunities to continue to grow and expand the program.
Empowering Our Teammates
In alignment with our IDEAL Values, Owens & Minor strives to empower our teammates by ensuring there are open channels of communication across all levels of the organization. Our teammates are supported with development programs
Owens & Minor, Inc.●2024 Proxy Statement15
Corporate Governance |
and a healthy work environment, and we aim to realize success together through diversity, equity, and inclusion (“DE&I”). In 2023, we held regular virtual Town Hall meetings with our Executive Leadership Team and global teammates and encouraged all managers to align action plans across their teams with survey responses. We provided Learning Pathways designed to support teammates in developing skills for their role and planning their career paths. Through our annual talent review, we continue to invest in leadership development opportunities to increase the readiness of top talent leaders to assume greater responsibility at Owens & Minor. We also bolstered our support for DE&I by continuing to grow our TRGs to provide support and help in personal and career development while creating a safe space where teammates can bring their authentic selves to work every day. In 2023, we launched the Diverse Abilities Inclusion & Support (“DAIS”) TRG for all teammates with diverse abilities, caring for a family member with diverse abilities, or wishing to join as an ally. This TRG advances awareness and inclusion while promoting an environment where teammates feel comfortable sharing, feel they are heard, and are encouraged to utilize resources available through our company and their communities. Our goal is to provide education and support while promoting inclusion and understanding of teammates with diverse abilities.
Supporting Our Teammates.The health, wellness and safety of our teammates is a foundational priority at Owens & Minor. We take care of our teammates, and our teammates take care of our customers. We value the contributions teammates make toward growing Owens & Minor and offer a comprehensive suite of benefits and well-being resources such as health and financial wellness programs, adoption assistance, parental leave, education assistance, and bereavement leave.
Teammate safety is a priority at Owens & Minor, and we pursue a “safety as a lifestyle” approach, which was demonstrated in 2023, as we achieved a total-company recordable incident rate of 1.02—lower than the average of 2.7 for private industry. Additionally, we achieved a DART rate (cases with Days Away, Restricted, or Transfer of Duty) of 0.61, also lower than the private industry average of 1.7. Several of our sites routinely work millions of hours without a recordable injury, reflecting our commitment to safety and overall target of zero injuries. During 2023, we achieved several Environment, Health, and Safety milestones including, but not limited to:
• | 27 of our manufacturing plants and distribution centers worked the entire year free of recordable injuries. |
• | 75% of our Patient Direct locations worked the entire year free of recordable incidents. |
• | We hosted a “Spring into Safety” housekeeping challenge in March to focus on the fundamentals for our safe workplace. |
• | Our facility in Kells, Ireland hosted a Wellness Week in December educating and refreshing our teammates on self-care, winter safety, and Supervisor training/preparedness. |
• | We hosted Global Safety Week in August, involving all Products & Healthcare Services, (e.g., manufacturing, distribution), Patient Direct and Corporate Functions in a coordinated, structured week to celebrate the safety of our teammates and educate them for continued well-being. This special week also included a global competition encouraging sites to get creative and showcase teammate’s engagement activities. |
Overall, we seek to strengthen and continuously improve all of our Environment, Health, and Safety program initiatives with the goal of providing an optimal environment to achieve our Purpose and Vision.
Promoting Diversity, Equity, and Inclusion.Promoting DE&I is not a project nor a point-in-time discussion. Building a diverse, equitable, and inclusive workplace takes dedication and a long-term commitment from each one of us to live our IDEAL Values and to bring our authentic selves to work each day.
We encourage a working environment that promotes the success and well-being of all our teammates. We advocate for DE&I across our business to help succeed in delivering our DE&I strategy. Reflecting our commitment to and support for DE&I, we launched Unconscious Bias training for all senior leaders in 2023, and we will continue educating at deeper levels of the organization in 2024.
Our TRGs were created in 2020 to promote engagement and support for underrepresented identity groups, including African American/Black, Veteran and Military, LGBTQ+, Women’s Empowerment Network, Hispanic, Asian American/Pacific Islanders, and Women in Technology. With the addition of our eighth TRG in 2023 centered on teammates with or who care for family members with Diverse Abilities, we have more than 1,000 members and allies participating in TRGs throughout the company. A new TRG has been approved for Q1 2024 focusing on emerging and future leaders within the company. To further advance our Purpose of Life Takes Care, each TRG received funding in 2023 from the Foundation to support
16Owens & Minor, Inc.●2024 Proxy Statement
Corporate Governance |
nonprofit organizations nominated by each TRG that align with that specific TRG’s mission and goals. These contributions allowed our TRGs to develop partnerships by participating in engagement events and volunteer opportunities in the identificationdiverse communities where we live and strategic recruitment of directors possessing the qualities, character, experience and expertise that will contribute to the leadership and success of the Company in the rapidly changing healthcare industry.work.
THE GOVERNANCE & NOMINATING
COMMITTEE
Martha H. Marsh, Chairman
Stuart M. Essig
Lemuel E. Lewis
Eddie N. Moore, Jr.
James E. Rogers
The Board of Directors held 1516 meetings during 2017.2023 which included regular meetings and special meetings to provide oversight related to, among other things, the Company’s strategic planning, certain executive management changes and navigating macro-economic conditions during 2023. All directors attended at least 75% of the meetings of the Board and committees on which they served. Our directors attend our annual meetingAnnual Meeting of shareholdersShareholders unless there is compelling reason why they cannot. All of our directors with the exception of Mr. Moore,in office at that time attended our 20172023 Annual Meeting of Shareholders.
UnderCommittees of the Company’s Corporate Governance Guidelines, the independent directors meet in executive session after each regularly scheduled Board meeting. These meetings are chaired by our lead director who is elected annually by thenon-management directors following each annual meeting of shareholders. Anne Marie Whittemore currently serves as lead director and presides over these executive sessions. As lead director, Ms. Whittemore is also invited to participate in meetings of all Board committees but is permitted to vote only in meetings of committees of which she is a member. Shareholders and other interested parties may contact the lead director by following the procedures set forth in “Communications with the Board of Directors” on page 11 of this proxy statement.
The Board of Directors currently has the following committees, which the Board established to assist it with its responsibilities:
Audit Committee:Oversees (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the qualification and independence of the Company’s independent registered public accounting firm, (iv) the performance of the Company’s independent registered public accounting firm and internal audit functions and (v) issues involving the Company’s ethical and legal compliance responsibilities. Committee.The Audit Committee oversees:
• | Integrity of the Company’s financial statements; |
• | The Company’s compliance with legal and regulatory requirements; |
• | Qualification and independence of the Company’s independent registered public accounting firm; |
• | Performance of the Company’s independent registered public accounting firm and internal audit functions; |
• | Certain aspects of the Company’s ERM program, including cybersecurity risk; and |
• | Issues involving the Company’s ethical and legal compliance responsibilities. |
The Audit Committee has sole authority to appoint, retain, compensate, evaluate, and terminate the Company’s independent registered public accounting firm. The Board of Directors has determined that each of Lemuel E. Lewis and Eddie N. Moore, Jr.Committee Chair, Stephen Klemash, is an “audit committee financial expert,” as defined by SEC regulations and that each member of the Audit Committee is financially literate under NYSE listing standards. All members of the Audit Committee are independent as such term is defined under the enhanced independence standards for audit committees in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules thereunder as incorporated into the NYSE listing standards and under the Company’s Corporate Governance Guidelines. The Audit Committee met six times during 2023.
CompensationOur People & BenefitsCulture Committee. The OP&C Committee:Administers executive compensation programs, policies and practices. Advises the Board on salaries and compensation of the executive officers and makes other studies and recommendations concerning compensation and compensation policies. May delegate authority forday-to-day administration and interpretation of compensation plans to certain senior officers of the Company (other than for matters affecting executive officer compensation and benefits). For further information on this committee’s processes and procedures, see “Compensation Discussion and Analysis” on page 33 of this proxy statement.
• | Administers executive compensation programs, policies and practices; |
• | Advises the Board on salaries and compensation of the executive officers; |
• | Conducts studies and recommendations concerning compensation and compensation policies; |
• | May delegate authority for day-to-day administration and interpretation of compensation plans to certain senior officers of the Company (other than for matters affecting executive officer compensation and benefits); and |
• | Exercises oversight over other matters affecting our culture and our teammates such as DE&I, teammate satisfaction, teammate health and well-being, job satisfaction and turnover. |
All members of the CompensationOP&C Committee are independent within the meaning of the enhanced NYSE listing standards and the Company’s Corporate Governance Guidelines.Guidelines and are “non-employee directors” as defined in Rule 16b-3 under the Exchange Act. The CompensationOP&C Committee met 6eight times during 2017.2023.
Governance & Nominating Committee:Considers and recommends nominees for election as directors and officers and nominees for each Board committee. Reviews and recommends changes to director compensation. Reviews and evaluates the procedures, practices and policies of the Board and its members and leads the Board in its annual self-review. Oversees the governance of the Company, including reviewing and recommending changes to the CorporateCommittee. The Governance Guidelines. Conducts succession planning for senior management. & Nominating Committee:
• | Considers and recommends nominees for election as directors and officers and nominees for each Board committee; |
• | Reviews and recommends changes to director compensation; |
Owens & Minor, Inc.●2024 Proxy Statement17
Corporate Governance |
• | Reviews and evaluates the procedures, practices and policies of the Board and its members and leads the Board in its annual self-review; |
• | Oversees the governance of the Company, including reviewing and recommending changes to the Corporate Governance Guidelines; |
• | Conducts succession planning for senior management; and |
• | Reviews the Company’s ESG programs and practices. |
All members of the Governance & Nominating Committee are independent within the meaning of the NYSE listing standards and the Company’s Corporate Governance Guidelines. The Governance & Nominating Committee met four times during 2023.
Executive Committee:Committee.Exercises limited powers of the Board when the Board is not in session. The Executive Committee did not meet during 2017.
BOARD COMMITTEE MEMBERSHIPThe Board, upon recommendation from the Governance & Nominating Committee, reviews and determines the composition of the Committees, appoints the Committee Chairs, and considers periodic rotation of committee members and chairs, taking into account the benefits of continuity and depth of experience, professional background, and experience with understanding different aspects of our business. In January 2024, the Board rotated the members of the Governance & Nominating and OP&C Committees.
Director | Board | Audit | Compensation & Benefits | Executive | Governance & Nominating | ||||||||||||||||||||
P. Cody Phipps* | X* | X* | |||||||||||||||||||||||
Stuart M. Essig | X | X | |||||||||||||||||||||||
John W. Gerdelman | X | X | |||||||||||||||||||||||
Barbara B. Hill | X | X | |||||||||||||||||||||||
Lemuel E. Lewis | X | X* | X | X | |||||||||||||||||||||
Martha H. Marsh | X | X | X | X* | |||||||||||||||||||||
Mark F. McGettrick** | X | ||||||||||||||||||||||||
Eddie N. Moore, Jr. | X | X | X | ||||||||||||||||||||||
James E. Rogers*** | X | X | X | ||||||||||||||||||||||
David S. Simmons*** | X | X | |||||||||||||||||||||||
Robert C. Sledd | X | X | X* | X | |||||||||||||||||||||
Anne Marie Whittemore | X | X | |||||||||||||||||||||||
No. of meetings in 2017 | 15 | 7 | 6 | 0 | 4 |
Director | Board | Audit | Executive | Governance & Nominating | Our People & Culture | |||||
Mark A. Beck | C |
| C | • | • | |||||
Gwendolyn M. Bingham | • |
| • | C |
| |||||
Kenneth Gardner-Smith | • |
|
|
| • | |||||
Robert J. Henkel | • |
| • |
| C | |||||
Rita F. Johnson-Mills | • |
|
| • |
| |||||
Stephen W. Klemash** | • | C | • |
|
| |||||
Teresa L. Kline | • | • |
|
|
| |||||
Edward A. Pesicka* | • |
| • |
|
| |||||
Carissa L. Rollins | • | • |
|
|
| |||||
No. of Meetings in 2023 | 16 | 6 | 0 | 4 | 8 |
C Chair • Member *ChairmanNon-Independent Director ** Financial Expert
**Mr. McGettrick was appointed to the Board on March 1, 2018.
***Mr. Rogers and Mr. Simmons have notified the Board of Directors that they are not standing forre-election at the annual meeting.
DIRECTOR COMPENSATIONDirector Compensation
The Governance & Nominating Committee reviews director compensation annually, and it is the responsibility of this committee to recommend to the Board of Directors any changes in director compensation. The Board of Directors makes the final determination with respect to director compensation. The Governance & Nominating Committee has the authority under its charter to retain outside consultants or advisors to assist it in gathering information and making decisions.
The Company uses a combination of cash and equity compensation to attract and retain qualified candidates to serve on its Board of Directors. In setting director compensation, the Company considers the time commitment of timethat directors must make in performing their duties, the level of skills required by the Company of its Board members and the market competitiveness of its director compensation levels. Additionally, from time to time, the Company performs a market review with respect to other leading companies of similar size to the Company and with respect to the Company’s peer group, under the supervision of the Governance & Nominating Committee, and upon recommendation of the Company’s independent compensation consultant, to determine the compensation arrangements for the independent directors of the
18Owens & Minor, Inc.●2024 Proxy Statement
Corporate Governance |
Company. The table below sets forth the schedule of fees paid tonon-employee directors for their annual retainer and service in various capacities on Board committees and in Board leadership roles. Employee directors do not receive any additional compensation for serving on the Board or any of its committees.
Schedule of Director Fees
Type of Fee | Cash | Equity | ||||||
Annual Retainer | $ | 35,000 | $ | 100,000 | (1) | |||
Additional Annual Retainer for Lead Director | 35,000 | N/A | ||||||
Additional Annual Retainer for Audit Committee Chair | 10,000 | N/A | ||||||
Additional Annual Retainer for Compensation Committee Chair | 10,000 | N/A | ||||||
Additional Annual Retainer for Governance & Nominating Committee Chair | 9,000 | N/A | ||||||
Additional Annual Retainer for Other Committee Chairs | 8,000 | N/A | ||||||
Board or Audit Committee Attendance Fee (per meeting) | 2,000 | N/A | ||||||
Compensation Committee Attendance Fee (per meeting) | 1,800 | N/A | ||||||
Other Committee Attendance Fee (per meeting) | 1,500 | N/A | ||||||
Board or Committee Telephone Conference Attendance Fee (per meeting, other than Audit Committee) | 1,000 | N/A | ||||||
Audit Committee Telephone Conference Attendance Fee (per meeting) | 1,200 | N/A | ||||||
Board Strategy Retreat Attendance Fee (annual2-day meeting) | 3,000 | N/A |
Type of Fee | Cash | Equity | ||||||
Annual Retainer | $ | 125,000 |
| $ | 175,000 | (1) | ||
Additional Annual Retainer for Independent Board Chair |
| 110,000 |
|
| N/A |
| ||
Additional Annual Retainer for Audit Committee Chair |
| 30,000 |
|
| N/A |
| ||
Additional Annual Retainer for OP&C Committee Chair |
| 25,000 |
|
| N/A |
| ||
Additional Annual Retainer for Governance & Nominating Committee Chair |
| 25,000 |
|
| N/A |
|
(1) Restricted stock grant withone-year vesting period.
(1) | Restricted stock grant with one-year vesting period. |
Directors may defer the receipt of all or part of their director fees under the Directors’ Deferred Compensation Plan. Amounts deferred are “invested” in bookkeeping accounts that measure earnings and losses based on the performance of a particular investment. Directors may elect to defer their fees into the following two subaccounts: (i) an account based upon the price of the Common Stock and (ii) an account based upon the current interest rate of the Company’s fixed income fund in its 401(k) plan.Retirement and Savings Plan (the “401(k) Plan”). Subject to certain restrictions, a director may take cash distributions from a deferred fee account either prior to or following the termination of his or her service as a director.
2023 Director Compensation Table
The table below summarizes the actual compensation paid by the Company tonon-employee directors who served during the year ended December 31, 2017.2023. Mr. Pesicka’s compensation is shown in the table entitled “2023 Summary Compensation Table”.
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | ||||||||||||||||||||||||||||
Name | Fees Earned in Cash ($) (1) | Stock Awards ($) (1)(2)(4) | Option Awards ($) (3) | Non-Equity ($) | Change in Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||||||
Stuart M. Essig | 64,900 | 100,000 | — | — | — | — | 164,900 | ||||||||||||||||||||||||||||
John W. Gerdelman | 70,400 | 100,000 | — | — | — | — | 170,400 | ||||||||||||||||||||||||||||
Barbara B. Hill | 72,150 | 125,000 | — | — | — | — | 197,150 | ||||||||||||||||||||||||||||
Lemuel E. Lewis | 87,400 | 100,000 | — | — | — | — | 187,400 | ||||||||||||||||||||||||||||
Martha H. Marsh | 84,000 | 100,000 | — | — | — | — | 184,000 | ||||||||||||||||||||||||||||
Mark F. McGettrick (5) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||
Eddie N. Moore, Jr. | 76,400 | 100,000 | — | — | — | — | 176,400 | ||||||||||||||||||||||||||||
James E. Rogers | 75,000 | 100,000 | — | — | — | — | 175,000 | ||||||||||||||||||||||||||||
David S. Simmons | 65,200 | 100,000 | — | — | — | — | 165,200 | ||||||||||||||||||||||||||||
Robert C. Sledd | 89,000 | 100,000 | — | — | — | — | 189,000 | ||||||||||||||||||||||||||||
Craig R. Smith | 44,500 | N/A | — | — | — | — | 44,500 | ||||||||||||||||||||||||||||
Anne Marie Whittemore | 94,000 | 100,000 | — | — | — | — | 194,000 |
Name | Fees Earned ($) | Stock Awards ($)(1)(2)(3) | Total ($) | |||||||||
Mark A. Beck |
| 235,000 |
|
| 175,000 |
|
| 410,000 | ||||
Gwendolyn M. Bingham |
| 150,000 |
|
| 175,000 |
|
| 325,000 | ||||
Kenneth Gardner-Smith |
| 125,000 |
|
| 175,000 |
|
| 300,000 | ||||
Robert J. Henkel |
| 150,000 |
|
| 175,000 |
|
| 325,000 | ||||
Rita F. Johnson-Mills |
| 125,000 |
|
| 175,000 |
|
| 300,000 | ||||
Stephen W. Klemash |
| 155,000 |
|
| 175,000 |
|
| 330,000 | ||||
Teresa L. Kline |
| 125,000 |
|
| 175,000 |
|
| 300,000 | ||||
Carissa L. Rollins |
| 125,000 |
|
| 175,000 |
|
| 300,000 |
(1)
(1) | Includes amounts deferred by the directors under the Directors’ Deferred Compensation Plan. |
(2) | The amounts included in the “Stock Awards” column are the aggregate grant date fair value of the awards computed in accordance with the FASB ASC Topic 718. Assumptions used in the calculation of the stock awards are included in note 10 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which is incorporated herein by reference. The actual value a director may receive for Stock Awards depends on market prices, and there can be no assurance that the amounts shown are the amounts that will be realized. |
(3) | The Stock Award amount of $175,000 equated to 9,344 shares of restricted stock based on the closing stock price of $18.73 on May 12, 2023, the date of grant. These shares vest on May 12, 2024. |
(2) The amounts included in the “Stock Awards” column are the aggregate grant date fair value of the awards computed in accordance with the FASB ASC Topic 718.Owens & Minor, Inc.●2024 Proxy Statement19
Corporate Governance |
(3) Option Awards were not granted to Directors in 2017.
(4) The Stock Award amount of $100,000 equated to 3,050 shares of Restricted Stock based on the closing stock price of $32.79 on May 5, 2017, the date of grant. These shares vest on May 5, 2018. Upon her appointment to the Board on February 9, 2017, Ms. Hill received a Stock Award in the amount of $25,000 which equated to 696 shares of Restricted Stock based on the closing price of $35.91 on that date. These shares vested on February 9, 2018. Mr. Smith did not receive a Stock Award during 2017.
(5) Mr. McGettrick was appointed to the Board on March 1, 2018 and therefore did not receive compensation during the year ended December 31, 2017.
Stock Ownership Guidelines for Directors
The Company maintains stock ownership guidelines for its directors whichand modified those guidelines in 2021 to provide that each director shall attain, within five years after his or her service on the Board begins (or by July 30, 2026 for directors serving as of July 30, 2021), a level of equity ownership of Common Stock having a value of at least fivefour times the director’s annual cash retainer. Currently, the annual cash retainer fee or $150,000, whichever is higher. Each director who has served on$125,000 and the Board for at least five years has achieved thisequity ownership objective.guideline value is $500,000.
DIRECTOR NOMINATING PROCESSDirector Nominating Process
Director Candidate Recommendations and Nominations by Shareholders. The Governance & Nominating Committee charter provides that the Governance & Nominating Committee will consider director candidate recommendations by shareholders. Shareholders should submit any such recommendations to the Governance & Nominating Committee through the method described under “Communications with the Board of Directors” below. In addition, our Bylaws provide that any shareholder of record entitled to vote for the election of directors at the applicable meeting of shareholders may nominate directors by complying with the notice procedures and requirements set forth in the Bylaws and summarized inBylaws. For more information, see “Shareholder Proposals” on page 6721 of this proxy statement.Proxy Statement.
Process for Identifying and Evaluating Director Candidates.Candidates. The Governance & Nominating Committee evaluates all director candidates in accordance with the director qualification standards and the criteria described in our Corporate Governance Guidelines. These guidelines require the Governance & Nominating Committee on an annual basis to review and evaluate the requisite skills and characteristics of individual Board members and nominees as well as the composition of the Board as a whole. This assessment includes whether the member or candidate is independent and includes considerations of diversity, age, skills, and experience in the context of the Board’s needs. The goal of the Governance & Nominating Committee is to have a Board whose membership reflects a mix of diverse skill sets, technical expertise, educational and professional backgrounds, industry experiences and public service as well as perspectives of different genders and ethnicities. The Governance & Nominating Committee reviews its annual assessment with the Board each year and, as new member candidates are sought, attempts to maintain, and enhance the level of diverse backgrounds and viewpoints of directors constitutingcomposing the Board. As part of the Board’s annual self-assessment process, the Board will consider the effectiveness of its overall composition and structure as well as its performance and functioning.
There are no differences in the manner in whichway the Governance & Nominating Committee evaluates director candidates based on whether the candidate is recommended by a shareholder.shareholder or was identified by other means. The Governance & Nominating Committee did not receive any nominations from any shareholders for the 20182024 Annual Meeting.
Our Bylaws provide that no director nominee can stand for election if, at the time of appointment or election, the nominee is over the age of 72; however, under exceptional circumstances, the Board may waive on a temporary basis the director age limitations to allow a director to be appointed, elected, and serve past age 72.
COMMUNICATIONS WITH THE BOARD OF DIRECTORSCommunications with the Board of Directors
The Board of Directors has approved a process for shareholders and other interested parties to send communications to the Board. Shareholders and other interested parties can send written communications to the Board, any committee of the Board,non-management directors as a group, the Chair, the lead director or any other individual director atby one of the following address:means: (1) postal mail to P.O. Box 2076, Mechanicsville,27626, Richmond, VA 23116-2076.23261-7626, or (2) on our website at http://www.owens-minor.com under “Corporate Governance” in the “Investor Relations” tab. All communications will be relayed directly to the applicable director(s).
20Owens & Minor, Inc.●2024 Proxy Statement
Proposal 1: Election of Directors
PROPOSAL 1: ELECTION OF DIRECTORS
TenNine directors have been nominated for election to the Board of Directors for aone-year term expiring at the 20192025 Annual Meeting of Shareholders or until their respective successors are elected. Each nominee has agreed to serve if elected and qualified. If any nominee is not able to serve, the Board may designate a substitute or reduce the number of directors serving on the Board. Proxies will be voted for the nominees shown below (or if not able to serve, such substitutes as may be designated by the Board). The Board has no reason to believe that any of the nominees will be unable to serve.
Our Bylaws currently provide that the number of directors constituting the Board of Directors consistsshall from time to time be set by resolution adopted by the affirmative vote of 12 directors anda majority of the Directors in office. In accordance with the Bylaws, the Board has approved an amendment to our Bylaws to decrease the number of directors to 10 effective upon Messrs. Rogers and Simmons’ retirement fromthat the Board effective upon the 2018 Annual Meeting.of Directors would consist of nine directors. The Governance & Nominating Committee has recommended to the Board of Directors, and the Board of Directors has approved, 10nine persons as nominees for election to the Board of Directors. Proxies cannot be voted for a greater number of directors than the number of nominees named.
Information on each nominee, including the particular experience, qualifications, attributes and/or skills that led the Board to conclude that he or she should serve as a director of the Company, is set forth below.below in the following tables and in nominee specific disclosures.
Experience & Skills of Director Nominees | ||||||||||||||||||
Significant Leadership Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||
Healthcare Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Manufacturing/ Operations Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Global, Emerging Markets Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Supply Chain & Logistics Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Technology, Cybersecurity or IT Oversight | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||
Financial Literacy & Reporting | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||
Risk Oversight/ Risk Management | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||
Public Company Governance | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||
Environmental, Social & Governance (ESG) | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||
Background of Director Nominees | ||||||||||||||||||
Gender | Male | Female | Male | Male | Female | Male | Female | Male | Female | |||||||||
Race/Ethnicity | White | African American | African American | White | African American | White | White | White | White | |||||||||
Age | 58 | 64 | 43 | 69 | 65 | 63 | 65 | 57 | 54 |
Owens & Minor, Inc.●2024 Proxy Statement21
Proposal 1: Election of Directors |
Nominees for Election
Mark A. Beck | ||||
Principal Occupation: Co-founder and Owner of B-Square Precision, LLC Age 58 Director since 2019 Independent Director, Chair of the Board Committees: Executive (Chair), |
Background: Mr. Beck serves as the Board’s Chair, a position he has held since September 2020, and is the co-founder and CEO of B-Square Precision, LLC, a private company engaged in the acquisition and management of companies that manufacture high-precision tools, dies, molds and components. Previously, Mr. Beck served as Qualifications:
The Board of Directors has nominated Mr. |
Gwendolyn M. Bingham | ||
Principal Occupation: Retired United States Army (three-stars) Age 64 Director since 2020 Independent Director Committees: Executive, Governance & Nominating (Chair) |
Background: Lieutenant General (three-stars) Bingham retired in September 2019 from the U.S. Army following a 38-year career in the military. During her military career, LTG (retired) Bingham served as Department of Qualifications: The Board of Directors has |
22Owens & Minor, Inc.●2024 Proxy Statement
Proposal 1: Election of Directors |
Kenneth Gardner-Smith | ||||
Principal Occupation: Chief People Officer, DaVita Inc. Age 43 Director since Independent Director Committee: Our People & Culture | Background: Mr. Gardner-Smith has served as the Chief People Officer since 2020 for DaVita, Inc., a Fortune 500 kidney dialysis service provider. Prior to that Mr. Gardner-Smith has held the following positions with DaVita, including Regional Group VP, Field Operations – Southeast from 2015 to 2019, Division VP from 2014 to 2015, Group Director from 2013 to 2014, and Regional Director, Operations from 2011 to 2013. Prior to his employment with DaVita from 2008 to 2011, Mr. Gardner-Smith worked as an investment banker at Morgan Stanley focused on mergers and acquisitions. From 2003 to 2006, Mr. Gardner-Smith was Relationship Manager for Wells Fargo. Qualifications:
The Board of Directors has nominated Mr. | |||
Robert J. Henkel | ||||
Principal Occupation: Retired, President & Chief Ascension Health Age 69 Director since 2019 Independent Director Committees: Executive, Our People & Culture (Chair) |
Background: Mr. Henkel was the President, Healthcare Transformation at the THEO Executive Group, from January 2019 to March 2021. Previously, Mr. Henkel served as Qualifications:
The Board of Directors has nominated |
Proposal 1: Election of Directors |
Rita F. Johnson-Mills | ||
Principal Occupation: President, (Southern Region), CINQCARE Age 65 Director since 2022 Independent Director Committee: Governance & Nominating |
Background: Ms. Johnson-Mills has served as Qualifications: The Board of Directors has | |
Stephen W. Klemash | ||
Principal Occupation: Retired Partner, Ernst & Young and EY Americas Center for Board Matters Age 63 Director since Independent Director Committees: Audit (Chair), Executive | Background: Mr. Klemash retired in June 2021 as a Partner with Ernst & Young LLP (EY), a position he held since 1997. Mr. Klemash served in a limited consulting capacity with EY through June 2022. In addition, Mr. Klemash also previously served as the Lead Partner with the EY Americas Center for Board Matters (CBM), from 2016 to December 2021. Prior to that Mr. Klemash held multiple Managing Partner positions for EY including from 2011 to 2016 East Central and Central Managing Partner of Accounts, from 2009 to 2011 East Central Region Managing Partner of Advisory, from 2007 to 2009 North Central Region Managing Partner of Assurance and Advisory Business Services and from 2002 to 2007 Pittsburgh Office Managing Partner. Prior to 2002, Mr. Klemash was an assurance practitioner, from the date of his hire by EY in 1984, serving clients in a variety of industries. Mr. Klemash is a certified public accountant and member of the American Institute of Certified Public Accountants. Qualifications:
The Board of Directors has nominated Mr. |
24Owens & Minor, Inc.●2024 Proxy Statement
Proposal 1: Election of |
Teresa L. Kline | ||
Principal Occupation: Retired, President and Chief Executive Officer of Health Alliance Plan of Michigan and Executive Vice President of Henry Ford Health System Age 65 Director since 2022 Independent Director Committee: Audit |
Background: Ms. Kline retired in Qualifications:
The Board of Directors has nominated Ms. |
Edward A. Pesicka | ||||
Principal Occupation: President and Chief Executive Officer of Age 57 Director since 2019 Committee: Executive |
Background: Mr. Pesicka is Qualifications:
The Board of Directors has nominated Mr. | |||
|
| ||
|
Owens & Minor, Inc.●2024 Proxy Statement25
Proposal 1: Election of |
Carissa L. Rollins | ||
Principal Occupation: Chief Information Officer, Illumina, Inc. Age 54 Director since 2022 Independent Director Committee: Audit |
Background: Ms. Rollins has Qualifications:
The Board of Directors has nominated Ms. |
The Board of Directors recommends a vote FOR the election of each nominee as director.Director.
Effective immediately following the Annual Meeting, Messrs. Rogers and Simmons’ terms will expire, at which time they will retire from the Board. The Company gratefully acknowledges and thanks Mr. Rogers’ for his 26 years and Mr. Simmons for his four years of service and dedication to our Board.
PROPOSAL 2: APPROVAL OF THE OWENS & MINOR, INC. 2018 STOCK INCENTIVE PLAN
The Company currently has in effect the 2015 Stock Incentive Plan (the “2015 Plan”). The 2015 Plan permits the grant of options, stock appreciation rights, stock awards, stock units and incentive awards. On February 8, 2018, our Board of Directors adopted the 26Owens & Minor, Inc. 2018 Stock Incentive Plan (the “2018 Plan”), subject to the approval●2024 Proxy Statement
Proposal 2: Ratification of shareholders. Like the 2015 Plan, the 2018 Plan authorizes the grant of options, stock appreciation rights, stock awards, stock units and incentive awards. If the shareholders approve the 2018 Plan, no additional awards will be granted under the 2015 Plan after the date of shareholder approval of the 2018 Plan. The closing price of the Company’s Common Stock on March 1, 2018 was $16.11 per share.
Our Board of Directors believes that the 2015 Plan has benefited, and the 2018 Plan will benefit, the Company, by (i) assisting in recruiting and retaining the services of teammates andnon-employee directors with high ability and initiative, (ii) providing greater incentives for teammates andnon-employee directors who provide valuable services to the Company and its subsidiaries and affiliates and (iii) associating the interests of these persons with those of the Company and its shareholders.
Key features of the 2018 Plan, which contains provisions considered best practices for compensation and governance purposes, include:
The 2018 Plan generally will be administered by our Compensation Committee which consists entirely of independentnon-employee directors.
The 2018 Plan sets reasonable limits as to the awards any teammate, ornon-employee director may receive in any calendar year.
All stock options and stock appreciation rights must have an exercise price that is not less than the fair market value of the underlying stock on the grant date.
The maximum number of shares of our Common Stock that will be made available under the 2018 Plan is the sum of (i) 3,600,000 shares, less the number of shares of our Common Stock subject to awards granted under the 2015 Plan after March 1, 2018,plus (ii) the number of shares of our Common Stock subject to awards granted under the 2015 Plan that become available after March 1, 2018 because of the expiration, cancellation or forfeiture of the award without the issuance of the underlying shares. Between January 1, 2018 and March 1, 2018, awards representing 705,882 shares of Common Stock were granted under the 2015 Plan. This does not include awards to be granted in connection with our acquisition of Halyard Health S&IP, which we estimate will represent approximately 364,540 shares (based on a Common Stock price of $16.11 per share). We currently expect this acquisition to close early in the second quarter of 2018.
Shares of Common Stock not issued as the result of a net settlement of options, stock appreciation rights, stock awards, stock units and incentive awards, or tendered or withheld to pay the exercise price, purchase price or withholding taxes relating to options, stock appreciation rights, stock awards, stock units and incentive stock awards, shall not again be made available for issuance as awards under the 2018 Plan.
All awards granted under the 2018 Plan will be subject to aone-year minimum vesting period, provided that (i) up to 5% of the shares authorized for issuance under the 2018 Plan (subject to adjustments) may provide for vesting of awards in less than one year and (ii) awards granted tonon-employee directors may vest earlier than one year upon the annual meeting of the Company’s shareholders that occurs in the year immediately following the year of grant so long as the awards vest as of a date that is not earlier than two weeks prior to the anniversary date of the immediately preceding year’s annual shareholders meeting.
In connection with a change in control, vesting oftime-based awards will only be accelerated if the time-based awards are not assumed or converted into substitute awards following the change in control and vesting ofperformance-based awards shall only be accelerated to the extent of actual
|
The 2018 Plan does not include any reload feature which would provide for an automatic grant of additional awards or any “evergreen” share replenishment features which would provide for an automatic increase in the number of shares available for issuance.
The 2018 Plan prohibits the repricing of outstanding stock options, stock appreciation rights and other stock awards in the nature of purchase rights, whether by amending an existing award or by substituting a new award at a lower price, without shareholder approval. The 2018 Plan also prohibits the payment of cash, awards or other securities in exchange forout-of-the-money awards, without shareholder approval.
Awards granted under the 2018 Plan are subject to the Company’s Recoupment Policy (which is described on page 52 of this proxy statement).
There is not a liberal change in control definition in the 2018 Plan. A change in control does not occur on announcement or commencement of a tender offer or a potential takeover or on shareholder approval of a merger or other transaction.
Any material amendments to the 2018 Plan require shareholder approval.
No dividends or dividend equivalents may be granted in connection with options, stock appreciation rights or other awards in the nature of purchase rights. No dividends or dividend equivalents may be paid in connection with a stock award or stock unit unless and until the award is no longer subject to forfeiture conditions, and any such dividends or dividend equivalents will either be (i) deemed reinvested in additional awards which remain subject to the same forfeiture and other conditions applicable to the award to which such dividends or dividend equivalents related or (iii) accumulated (without interest) and become payable only at the time and to the extent the related award becomes nonforfeitable and/or payable. No dividends may be paid with respect to an award that is forfeited.
The 2018 Plan does not provide for taxgross-ups of any kind.
A summary of the principal features of the 2018 Plan is included below. However, every aspect of the 2018 Plan is not addressed in this summary and shareholders are encouraged to read the full text of the 2018 Plan which is attached to this proxy statement asAnnex A. We have no current plans, proposals or arrangements, written or otherwise, to grant any specific awards under the 2015 Plan that have not been granted as of March 1, 2018or under the 2018 Plan, except in connection with the closing of our acquisition of Halyard Health S&IP or as provided for under our Board of Directors compensation plan (as described on pages 18 and 9 respectively of this proxy statement).
Reasons for the 2018 Plan and Recommendation of the Board of Directors
As described in more detail in this proxy statement under “Executive Compensation—Compensation Disclosure and Analysis,” we believe our compensation programs are structured to attract, retain and motivate our teammates andnon-employee directors. Our Board of Directors believes that equity incentive awards play a key role in these programs as they help align the interests of teammates andnon-employee directors with those of our shareholders. As of March 1, 2018, there were (1) 61,488,172 shares of our Common Stock outstanding, (2) 1,532,907 full value shares outstanding which include outstanding Performance Shares at target but there are no outstanding stock options or stock appreciation rights, and (3) only 773,638 shares available for grant under the 2015 Plan, which amount will be further reduced by the grant of awards representing an estimated 364,540 additional shares of Common Stock in connection with the Halyard Health S&IP acquisition.
Historical Burn Rate; Potential Economic Dilution Analysis. We are committed to managing the use of our equity incentives prudently to balance the benefits equity compensation brings to our compensation programs against the dilution it causes our shareholders. As part of our analysis when considering the number of shares to be reserved under the 2018 Plan, we considered the 2015 Plan’s “burn rate,” calculated as the number of shares subject to equity awards granted under the 2015 Plan, divided by the weighted average number of shares outstanding for that period. Our average burn rate for the three years ending December 31, 2017 was 3.73%. The total potential dilution resulting from issuing all shares authorized under our equity plans as of March 1, 2018 would be approximately 3.8%. We believe that our burn rate and potential dilution amounts are reasonable for our industry and market conditions. Since the 2015 Plan was adopted, we have sought to provide equity compensation to our teammates andnon-employee directors who we believe are important to our organization in furthering our business strategy. In addition, since that time we have made multiple leadership appointments and promotions to advance our strategy. We made equity grants from the 2015 Plan in connection with each of these new hires and promotions. We believe these new hires and promotions are key to the development and strengthening of the management team with the experience and talent necessary to further implement our transformation. Additionally, we have made two significant acquisitions in 2017 and 2018, Byram Healthcare and Halyard Health S&IP, to accelerate our transformation and have issued awards under our 2015 Plan prior to March 1, 2018 representing 63,501 shares of Common Stock to teammates who have joined us from Byram Healthcare and expect to issue awards representing an additional 364,540 shares of Common Stock to teammates who will join us from Halyard Health S&IP.
Expected Duration. We expect that the shares available under the 2018 Plan for future awards, if the 2018 Plan is approved by our shareholders, will be sufficient forcurrently-anticipated awards for the next three- four years. Expectations regarding future share usage could be impacted by a number of factors such as hiring and promotion activity at the executive level; the rate at which shares are returned to the 2018 Plan reserve upon awards’ expiration, forfeiture or cash settlement; the future performance of our stock price; factors involved in acquiring other companies; and other factors. While we believe that the assumptions we used are reasonable, future share usage may differ from current expectations.
For the foregoing reasons, our Board of Directors recommends that our shareholders approve the 2018 Plan.
Administration of the 2018 Plan
The 2018 Plan is generally administered by the Compensation Committee. The Compensation Committee approves all terms of awards to teammates under the 2018 Plan. The Compensation Committee also approves the teammates who will receive grants under the 2018 Plan, determines the type of award that will be granted and approves the number of shares of Common Stock subject to the grant. The Governance & Nominating Committee of the Board of Directors administers the 2018 Plan in the case of any award that is made to a member of the Board who is not also a teammate of the Company or an affiliate. References in this summary to the “Compensation Committee” include, with respect to awards made tonon-employee directors, the Governance & Nominating Committee.
Participation in 2018 Plan
Because awards under the 2018 Plan are made at the Compensation Committee’s discretion, we are unable to determine who will be selected to receive awards or the type, size or terms of the awards that may be granted. For the same reason, we are unable to determine the awards that would have been granted last year if the 2018 Plan had been in effect. However, outstanding awards previously granted under the 2015 Plan are reported herein. See “Grants of Plan Based Awards Table” on page 56 and “Outstanding Equity Awards at FiscalYear-End Table” on page 58 of this proxy statement.
Any teammate, consultant ornon-employee director of the Company or any affiliate who, in the judgment of the Compensation Committee, has contributed significantly or can be expected to contribute significantly to
the performance of the Company and/or its affiliates may receive an award under the 2018 Plan. The Company currently has approximately 8,600 teammates (including approximately 10 teammates who are officers), and the Company currently has 11non-employee directors. In fiscal 2017 the Company made awards to 301 participants, which included nine executive officers and our 10non-employee directors. The Compensation Committee has the complete discretion, as provided in the 2018 Plan, to select eligible teammates, consultants and/ornon-employee directors to receive awards under the 2018 Plan and to determine for each teammate, consultant ornon-employee director the nature of the award and the terms and conditions of each award.
The basis for participation in the 2018 Plan is that the Compensation Committee has determined that such participation will further the 2018 Plan’s purposes. In exercising its discretion, the Compensation Committee will consider the recommendations of management and the purposes of the 2018 Plan, which include the recruiting and retaining of teammates andnon-employee directors with high ability and initiative, providing greater incentives for teammates andnon-employee directors who provide valuable services to the Company and its subsidiaries and affiliates and associating the interests of these persons with those of the Company and its shareholders. For a description of the basis of participation for our executive officers andnon-employee directors during fiscal 2017, see “Compensation Discussion and Analysis” beginning on pages 33 through 53 of the proxy statement and “Director Compensation” on page 9 of the proxy statement.
The 2018 Plan includes reasonable limits on the benefits that any participant may receive for any calendar year. No teammate may be granted, in any calendar year, (i) options, stock appreciation rights or other purchase rights for more than 2,000,000 shares of our Common Stock, (ii) stock awards or stock units for more than 1,000,000 shares of our Common Stock or (iii) incentive awards exceeding $10,000,000. The foregoing limitations can be multiplied by two for awards granted to teammates during the calendar year in which the teammate first commences employment or other service. The 2018 Plan also provides that in any calendar year anon-employee director may not be granted awards during any single calendar year in respect of thenon-employee director’s service as a member of the board that, taken together with any cash fees paid to thenon-employee director, exceeds $750,000 in total value (calculating the value of any such awards based on the grant date fair value of such awards for financial accounting purposes). The Compensation Committee may, however, make exceptions to the foregoing limit (up to twice such limit) for anon-executive chair of the Board of Directors or, in extraordinary circumstances, for other individualnon-employee directors, as the Compensation Committee may determine, provided that thenon-employee director receiving such awards may not participate in the decision to make such awards.
Share Authorization
The maximum aggregate number of shares of Common Stock that may be issued under the 2018 Plan is the sum of (i) 3,600,000 shares, less the number of shares of our Common Stock subject to awards granted under the 2015 Plan afterMarch 1, 2018, plus (ii) the number of shares of our Common Stock that are subject to awards granted under the 2015 Plan that become available after March 1, 2018 because of the expiration, cancellation or forfeiture of the award without the issuance of the underlying shares. In connection with stock splits, stock dividends, recapitalizations and certain other events, the Board will make adjustments that it deems appropriate in the aggregate number of shares of Common Stock that may be issued under the 2018 Plan, the terms of outstanding awards and the per individual grant limitations.
Except as described herein, each share of Common Stock issued in connection with an award granted under the 2018 Plan will reduce the total number of shares of Common Stock available for issuance under the 2018 Plan by one. If any options, stock appreciation rights, stock awards, stock units or other awards terminate, expire or are canceled, forfeited, exchanged or surrendered without having been exercised or paid or without issuance of the underlying shares, the Common Stock subject to such awards, to the extent of the termination, expiration, cancellation, forfeiture, surrender or cash settlement, will again be available for awards under the 2018 Plan. Any shares of Common Stock that are tendered or withheld from the settlement of an award to satisfy the grant or exercise price or to satisfy a tax withholding obligation under an award will not be available for future awards to
be granted under the 2018 Plan. If Common Stock is issued in settlement of a stock appreciation right, the number of shares available for future awards will be reduced by the number of shares for which the stock appreciation right was exercised rather than the number of shares issued. Shares of Common Stock that may be issued under the 2018 Plan may not be increased through the Company’s purchase of shares of Common Stock on the open market with the proceeds obtained from the exercise of options or other purchase rights granted under the 2018 Plan.
Awards
The Compensation Committee will determine the eligible individuals who will receive awards under the 2018 Plan and the Compensation Committee will specify the type of award that is made and will prescribe the terms and conditions that govern each award. The 2018 Plan generally provides that no award will become fully exercisable or entirely vested before the first anniversary of the date of grant of the award, provided that (i) awards may be granted without regard to this minimum vesting requirement with respect to a maximum of 5% of the shares of Common Stock authorized for issuance under the 2018 Plan and (ii) awards may be granted without regard to the minimum vesting requirement tonon-employee directors as described above. Notwithstanding the preceding sentence, the Compensation Committee may accelerate the exercisability or vesting of awards (i) in connection with a termination of employment or other service (including without limitation on death, disability, retirement or involuntary termination) or (ii) if the award has been outstanding for at least one year, and up to 5% of the shares of Common Stock authorized for issuance under the 2018 Plan may be issued without regard to any such restrictions on accelerated vesting of awards.
Options. The 2018 Plan authorizes the Compensation Committee to grant incentive stock options (under Section 421 of the Internal Revenue Code) and options that do not qualify as incentive stock options. The exercise price of each option will be determined by the Compensation Committee, provided that the price cannot be less than 100% of the fair market value of the Common Stock on the date on which the option is granted (or 110% of the shares’ fair market value on the grant date in the case of an incentive stock option to an individual who is a “ten percent shareholder” under Sections 422 and 424 of the Internal Revenue Code). Except in the event of stock splits, stock dividends and other changes in our capitalization, unless approved by shareholders, the exercise price of an outstanding option cannot be reduced and no payment can be made to cancel an option if the exercise price exceeds the shares’ fair market value on the date of cancellation.
The exercise price for any option is generally payable (i) in cash, (ii) in a cash equivalent acceptable to the Compensation Committee, or (iii) by the surrender of Common Stock (including Common Stock otherwise issuable upon exercise of the option) (or attestation of ownership of Common Stock) with an aggregate fair market value on the date on which the option is exercised equal to the exercise price for the number of shares being purchased.
The term of an option cannot exceed 10 years from the date of grant (or five years in the case of an incentive share option granted to a “ten percent shareholder”). The Compensation Committee may grant options that have a term less than the maximum term permitted under the 2018 Plan. The 2018 Plan provides for the automatic exercise of options if (a) the participant remains in the continuous employ or service of the Company from the date of grant until the stated expiration date of the option and (b) the fair market value of the shares subject to the option exceeds the exercise price. In that event, if not exercised by the participant, the option will be exercised on the stated expiration date and the participant will be issued shares of Common Stock that have a fair market value equal to the excess of the aggregate number of shares subject to the exercised portion of the option over the number of shares whose fair market value equals the aggregate exercise price of the option and applicable tax withholdings.
No dividends may be paid with respect to an option.
Stock Awards. The 2018 Plan also provides for the grant of stock awards. A stock award is an award of Common Stock that will be subject to restrictions on transferability and such other restrictions as the
Compensation Committee determines on the date of grant and consistent with the terms of the 2018 Plan, including the vesting requirements described above. The vesting requirements or restrictions may be stated with reference to one or more performance objectives, including objectives stated with respect to “performance goals” as described below under “Performance Objectives.” The restrictions, if any, may lapse over a specified period of time or through the satisfaction of conditions, in installments or otherwise, as the Compensation Committee may determine.
A participant who receives a stock award will have all of the rights of a shareholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the shares; provided, however, that the 2018 Plan provides that dividends payable on a stock award shall either be deemed reinvested in additional stock awards, which shall remain subject to the same forfeiture and transfer conditions applicable to the stock award with respect to which such dividends related, or accumulated and paid in cash, without interest, if and at the time the related stock award is no longer subject to forfeiture and transfer conditions. During the period, if any, when stock awards arenon-transferable or forfeitable, (i) a participant is prohibited from selling, transferring, pledging, exchanging, hypothecating or otherwise disposing of his or her stock award shares, (ii) the company will retain custody of the certificates and (iii) a participant must deliver a share power to the Company for each stock award. No dividends may be paid with respect to a stock award that is forfeited.
Stock Appreciation Rights. The 2018 Plan authorizes the Compensation Committee to grant stock appreciation rights that provide the recipient with the right to receive, upon exercise of the stock appreciation right, cash, Common Stock or a combination of the two. The amount that the recipient will receive upon exercise of the stock appreciation right generally will equal the excess of the fair market value of the Common Stock on the date of exercise over the shares’ fair market value on the date of grant (the “initial value”). Stock appreciation rights will become exercisable in accordance with terms prescribed by the Compensation Committee and consistent with the terms of the 2018 Plan, including the vesting requirements described above. Stock appreciation rights may be granted in tandem with an option grant or independently from an option grant. The term of a stock appreciation right cannot exceed ten years from the date of grant or five years in the case of a share appreciation right granted in tandem with an incentive stock option awarded to a “ten percent shareholder”. The Compensation Committee may grant stock appreciation rights that have a term less than such maximum terms. The 2018 Plan provides for the automatic exercise of a stock appreciation right if (a) the participant remains in the continuous employ or service from the date of grant until the stated expiration date of the stock appreciation right and (b) the fair market value of the shares subject to the stock appreciation right exceeds the initial value per share. In that event, if not exercised by the participant, the stock appreciation right will be exercised on the stated expiration date and the participant will receive the amount payable for exercises on that date (subject to applicable withholdings).
Except in the case of stock splits, stock dividends and other changes in our capitalization, the initial value of an outstanding stock appreciation right cannot be reduced without the approval of shareholders. In addition, the 2018 Plan provides that no payment may be made on account of the cancellation of a stock appreciation right if the initial value exceeds the fair market value of a share of Common Stock.
No dividends may be paid with respect to any stock appreciation rights.
Stock Units. The 2018 Plan also authorizes the Compensation Committee to grant awards of stock units. Stock units represent the participant’s right to receive an amount, based on the value of the Common Stock, if the requirements established by the Compensation Committee are satisfied. Consistent with the terms of the 2018 Plan, including the vesting requirements described above, the Compensation Committee will determine the applicable performance period, the performance goals and such other conditions that apply to the stock unit award. Performance goals may be stated with respect to the performance criteria described below under “Performance Objectives” or such other criteria determined by the Compensation Committee. If the performance goals and other requirements are met, stock units will be paid in cash, Common Stock or a combination thereof.
Incentive Awards. The 2018 Plan also permits the grant of incentive awards. An incentive award is an opportunity to earn a payment upon the terms and conditions prescribed by the Compensation Committee. The terms and conditions may provide that the incentive award will be earned only if the participant’s employment continues for a specified period or only to the extent that the participant, the Company or an affiliate achieves objectives measured over a period of at least one year. The objectives may be stated with reference to one or more of the performance criteria described below under “Performance Objectives” or such other criteria determined by the Compensation Committee. If an incentive award is earned, the amount payable will be paid in cash, Common Stock or a combination thereof. No dividends may be paid in respect of an incentive award.
Change in Control
Unless an outstanding award is assumed or otherwise continued after a change in control, upon a change in control andcash-out of the award, (i) each option and stock appreciation right shall be fully exercisable thereafter, (ii) each stock award will become transferable and nonforfeitable, (iii) each stock unit award shall be earned in its entirety and converted into a transferable and nonforfeitable stock award, and (iv) each incentive award shall be earned, in whole or in part, in accordance with the terms of the applicable award agreement, except that (i) each performance-based option and stock appreciation right shall be exercisable, (ii) each performance-based stock award will become transferable and nonforfeitable, (iii) each performance-based stock unit award will be earned and converted into a transferable and nonforfeitable stock award, and (iv) each performance-based incentive award shall be earned only to the extent of actual performance through the date of the change in control or pro rata based on the elapsed portion of the performance period as of the date of the change in control, whichever the Committee determines appropriate.
In the event of a change in control, the Compensation Committee, in its discretion and without the need for a participant’s consent, may provide that an outstanding option, stock appreciation right, stock award, stock unit award or incentive award shall be assumed by, or a substitute award granted by, the surviving entity in the change in control. Such assumed or substituted award shall be of the same type of award as the original option, stock appreciation right, stock award, stock unit award or incentive award being assumed or substituted.
Unless an outstanding award is to be assumed or otherwise continued after the change in control, the Compensation Committee, in its discretion and without the need of a participant’s consent, may provide that (i) each option and stock appreciation right that is or will be exercisable on the date of the change in control, (ii) each stock award that is or will become transferable and nonforfeitable, (iii) each stock unit award that is or will be earned and convertible into a transferable and nonforfeitable stock award and (iv) each inventive award that is or will be earned shall be cancelled in exchange for a payment. The payment may be in cash, shares of Common Stock or other securities or consideration received by Company shareholders in the change in control transaction. The amount of the payment will be equal to (i) the amount by which the price per share received by the shareholder in the transaction exceeds the exercise price of the option or initial value of the stock appreciation right, (ii) the price per share received by the shareholders in the transaction for each share subject to a stock award or stock unit or (iii) the amount earned under the incentive award. Notwithstanding the foregoing, however, awards that are not vested,non-forfeitable or payable as of the change in control will be cancelled without any payment therefor.
A change of control under the 2018 Plan generally occurs if:
a person, entity or affiliated group (with certain exceptions) acquires, in a transaction or series of transactions, at least 30% of our combined voting power;
we merge with another entity unless (i) the voting securities of the Company immediately prior to the merger continue to represent more than 50% of the combined voting power of the securities in the merged entity or its parent or (ii) the merger is effected to implement a recapitalization transaction in which no person acquires more than 30% of our combined voting power;
there is consummated an agreement for the sale or disposition of all or substantially all of our assets;
the stockholders approve a plan of complete liquidation; or
during any period of twelve (12) consecutive months, individuals who, at the beginning of such period, constitute our Board, together with any new directors whose nomination or election was approved by a majority of the directors then so in office (other than individuals who become directors in connection with certain transactions or election contests), cease for any reason to constitute a majority of our Board.
The Internal Revenue Code has special rules that apply to “parachute payments,”i.e., compensation that is payable on account of a change in control. If the parachute payments exceed a safe harbor amount prescribed by the Internal Revenue Code, then the recipient is liable for a 20% excise tax on a portion of the parachute payments, and the Company is not allowed to claim a federal income tax deduction for a portion of the parachute payments.
The 2018 Plan provides for a reduction in benefits if the benefits of awards, either alone or together with parachute payments under other plans and agreements, exceed the safe harbor amount. In that event, the participant’s total parachute payments will be reduced to the safe harbor amount,i.e., the maximum amount that may be paid without an excise tax liability or loss of deduction. However, the benefits will not be reduced, and the participant will receive all of the parachute payments, if the participant will receive a greaterafter-tax benefit, taking into account the excise tax payable by the participant, by receiving all of the parachute payments. The 2018 Plan provides that these provisions do not apply to a participant who, under an agreement with the Company or the terms of another plan is not permitted to receive parachute payments in excess of the safe harbor amount.
Performance Objectives
The 2018 Plan also identifies performance criteria that may be used to establish performance goals that will determine whether an award becomes vested or is earned. The Compensation Committee may prescribe that an award will become vested or be earned upon the attainment of one or more performance goals or objectives, including but not limited to: (i) gross, operating or net earnings before or after taxes; (ii) return on equity; (iii) return on capital; (iv) return on sales; (v) return on assets or net assets; (vi) earnings per share; (vii) cash flow per share; (viii) book value per share; (ix) earnings growth; (x) sales or sales growth; (xi) volume growth; (xii) cash flow (as defined by the Compensation Committee); (xiii) Fair Market Value; (xiv) total shareholder return; (xv) market share; (xvi) productivity; (xvii) level of expenses; (xviii) quality; (xix) safety; (xx) customer satisfaction; (xxi) total economic value added; (xxii) earnings before interest, taxes, depreciation and amortization; and (xxiii) revenues or revenue growth.
A performance goal or objective may be stated with respect to the Company, a subsidiary or a business unit and also may be stated with respect to one or more of these criteria or may be expressed on an absolute basis or relative to the performance of one or more similarly situated companies or a published index. In establishing a performance goal or objective, the Compensation Committee may exclude any or all special, unusual or extraordinary items as determined under generally accepted accounting principles, including the charges or costs associated with restructurings of the Company, discontinued operations, other unusual ornon-recurring items and the cumulative effects of accounting changes. The Compensation Committee may also adjust performance goals or objectives, including to reflect the impact of unusual ornon-recurring events affecting the Company and for changes in applicable tax laws and accounting principles.
Section 162(m) Transition Rule
If and to the extent that the Compensation Committee grants an award under the 2018 Plan in substitution for an award intended to constitute “qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code, as in effect prior to the enactment of the Tax Cuts and Jobs Act of 2017, or pursuant to a
binding contract in effect as of November 2, 2017 and intended to constitute “qualified performance-based compensation” under the special transition rule under Section 162(m) then such award shall be (i) subject to such terms and conditions as are required for the award to continue to qualify under the transition rule for “qualified performance-based compensation” under Section 162(m) under the Tax Cuts and Jobs Act of 2017, as the Compensation Committee shall determine, (ii) the award will be administered by asub-committee of the Compensation Committee which is comprised of two or more members that qualify as “outside directors” under Section 162(m) prior to the enactment of the Tax Cuts and Jobs Act of 2017, and (iii) none of the provisions of the 2018 Plan shall apply to such award to the extent such provisions would result in the award no longer qualifying under the transition rule for “qualified performance-based compensation” under Section 162(m) prior to the Tax Cuts and Jobs Act of 2017.
Return of Awards; Repayment
The 2018 Plan provides that all awards, and all payments under awards, are subject to any policy that the Company adopts requiring the return or repayment of compensation and/or benefits,i.e., a claw-back or compensation recoupment policy. To the extent required by any such policy as in effect on the date that the award is granted, the date the option or stock appreciation right was exercised, the date of payment or the date the award became vested or earned, a participant will be required to return any award (if not previously exercised or settled) and any payment previously made or proceeds received with respect to any award (if the award has vested or been settled).
Amendment; Termination
The 2018 Plan may be amended or terminated at any time by the Board of Directors; provided that no amendment may adversely impair the rights of participants under outstanding awards. Our shareholders must approve any amendment if such approval is required under applicable law or stock exchange requirements. Our shareholders also must approve any amendment that materially increases the benefits accruing to participants under the 2018 Plan, materially increases the aggregate number of shares of Common Stock that may be issued under the 2018 Plan (other than adjustments to reflect stock dividends, stock splits and other changes in capitalization) or materially modifies the requirements as to eligibility for participation in the 2018 Plan. In addition, except in connection with adjustments to reflect stock dividends, stock splits and other changes in capitalization, the exercise price of an option, the purchase price of an award or the initial value of a stock appreciation right may not be reduced and no action that would constitute are-pricing of such awards may be taken without the approval of shareholders.
The 2018 Plan provides that, unless terminated sooner by the Board or extended with shareholder approval, no awards may be made under the 2018 Plan after February 7, 2028.
Deferral of Awards
The Compensation Committee may permit a participant to defer, or if and to the extent specified in an award agreement require the participant to defer, receipt of the payment of cash or the delivery of shares of Common Stock that would otherwise be due by virtue of the lapse or waiver of restrictions with respect to awards, the satisfaction of any requirements or goals with respect to awards, the lapse or waiver of the deferral period for awards, or the lapse or waiver of restrictions with respect to awards. If such deferral is permitted, the Compensation Committee will establish rules and procedures for making such deferral elections and for the payment of such deferrals which will be intended to conform in form and substance with applicable regulations promulgated under Section 409A of the Internal Revenue Code. There are no assurances, however, that a participant will not be subjected to tax penalties under Section 409A with respect to any awards or such deferrals.
No Employment Rights
Awards do not confer upon any individual any right to continue in the employ or service of the Company or any affiliate.
U.S. Federal Income Tax Consequences
The grant of an option or stock appreciation right will create no tax consequences for the participant or the Company at the time of the grant. A participant will have no taxable income upon exercise of an incentive stock option except that a participant must recognize income equal to the fair market value of the shares acquired minus the exercise price for alternative minimum tax purposes. Upon exercise of an option (other than an incentive stock option) or a stock appreciation right, a participant generally must recognize ordinary income equal to the fair market value of the shares and/or the amount of cash acquired minus the exercise price or initial value. Upon a disposition of shares acquired by exercise of an incentive stock option on or before the earlier of the second anniversary of the grant of such incentive stock option or the first anniversary of the exercise of such option, the participant generally must recognize ordinary income equal to the lesser of (1) the fair market value of the shares at the date of exercise minus the exercise price, or (2) the amount realized upon the disposition of the incentive stock option shares minus the exercise price. Otherwise, a participant’s disposition of shares acquired upon the exercise of an option (including an incentive stock option for which the incentive stock award option holding periods are met) generally will result in only capital gain or loss. Other awards under the 2018 Plan, including stock awards, stock units and incentive awards, will generally result in ordinary income to the participant equal to the cash or the fair market value of the shares received (minus the amount, if any, paid by the participant for such shares) at the time such cash or shares are received by the participant or, if later, the time that the substantial risk of forfeiture of such shares lapses.
The Company generally will be entitled to claim a tax deduction with respect to an award granted under the 2018 Plan when the participant recognizes ordinary income with respect to the award in an amount equal to the ordinary income that is recognized by the participant. The Company will not be entitled to claim any tax deduction of any amount recognized by a participant as capital gains.
The Company will be permitted to withhold from any award granted under the 2018 Plan any required withholding taxes. Payment of withholding taxes may be made through one or more of the following means: payment in cash (including personal check or wire transfer), or, with the approval of the Committee, by delivering shares previously owned by the grantee or by delivery of shares acquired or to be acquired under the award.
Section 83(b) of the Internal Revenue Code.A participant may elect under Section 83(b) of the Internal Revenue Code to be taxed at the time of grant of a stock award on the fair market value of the shares at that time rather than to be taxed when the risk of forfeiture lapses on the stock, and the Company will have a deduction available at the same time and in the same amount as the participant recognized income. If a participant files an election under Section 83(b) and the participant subsequently forfeits the restricted shares, he or she would not be entitled to any tax deduction, including as a capital loss, for the value of the shares on which he or she previously paid tax. Except as discussed below, the Company generally will be entitled to a tax deduction at the time and equal to the amount recognized as ordinary income by the participant in connection with an option, stock appreciation right, or other award, but will be entitled to no tax deduction relating to amounts that represent a capital gain to a participant, Thus, the Company will not be entitled to any tax deduction with respect to an incentive stock option if the participant holds the shares for the incentive stock option holding periods.
The Board of Directors recommends that you vote FOR approval of the Owens & Minor, Inc. 2018 Stock Incentive Plan.
PROPOSAL 3: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMIndependent Registered Public Accounting Firm
The Audit Committee (with confirmation of the Board) has selected KPMG LLP to serve as the Company’s independent registered public accounting firm for the year ending December 31, 20182024, and has directed that management submit such appointment of KPMG LLP for ratification by the shareholders at the annual meeting.Annual Meeting. Representatives of KPMG LLP will be present at the annual meetingAnnual Meeting to answer questions and to make a statement if they desire to do so.
Under the Sarbanes-Oxley Act of 2002 and the rules of the SEC promulgated thereunder, the Audit Committee is solely responsible for the appointment, compensation, and oversight of the work of the Company’s independent registered public accounting firm. Shareholder ratification of this appointment is not required by the Company’s Bylaws or otherwise. If shareholders fail to ratify the appointment, the Audit Committee will take such failure into consideration in future years. If shareholders ratify the appointment, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it is determined that such a change would be in the best interests of the Company.
Prior to selecting KPMG LLP for fiscal 2018,2024, the Audit Committee evaluated KPMG’sKPMG LLP’s performance with respect to fiscal 2017.2023. In conducting this annual evaluation, the Audit Committee considered management’s assessment of KPMG’sKPMG LLP’s performance in areas such as (i) independence, (ii) the quality and the efficiency of the services provided, including audit planning and coordination, (iii) industry knowledge and (iv) the quality of communications, including KPMG LLP staff accessibility and keeping management and the Committee apprised of issues. The Audit Committee also considered KPMG’sKPMG LLP’s tenure, the impact on the Company of changing auditors and the reasonableness of KPMG’s billableKPMG LLP’s rates. The Audit Committee is responsible for the audit fee negotiations associated with the retention of KPMG LLP. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered accounting firm. Further, in conjunction with the rotation of the auditing firm’s lead engagement partner every five years, the Audit Committee and its chairpersonchair will continue to be directly involved in the selection of KPMG LLP’s new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as our independent external auditor is in the best interests of usOwens & Minor and our stockholders.shareholders.
The Board of Directors recommends a vote FOR the ratification of the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for the year ending December 31, 2018.2024.
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMFees Paid to Independent Registered Public Accounting Firm
For each of the years ended December 31, 20172023 and 2016,2022, KPMG LLP billed the Company the fees set forth below in connection with professional services rendered by that firm to the Company:
Year 2017 | Year 2016 | |||||||
Audit Fees | $ | 2,110,500 | $ | 1,956,000 | ||||
Audit-Related Fees | 23,500 | 32,000 | ||||||
Tax Fees | 264,000 | 102,000 | ||||||
All Other Fees | — | — | ||||||
|
|
|
| |||||
Total | $ | 2,398,000 | $ | 2,090,000 |
Year 2023 ($) | Year 2022 ($) | |||||||
Audit Fees(1) | $ | 4,377,500 |
| $ | 4,457,000 |
| ||
Audit-Related Fees(2) |
| 63,000 |
|
| 38,000 |
| ||
Tax Fees(3) |
| 243,300 |
|
| 310,000 |
| ||
All Other Fees(4) |
| 169,310 |
|
| 9,000 |
| ||
Total | $ | 4,853,110 |
| $ | 4,814,000 |
|
Audit Fees. These were fees for professional services performed for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s filings on Forms10-K and10-Q, Sarbanes-Oxley compliance, and services normally provided in connection with statutory and regulatory filings or engagements.
(1) | Fees for professional services performed for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s filings on Forms 10-K and 10-Q, Sarbanes-Oxley compliance, and services normally provided in connection with statutory, regulatory filings or engagements and services related to the Apria acquisition in 2022. |
(2) | Fees primarily for the annual audit of the Company’s employee benefit plan financial statements and agreed-upon procedures attestation in 2023. |
(3) | Fees primarily for advice and consulting services related to the structuring of international operations and sales and use tax returns. |
(4) | All other fees in 2023 include a cyber maturity assessment, and in 2023 and 2022, include fees for online resources provided by KPMG LLP. |
Owens & Minor, Inc.●2024 Proxy Statement27
Proposal 2: Ratification of Independent Registered Public Accounting Firm |
Audit-Related Fees. These were fees primarily for the annual audits of the Company’s employee benefit plan financial statements, internal control attestations in certain foreign jurisdictions and consultations by management related to financial accounting and reporting matters.
Tax Fees. These were fees primarily for advice and consulting services related to the structuring of international operations, and the restructuring of business operations.
The Audit Committee has established policies and procedures for thepre-approval of audit services and permittednon-audit services in order to ensure the services do not impair the auditor’s independence. The Audit Committee willpre-approve on an annual basis the annual audit services engagement terms and estimated fees and will alsopre-approve certain audit-related services that may be performed by the independent auditors up to the estimated pre-approved fee levels, as well as permissible tax planning and compliance services. The Audit Committee may delegatepre-approval authority to one or more of its members, but anypre-approval decision by such member or members must be presented to the full Audit Committee at its next scheduled meeting. All services provided by, and fees paid to, KPMG LLP in 20172023 werepre-approved by the Audit Committee in accordance with thepre-approval policies, and there were no instances of waiver of approval requirements or guidelines being waived during this period.
REPORT OF THE AUDIT COMMITTEEReport of the Audit Committee
The Audit Committee iswas composed of fourfive directors in 2023, and is currently composed of three directors, each of whom is independent under the enhanced independence standards for audit committees in the Exchange Act and the rules thereunder as incorporated into the listing standards of the NYSE and under the Company’s Corporate Governance Guidelines, and twoone of whom have been determined by the Board of Directors to be an audit committee financial experts.expert. The Audit Committee met sevensix times during 2017.2023. The Audit Committee operates under a written charter adopted by the Board of Directors, which the Audit Committee reviews at least annually and revises as necessary to ensure compliance with current regulatory requirements and industry changes.
As its charter reflects, the Audit Committee has a broad array of duties and responsibilities. responsibilities and assists the Board in fulfilling its oversight responsibility related to the preparation of financial statements, compliance with legal and regulatory requirements, the Company’s independent registered public accounting firm, including its qualifications, performance and independence, the Company’s internal audit function, treasury and finance matters, and the Company’s enterprise risk management and data and cybersecurity risks.
With respect to financial reporting and the financial reporting process, management, the Company’s independent registered public accounting firm and the Audit Committee have the following respective responsibilities:responsibilities set forth below.
Management is responsible for:
Establishing and maintaining the Company’s internal control over financial reporting;
• | Establishing and maintaining the Company’s internal control over financial reporting; |
Assessing the effectiveness of the Company’s internal control over financial reporting as of the end of each year; and
• | Assessing the effectiveness of the Company’s internal control over financial reporting as of the end of each year; and |
Preparation, presentation and integrity of the Company’s consolidated financial statements.
• | Preparation, presentation and integrity of the Company’s consolidated financial statements. |
The Company’s independent registered public accounting firm is responsible for:
Performing an independent audit of the Company’s consolidated financial statements and the Company’s internal control over financial reporting;
• | Performing an independent audit of the Company’s consolidated financial statements and the Company’s internal control over financial reporting; |
Expressing an opinion as to the conformity of the Company’s consolidated financial statements with U.S. generally accepted accounting principles; and
• | Expressing an opinion as to the conformity of the Company’s consolidated financial statements with U.S. generally accepted accounting principles; and |
Expressing an opinion as to the effectiveness of the Company’s internal control over financial reporting.
• | Expressing an opinion as to the effectiveness of the Company’s internal control over financial reporting. |
The Audit Committee is responsible for:
Selecting the Company’s independent registered public accounting firm;
Overseeing and reviewing the financial statements and the accounting and financial reporting processes of the Company; and
• | Selecting the Company’s independent registered public accounting firm; |
• | Overseeing and reviewing the consolidated financial statements and the accounting and financial reporting processes of the Company; and |
Overseeing and reviewing management’s evaluation of the effectiveness of internal control over financial reporting.
• | Overseeing and reviewing management’s evaluation of the effectiveness of internal control over financial reporting. |
In this context, the Audit Committee has met and held discussions with management and KPMG LLP, the Company’s independent registered public accounting firm. Management represented to the Audit Committee that the Company’s consolidated financial statements for the year ended December 31, 20172023 were prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee has reviewed and discussed these consolidated financial statements
28Owens & Minor, Inc.●2024 Proxy Statement
Proposal 2: Ratification of Independent Registered Public Accounting Firm |
with management and KPMG LLP, including the scope of the independent registered public accounting firm’s responsibilities, critical accounting policies and practices used, and significant financial reporting issues and judgments made in connection with the preparation of such financial statements.
The Audit Committee has discussed with KPMG LLP the matters required to be discussed pursuant to Public Company Accounting Oversight Board Auditing Standard No. 1301 (Communications with Audit Committees). The Audit Committee has also received the written disclosures and communications from KPMG LLP required by the PCAOB regarding the independence of that firm and has discussed with KPMG LLP the firm’s independence from the Company.
In addition, the Audit Committee has discussed with management its assessment of the effectiveness of internal control over financial reporting and has discussed with KPMG LLP its opinion as to the effectiveness of the Company’s internal control over financial reporting.
Based upon its discussions with management and KPMG LLP and its review of the representations of management and the report of KPMG LLP to the Audit Committee, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form10-K for the year ended December 31, 20172023 for filing with the SEC.
THE AUDIT COMMITTEE |
Stephen W. Klemash, Chair Teresa L. Kline Carissa L. Rollins |
Lemuel E. Lewis, ChairmanOwens & Minor, Inc.●2024 Proxy Statement29
Proposal 3: Approval of Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan
John W. GerdelmanIn this Proposal 3, the Company’s shareholders are being asked to approve Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan (the “2023 Plan” or, as amended, the “Amended 2023 Plan”), a copy of which is attached as Annex A, to (i) increase the aggregate number of shares of Common Stock available for issuance under the 2023 Plan by 2,150,000 shares of Common Stock, (ii) increase the aggregate number of shares of Common Stock that may be issued or used with respect to incentive stock options (“ISOs”) by 2,150,000 shares of Common Stock and (iii) prohibit liberal share recycling for all awards (the “Proposed Amendments”). Other than the Proposed Amendments, no material changes will be made to the 2023 Plan. If the Company’s shareholders do not approve this Proposal 3, the 2023 Plan will continue by its terms, without the Proposed Amendments, and will terminate automatically on May 11, 2033.
Eddie N. Moore, Jr.Historical Information
Robert C. SleddThe 2023 Plan authorizes the Company to grant equity awards, including stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based awards to eligible teammates, consultants and non-employee directors of our Company and its affiliates, up to 4,025,000 shares of Common Stock. As of March 15, 2024, there were 2,741,643 shares of Common Stock remaining available for issuance under the 2023 Plan. If Amendment No. 1 to the 2023 Plan is approved by the Company’s shareholders, 2,150,000 additional shares of Common Stock will be authorized for issuance thereunder, subject to the adjustment provisions of the 2023 Plan described below.
The following table provides certain additional information regarding awards outstanding and unvested under the 2023 Plan as of March 15, 2024:
Options Outstanding | 0 | |||
Weighted Average Exercise Price of Options Outstanding | N/A | |||
Weighted Average Remaining Term of Options Outstanding | N/A | |||
Total Full-Value Awards Outstanding (Including Restricted Stock Units, Restricted Stock, target Performance Stock Units and target Performance Shares)(1) | 3,983,644 | |||
Shares of Common Stock Outstanding | 76,598,351 | |||
Overhang(2) | 5.20% | |||
Shares Available for Future Grant under the 2023 Plan | 2,741,643 | |||
Dilution under the 2023 Plan, as a Percentage of Common Stock Outstanding(3) | 8.78% |
(1) | Total full-value awards outstanding as of March 15, 2024 were comprised of the following: restricted stock units/restricted stock 2,975,141; performance stock units/performance shares (based on the target performance level) 1,008,503. |
(2) | Overhang consists of the number of shares subject to equity awards outstanding as of March 15, 2024, divided by the number of Common Stock outstanding as of March 15, 2024. |
(3) | Dilution consists of the number of shares subject to equity awards outstanding as of March 15, 2024, and the number of shares available for future grant under the 2023 Plan, divided by the number of Common Stock outstanding as of March 15, 2024. |
Why Amendment No. 1 to the 2023 Plan is Important
We believe that aligning the interests of teammates and non-employee directors with those of long-term shareholders is a key element of compensation at the Company; accordingly, it is essential that the Company maintain the flexibility and sufficient share reserve in the 2023 Plan to appropriately incentivize teammates and non-employee directors who provide valuable services to the Company and its affiliates. The 2023 Plan has benefited the Company by (i) assisting in recruiting and retaining the services of teammates and non-employee directors with high ability and initiative, (ii) providing greater incentives for teammates and non-employee directors who provide valuable services to the Company and its affiliates, and (iii) associating the interests of teammates and non-employee directors with those of the Company and its shareholders. For our CEO and other NEOs, equity-based incentive awards represent a significant portion of their compensation, with such awards representing approximately 69% and 63% of total target compensation, respectively. Amendment No. 1 to the 2023 Plan is intended to enhance the 2023 Plan and is needed to continue our equity compensation program, which is an important element in our ability to remain competitive in attracting and retaining experienced talent. We believe that our ability to recruit, retain and incentivize top talent will be adversely affected if Proposal 3 is not approved.
30Owens & Minor, Inc.●2024 Proxy Statement
Proposal 3: Approval of Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan |
STOCK OWNERSHIP INFORMATIONHistorical Burn Rate; Potential Economic Dilution Analysis
We are committed to managing the use of our equity incentives prudently to balance the benefits equity compensation brings to our compensation programs against the dilution it causes our shareholders. As part of our analysis when considering the number of shares to be added to the 2023 Plan by Amendment No. 1, we considered our equity plans’ “burn rate,” calculated as (i) the number of shares subject to equity awards granted under the Owens & Minor, Inc. 2018 Stock Incentive Plan (the “2018 Plan”) and the 2023 Plan for the three years ending December 31, 2023, divided by (ii) the weighted average number of shares outstanding for that period. Our average burn rate for the three years ending December 31, 2023 was 3.87%. The total potential dilution resulting from issuing all shares authorized under our equity plans as of March 15, 2024 (including the 2,150,000 additional shares that would be available if shareholders approve Amendment No. 1) would be approximately 11.59%. We believe that our burn rate and potential dilution amounts are reasonable for our industry and market conditions. During this three-year period, we have sought to provide equity compensation to our teammates and non-employee directors who we believe are important to our organization in furthering our business strategy. In addition, during this time we have made multiple leadership appointments and promotions to advance our strategy. Additionally, we made a significant business acquisition in 2022 of Apria, Inc. to accelerate our business strategy and issued awards representing 275,025 shares of Common Stock to teammates who joined us from Apria, including the employment of Apria’s former CEO, who was appointed as our Company’s Executive Vice President, President – Patient Direct & CEO of Apria upon the closing of the acquisition. Also contributing significantly to the number of awards that we were required to issue under the 2023 Plan in furthering our business strategy was a decline in the trading price of our Common Stock in 2022 and 2023, which required the issuance of a greater number of awards to achieve our intended incentives.
Expected Duration
If Amendment No. 1 to the 2023 Plan is approved by our shareholders, we expect that the shares available under the 2023 Plan for future awards will be sufficient for currently-anticipated awards for the next two years. Expectations regarding future share usage could be impacted by a number of factors such as: (i) the future performance of our stock price; (ii) hiring and promotion activity at the executive level; (iii) the rate at which shares are returned to the 2023 Plan reserve upon awards’ expiration, forfeiture or cash settlement without the issuance of the underlying shares; (iv) factors involved in acquiring other companies; and (v) other factors. While we believe that the assumptions we used are reasonable, future share usage may differ from current expectations.
For the foregoing reasons, our Board of Directors recommends that our shareholders approve Amendment No. 1 to the 2023 Plan.
Amended 2023 Plan Best Practices
The Amended 2023 Plan includes several features that are consistent with the interests of shareholders and corporate governance best practices, including the following:
• | No automatic award grants are promised to any eligible individual; |
• | No liberal share recycling for any awards; |
• | Awards assumed by a successor in connection with a change in control will not vest solely as a result of the change in control (unless specifically provided otherwise in an award agreement or any applicable employment agreement or similar agreement); |
• | No tax gross-ups under the Amended 2023 Plan; |
• | No evergreen for the Amended 2023 Plan share reserve; |
• | No repricing, replacement or re-granting of options, stock appreciation rights or other stock awards without shareholder approval (except in the event of certain equitable adjustments or a change in control, as further described below); |
• | Any award (or portion thereof) granted under the Amended 2023 Plan will vest no earlier than the first anniversary of the date the award is granted (subject to an exception equal to no more than 5% of the shares reserved for issuance under the Amended 2023 Plan); |
Owens & Minor, Inc.●2024 Proxy Statement31
Proposal 3: Approval of Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan |
• | Awards, including time-based awards, are subject to potential reduction, cancellation or recoupment pursuant to the Company’s clawback policy, as discussed in more detail on page 58; |
• | Awards are generally nontransferable; |
• | Meaningful annual limits on total non-employee director compensation; and |
• | Dividends and dividend equivalents are subject to restrictions and risk of forfeiture to the same extent as the award with respect to which such dividends or dividend equivalents are accrued and will not be paid unless and until such award has vested. |
Summary of the Amended 2023 Plan
The Amended 2023 Plan will provide for the grant of both ISOs, which are intended to qualify for favorable tax treatment under Section 16(a) Beneficial Ownership Reporting Compliance422 of the Code, and non-qualified stock options, as well as the grant of stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, other stock-based awards, cash awards and substitute awards intended to align the interests of our service providers with those of our shareholders.
Based solelyThis section summarizes material features of the Amended 2023 Plan. The summary is qualified in its entirety by reference to the complete text of the 2023 Plan, attached as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and Amendment No. 1 to the 2023 Plan, attached hereto as Annex A, which are both incorporated by reference into this Proposal 3.
The only material changes to the 2023 Plan as a result of the Proposed Amendments will be to (i) increase the aggregate number of shares of Common Stock available for issuance under the 2023 Plan by 2,150,000 shares of Common Stock, (ii) increase the aggregate number of shares of Common Stock that may be issued or used with respect to ISOs by 2,150,000 shares of Common Stock and (iii) prohibit recycling of shares (a) tendered as payment for the exercise of an award, (b) withheld to cover taxes or (c) shares covered by a stock-settled Stock Appreciation Right or other stock-settled Award that were not issued upon the settlement of the Award, as described in further detail below.
Securities to be Offered
The aggregate number of shares of Common Stock that may be issued pursuant to the Amended 2023 Plan will not exceed 6,175,000 shares of Common Stock (subject to any increase or decrease pursuant to the Amended 2023 Plan) (the “Share Reserve”). The aggregate number of shares of Common Stock that may be issued or used with respect to any ISO will not exceed the Share Reserve. The closing price per share of our Common Stock on March 15, 2024 was $25.47. Any award under the Amended 2023 Plan settled in cash will not be counted against the Share Reserve. Notwithstanding anything to the contrary contained in the Amended 2023 Plan, shares of Common Stock subject to an award under the Amended 2023 Plan or an award that was outstanding under the 2018 Plan as of the effective date of the 2023 Plan (a “Prior Plan Award”) will not again be made available for issuance or delivery under the Amended 2023 Plan if such shares of Common Stock are (i) delivered, withheld or surrendered in payment of the exercise or purchase price of an award or a Prior Plan Award, (ii) delivered, withheld, or surrendered to satisfy any tax withholding obligation or (iii) shares covered by a stock-settled Stock Appreciation Right or other stock-settled Award that were not issued upon the settlement of the Award. Shares of Common Stock subject to a Prior Plan Award that was granted pursuant to an exception under Section 303A.08 of the NYSE Listed Company Manual that become available for issuance under the Amended 2023 Plan will remain subject to the terms and conditions set forth in such exception. The number of shares of Common Stock available for issuance under the Amended 2023 Plan will not be reduced by shares issued pursuant to awards issued or assumed in connection with a merger or consolidation, except that shares acquired by exercise of substitute ISOs will count against the maximum number of shares that may be issued pursuant to the exercise of ISOs under the Amended 2023 Plan.
Administration
The Amended 2023 Plan will be administered by a committee of the Board that has been authorized to administer the Amended 2023 Plan, except if no such committee is authorized by the Board, the Board will administer the Amended 2023 Plan (as applicable, the “Committee”). The Committee will have broad discretion to administer the Amended 2023 Plan, including the power to determine the eligible individuals to whom awards will be granted, the number of awards to be
32Owens & Minor, Inc.●2024 Proxy Statement
Proposal 3: Approval of Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan |
granted and the terms and conditions of awards. The Committee may also accelerate the vesting or exercise of any award and make all other determinations and take all other actions necessary or advisable for the administration of the Amended 2023 Plan. To the extent the Committee is not the Board, the Board will still retain the authority to take all actions permitted by the Committee under the Amended 2023 Plan.
Eligibility
Teammates, consultants and non-employee directors of our Company and its affiliates will be eligible to receive awards under the Amended 2023 Plan. As stated above, the basis for participation in the Amended 2023 Plan is the Committee’s decision to select, in its sole discretion, participants from among those eligible. The Company and its affiliates have approximately 350 teammates, and eight non-employee directors who will be eligible to participate in the Amended 2023 Plan.
Non-Employee Director Compensation Limits
The fair value of any awards granted under the Amended 2023 Plan to a non-employee director as compensation for services on the Board, during any one calendar year, taken together with any cash fees paid to such non-employee director during such period in respect of the non-employee director’s services as a member of the Board during such year, may not exceed $750,000, provided that (i) the Committee may make exceptions to this limit, except that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous decisions involving compensation for non-employee directors and (ii) for any calendar year in which a non-employee director serves as lead director or non-executive chair of the Board, such limit will be increased to $1,500,000; provided, further, that such limit will be applied without regard to awards or other compensation, if any, provided to a non-employee director during any period in which such individual was an employee of the Company or any affiliate or was otherwise providing services to the Company or to any affiliate other than in the capacity as a non-employee director.
Minimum Vesting Term
A vesting period of at least one year will apply to all awards issued under the Amended 2023 Plan; provided that (i) up to 5% of the shares of Common Stock reserved for issuance under the Amended 2023 Plan may be issued pursuant to awards that do not comply with such minimum one year vesting period and (ii) an award granted to a non-employee director may vest on the earlier of (a) the date that is one year following the date on which such award is granted or (b) the first annual meeting of the Company’s recordsshareholders that occurs following the date such award is granted,provided that such vesting period may not be less than 50 weeks following the date such award is granted. Notwithstanding the foregoing, the Committee retains the ability to accelerate the vesting of any award for any reason.
Prohibition on Repricing
Except in the event of certain equitable adjustments or a change in control, as described in the Amended 2023 Plan, without the approval of the shareholders of the Company, no amendment may be made to the Amended 2023 Plan that would (i) increase the aggregate number of shares of Common Stock that may be issued under the Amended 2023 Plan; (ii) change the classification of individuals eligible to receive awards under the Amended 2023 Plan; (iii) reduce the exercise price of any option or stock appreciation right; (iv) grant any new option, stock appreciation right, or other award in substitution for, or upon the cancellation of, any previously granted option or stock appreciation right that has the effect of reducing the exercise price thereof; (v) exchange any option or stock appreciation right for Common Stock, cash, or other consideration when the exercise price per share under such option or stock appreciation right exceeds the fair market value of a share; or (vi) take any action that would be considered a “repricing” of an option or stock appreciation right under the applicable listing standards of the national exchange on which the Common Stock is listed.
Types of Awards
Options
The Amended 2023 Plan provides for the grant of both ISOs intended to qualify under Section 422 of the Code and information provided bynon-qualified stock options. We may grant options to eligible persons, except that ISOs may only be granted to persons who
Owens & Minor, Inc.●2024 Proxy Statement33
Proposal 3: Approval of Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan |
are our directors, executive officersteammates or teammates of one of our subsidiaries, in accordance with Section 422 of the Code. The exercise price of an option cannot be less than 100% of the fair market value of a share of Common Stock on the date on which the option is granted and beneficial ownersthe option must not be exercisable for longer than ten years following the date of grant. However, in the case of an ISO granted to an individual who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our equity securities, the exercise price of the option must be at least 110% of the fair market value of a share of Common Stock on the date of grant and the option must not be exercisable more than 5%five years from the date of grant.
Options granted under the Amended 2023 Plan generally must be exercised by the optionee before the earlier of the expiration of such option or at such time or times as will be determined by the Committee at the time of grant.The exercise price for the option may be paid upon such terms and conditions as established by the Committee and set forth in the applicable award agreement. The Committee may establish payment terms for the exercise of options pursuant to which the Company may withhold a number of shares that otherwise would be issued to the participant in connection with the exercise of the option having a fair market value on the date of exercise equal to the exercise price, or that permit the participant to deliver cash or shares with a fair market value equal to the exercise price on the date of payment, or through a simultaneous sale through a broker of shares acquired on exercise, all as permitted by applicable law.
Stock Appreciation Rights
A stock appreciation right is the right to receive an amount equal to the excess of the fair market value of one share of Common Stock on the date of exercise over the grant price of the stock appreciation right. The grant price of a stock appreciation right cannot be less than 100% of the fair market value of a share of Common Stock on the date on which the stock appreciation right is granted. The term of a stock appreciation right may not exceed ten years. The Committee has the discretion to determine other terms and conditions of a stock appreciation right award.
Restricted Stock Awards
A restricted stock award is a grant of shares of Common Stock subject to the restrictions on transferability and risk of forfeiture imposed by the Committee. Unless otherwise determined by the Committee and specified in the applicable award agreement, the holder of a restricted stock award has rights as a shareholder, including the right to vote the shares of Common Stock subject to the restricted stock award or to receive dividends on the shares of Common Stock subject to the restricted stock award during the restriction period. In the discretion of the Committee, dividends distributed prior to vesting may be subject to the same restrictions and risk of forfeiture as the restricted shares with respect to which the distribution was made.
Restricted Stock Units
A restricted stock unit is a right to receive cash, shares of Common Stock or a combination of cash and shares of Common Stock at the end of a specified period equal to the fair market value of one share of Common Stock on the date of vesting. Restricted stock units may be subject to the restrictions, including a risk of forfeiture, imposed by the Committee. The Committee may determine that a grant of restricted stock units will provide a participant a right to receive dividend equivalents, which entitles the participant to receive the equivalent value (in cash or shares of Common Stock) of dividends paid on the underlying shares of Common Stock. Dividend equivalent rights may be paid currently or credited to an account, settled in cash or shares, and may be subject to the same restrictions as the restricted stock units with respect to which the dividend equivalent rights are granted.
Performance Awards
A performance award is an award that vests and/or becomes exercisable or distributable subject to the achievement of certain performance goals during a specified performance period, as established by the Committee. Performance awards may be granted alone or in addition to other awards under the Amended 2023 Plan, and may be paid in cash, shares of Common Stock, other property, or any combination thereof, in the sole discretion of the Committee.
Other Stock-Based Awards
Other stock-based awards are awards payable in, valued in whole or in part by reference to, or otherwise based on or related to, the value of shares of Common Stock.
34Owens & Minor, Inc.●2024 Proxy Statement
Proposal 3: Approval of Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan |
Cash Awards
Cash awards may be granted in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by applicable law, as determined by the Committee. Cash awards may be granted subject to the satisfaction of vesting conditions or may be awarded purely as a bonus and not subject to restrictions or conditions, and if subject to vesting conditions, the Committee may accelerate the vesting of such awards at any time in its sole discretion.
Substitute Awards
In connection with an entity’s merger or consolidation with the Company or the Company’s acquisition of an entity’s property or stock, the Committee may grant awards in substitution for any options or other stock, or stock-based awards granted before such merger or consolidation by such entity or its affiliate.
Dividends and Dividend Equivalents Rights
Dividends and dividend equivalent rights may be granted at the discretion of the Committee. Dividend equivalent rights represent the right to receive the value of dividends, if any, paid by in respect of the number of shares of Common Stock underlying an award. Any dividend or dividend equivalent rights credited with respect to an award (except for dividends paid following the grant of an award of unrestricted (i.e., fully vested) shares) will be subject to the same restrictions on transferability and forfeitability to the same extent as the award with respect to which such shares of Common Stock or other property has been distributed and subject to such other terms and conditions as set forth in the relevant award agreement. Any dividends or dividend equivalent rights granted with respect to an award will be payable to the participant only if, when and to the extent such underlying award vests. The dividend equivalent rights granted with respect to awards that do not vest will be forfeited.
Certain Transactions
If the Company effects any merger, consolidation, statutory exchange, spin-off, reorganization, sale or transfer of all or substantially all the Company’s assets or business, or other corporate transaction or event in such a manner that the Company’s outstanding shares of Common Stock are converted into the right to receive (or the holders of Common Stock are entitled to receive in exchange therefor), securities or other property of the Company or other entity, then, (i) the aggregate number or kind of securities that thereafter may be issued under the Amended 2023 Plan, (ii) the number or kind of securities or other property (including cash) to be issued pursuant to awards granted under the Amended 2023 Plan, or (iii) the exercise or purchase price thereof, will be adjusted by the Committee to prevent dilution or enlargement of the rights granted to, or available for, participants under the Amended 2023 Plan.
Change in Control
The Amended 2023 Plan does not provide for the automatic acceleration of vesting of outstanding awards upon a change in control event solely with respect to the occurrence of the change in control unless the successor company fails to assume or replace the awards in connection with that change in control event, unless otherwise provided in an award agreement or any applicable employment agreement, or similar agreement. To the extent the successor company fails to assume or replace the awards, any performance-based awards will be deemed earned at the greater of (i) the target level of performance as set forth in the award agreement, and (ii) the actual performance achieved, measured and calculated as of the date of the change in control pursuant to a shortened performance period ending on the occurrence of the change in control.
Unless the individual award agreement or any applicable employment agreement, or similar agreement provides otherwise, if the successor company assumes the awards, vesting of the award will be accelerated upon a subsequent termination of the participant’s service, consulting relationship or employment without cause, or, if the participant resigns for good reason, in each case, within 24 months following the change in control, with any performance-based awards will be deemed earned at the greater of (i) the target level of performance as set forth in the award agreement, and (ii) the actual performance achieved, measured and calculated as of the date of the change in control pursuant to a shortened performance period ending on the occurrence of the change in control.
Owens & Minor, Inc.●2024 Proxy Statement35
Proposal 3: Approval of Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan |
Tax Withholding
The Company and any of its affiliates have the right to withhold, or require payment of, the amount of any applicable income tax, social insurance contribution or other applicable taxes that are required to be withheld in respect of an award. The Committee may, in its sole discretion, permit or require a participant to satisfy all or any portion of the applicable taxes that are required to be withheld with respect to an award by (i) the delivery of shares that have been both held by the participant and vested for at least six months (or such other period as established by the Committee) having an aggregate fair market value equal to such withholding liability (or portion thereof); (ii) having the Company withhold from the shares otherwise issuable or deliverable to, or that would otherwise be retained by, the participant upon the grant, exercise, vesting, or settlement of the award, as applicable, a number of shares with an aggregate fair market value equal to the amount of such withholding liability; or (iii) by any other means specified in the applicable award agreement or otherwise determined by the Committee.
Limitations on Transfer of Awards
Participants may not transfer options or stock appreciation rights granted under the Amended 2023 Plan other than by will or by the laws of descent and distribution, and all options and stock appreciation rights will be exercisable, during the participant’s lifetime, only by the participant. The Committee may determine, in its sole discretion, that a non-qualified stock option that is otherwise not transferable is transferable to a family member of the participant under certain circumstances.
Restricted stock awarded under the Amended 2023 Plan may not be transferred by participants during the period or periods set by the Committee, commencing on the date of such award, as set forth in the applicable award agreement.
Shares of Common Stock subject to other stock-based awards may not be transferred prior to the date on which the shares are issued or, if later, the date on which any applicable restriction, performance, or deferral period lapses, subject to the applicable provisions of the relevant award agreement and the Amended 2023 Plan.
All certificates for shares delivered under the Amended 2023 Plan will be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the SEC, any stock exchange upon which the Common Stock is then listed or any national securities exchange system upon whose system the Common Stock is then quoted, and any applicable law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
Clawback
All awards granted under the Amended 2023 Plan are subject to the Company’s clawback policy, as described in more detail on page 58.
Plan Amendment and Termination
The Board or the Committee may amend or terminate any award, award agreement or the Amended 2023 Plan at any time, provided that the rights of a participant granted an award prior to such amendment or termination may not be materially impaired without such participant’s consent. In addition, shareholder approval will be required for any amendment to the extent necessary to comply with applicable law or exchange listing standards. The Committee will not have the authority, without the approval of shareholders, to amend any outstanding option or share appreciation right to reduce its exercise price per share. The Amended 2023 Plan will remain in effect until May 11, 2033 (unless earlier terminated by the Board).
Material U.S. Federal Income Tax Consequences
The following is a general summary under current law of the principal U.S. federal income tax consequences related to awards under the Amended 2023 Plan. This summary describes the general federal income tax principles that apply, as based on current law and interpretational authorities which are subject to change at any time and is provided only for
36Owens & Minor, Inc.●2024 Proxy Statement
Proposal 3: Approval of Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan |
general information. This summary does not purport to be complete discussion of all potential tax effects relevant to recipients of awards under the Amended 2023 Plan. No attempt has been made to discuss any potential non-U.S., state, or local tax consequences. This summary is not intended as tax advice to participants, who should consult their own tax advisors. Non-qualified stock options or stock appreciation rights with an exercise price less than the fair market value of shares of our Common Stock on the date of grant, stock appreciation rights payable in cash, restricted stock units, and certain other awards that may be granted pursuant to the Amended 2023 Plan, could be subject to additional taxes unless they are designed to comply with certain restrictions set forth in Section 409A of the Code and guidance promulgated thereunder.
Tax Consequences to Participants under the Amended 2023 Plan
Non-Qualified Stock Optionsand Stock Appreciation Rights
If a participant is granted a non-qualified stock option or stock appreciation right under the Amended 2023 Plan, the participant should not have taxable income on the grant of the non-qualified stock option or stock appreciation right. Upon the exercise of a non-qualified stock option or stock appreciation right, a participant will recognize ordinary compensation income, subject to withholding obligations for a teammate, in an amount equal to the fair market value of the shares acquired on the date of exercise, less the exercise price paid for the shares. The participant’s basis in the Common Stock for purposes of determining gain or loss on a subsequent sale or disposition of such shares generally will be the fair market value of our Common Stock on the date the participant exercises such option or stock appreciation right. When a participant sells the Common Stock acquired as a result of the exercise of a non-qualified stock option or stock appreciation right, any appreciation or depreciation in the value of the Common Stock after the exercise date will be taxable as a long-term or short-term capital gain or loss for federal income tax purposes, depending on the holding period. The Common Stock must be held for more than twelve months to qualify for long-term capital gain treatment. Subject to the discussion under “Tax Consequences to the Company” below, the Company and its subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the participant recognizes ordinary income.
Incentive Stock Options
A participant receiving ISOs should not recognize taxable income upon grant. Additionally, if applicable holding period requirements are met, the participant should not recognize taxable income at the time of exercise. However, the excess of the fair market value of the shares of our Common Stock received over the option exercise price is an item of tax preference income potentially subject to the alternative minimum tax. If stock acquired upon exercise of an ISO is held for a minimum of two years from the date of grant and one year from the date of exercise and otherwise satisfies the ISO requirements, the gain or loss (in an amount equal to the difference between the fair market value on the date of disposition and the exercise price) upon disposition of the stock will be treated as a long-term capital gain or loss, and we believewill not be entitled to any deduction. If the holding period requirements are not met, the ISO will be treated as one that all reports requireddoes not meet the requirements of the Code for ISOs and the participant will recognize ordinary income at the time of the disposition equal to the excess of the amount realized over the exercise price, but not more than the excess of the fair market value of the shares on the date the ISO is exercised over the exercise price, with any remaining gain or loss being treated as capital gain or capital loss. The Company and its subsidiaries or affiliates generally are not entitled to a federal income tax deduction upon either the exercise of an ISO or upon disposition of the shares acquired pursuant to such exercise, except to the extent that the participant recognizes ordinary income on disposition of the shares.
Other Awards
A participant will recognize ordinary compensation income upon receipt of cash pursuant to a cash award or, if earlier, at the time the cash is otherwise made available for the participant to draw upon. Individuals will not have taxable income at the time of grant of a restricted stock unit, but rather, will generally recognize ordinary compensation income at the time he or she receives cash or a share of Common Stock in settlement of the restricted stock unit, as applicable, in an amount equal to the cash or the fair market value of the Common Stock received. The current federal income tax consequences of other awards authorized under the Amended 2023 Plan generally follow certain basic patterns: nontransferable restricted stock subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid, if any, only at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant through a Section 83(b) election); dividend equivalents and other stock or cash based awards are
Owens & Minor, Inc.●2024 Proxy Statement37
Proposal 3: Approval of Amendment No. 1 to the Owens & Minor, Inc. 2023 Omnibus Incentive Plan |
generally subject to tax at the time of payment. We or our subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the award recipient recognizes ordinary income.
A participant who is a teammate will be subject to withholding for federal, and generally for state and local, income taxes at the time he or she recognizes income under the rules described above. The tax basis in the Common Stock received by a participant will equal the amount recognized by the participant as compensation income under the rules described in the preceding paragraph, and the participant’s capital gains holding period in those shares will commence on the later of the date the shares are received or the restrictions lapse. Subject to the discussion below under “Tax Consequences to the Company,” we will be entitled to a deduction for federal income tax purposes that corresponds as to timing and amount with the compensation income recognized by a participant under the foregoing rules.
Tax Consequences to the Company
Reasonable Compensation
For the amounts described above to be fileddeductible by the Company, such amounts must constitute reasonable compensation for services rendered or to be rendered and must be ordinary and necessary business expenses.
Golden Parachute Payments
The Company’s ability (or the ability of one of our directorssubsidiaries) to obtain a deduction for future payments under the Amended 2023 Plan could also be limited by the golden parachute rules of Section 280G of the Code, which prevent the deductibility of certain excess parachute payments made in connection with a change in control of an employer-corporation.
Compensation of Covered Employees
Our ability to obtain a deduction for amounts paid under the Amended 2023 Plan could be limited by Section 162(m) of the Code. Section 162(m) of the Code limits our ability to deduct compensation, for federal income tax purposes, paid during any year to a “covered employee” (within the meaning of Section 162(m) of the Code) in excess of $1,000,000.
New Plan Benefits
Grants under the Amended 2023 Plan will be made at the discretion of the Committee, and therefore, the benefits or number of shares subject to awards that may be granted in the future to our executive officers, under Section 16(a)teammates and non-employee directors is not currently determinable. Therefore, a New Plan Benefits Table is not provided.
Equity Compensation Plan Information
The information regarding plans and other arrangements required by Item 10(c) of Schedule 14a can be found below in the section entitled “Equity Compensation Plan Information”.
Vote Required for Approval
Approval of this Proposal 3 requires the affirmative vote of a majority of the Exchange Act were filedvotes cast on this proposal. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the results of this vote.
The Board of Directors recommends a timely basis during 2017, except invote FOR the following instances: (1) for Mr. P. Cody Phipps,approval of
Amendment No. 1 to the President, Chief Executive Officer and Chairman of the Company, an amendment to a timely filed Form 4 was filed to correct an administrative error in reporting the amount of securities acquired; (2) for Mr. M. Jay Romans, a former executive officer of the Company, an amendment to a timely filed Form 4 was filed to correct an administrative error in reporting the amount of securities acquired; (3) for Ms. Barbara B. Hill and Mr. Lemuel E. Lewis, directors of the Company, Form 4s were inadvertently filed late to report the acquisition of phantom stock, derivative securities beneficially owned through the Company’s Directors’ Deferred CompensationOwens & Minor, Inc. 2023 Omnibus Incentive Plan.
Stock Ownership Information
Stock Ownership by Management and the Board of Directors
The following table shows, as of March 13, 2018,14, 2024, the number of shares of Common Stock beneficially owned by each director and director nominee, the executive officers identified as our “NEOs” in the Summary Compensation Table in this Proxy Statement and all current directors and executive officers of the Company as a group.
Name of Beneficial Owner | Sole Voting and Investment Power (1) | Other (2) | Aggregate Percentage Owned | ||||||||||||
Stuart M. Essig | 27,847 | — | * | ||||||||||||
John W. Gerdelman | 24,190 | — | * | ||||||||||||
Barbara B. Hill | 6,506 | — | * | ||||||||||||
Lemuel E. Lewis | 39,579 | — | * | ||||||||||||
Martha H. Marsh | 16,065 | — | * | ||||||||||||
Mark F. McGettrick | 1,397 | — | * | ||||||||||||
Eddie N. Moore, Jr. | 28,688 | — | * | ||||||||||||
James E. Rogers | 58,991 | — | * | ||||||||||||
David S. Simmons | 14,102 | — | * | ||||||||||||
Robert C. Sledd | 22,901 | — | * | ||||||||||||
Anne Marie Whittemore | 74,316 | — | * | ||||||||||||
P. Cody Phipps | 396,484 | — | * | ||||||||||||
Richard A. Meier | 127,158 | — | * | ||||||||||||
Stuart Morris-Hipkins | 62,061 | ||||||||||||||
Charles C. Colpo | 43,944 | — | * | ||||||||||||
Rony C. Kordahi | 48,160 | — | * | ||||||||||||
All Executive Officers and Directors as a group (21 persons) | 1,274,493 | — | 2.04 | % |
Name of Beneficial Owner | Sole Voting and Investment Power(1) | Other(2) | Aggregate Percentage | |||||||
Mark A. Beck(3) |
| 9,344 |
| — |
| * | ||||
Gwendolyn M. Bingham |
| 22,184 |
| — |
| * | ||||
Kenneth Gardner-Smith |
| 14,854 |
| — |
| * | ||||
Robert J. Henkel(3) |
| 37,344 |
| — |
| * | ||||
Rita F. Johnson-Mills |
| 14,057 |
| — |
| * | ||||
Stephen W. Klemash |
| 18,983 |
| — |
| * | ||||
Teresa L. Kline |
| 14,057 |
| — |
| * | ||||
Edward A. Pesicka |
| 857,796 |
| — |
| 1.12% | ||||
Carissa L. Rollins |
| 13,834 |
| — |
| * | ||||
Perry A. Bernocchi |
| 209,537 |
| — |
| * | ||||
Alexander J. Bruni |
| 65,808 |
| — |
| * | ||||
Andrew G. Long |
| 272,565 |
| 115,555 | * | |||||
Daniel J. Starck |
| 105,058 |
| — |
| * | ||||
All Executive Officers and Directors as a group (16 persons) |
| 1,891,169 |
|
|
| 2.62% |
* Represents less than 1% of the total number of shares outstanding.
* | Represents less than 1% of the total number of shares outstanding. |
(1) No officer or director of the Company has the right to acquire any shares through the exercise of stock options within 60 days following March 13, 2018.
(1) | No officer or director of the Company has the right to acquire any shares through the exercise of stock options within 60 days following March 14, 2024. There are no outstanding options, warrants or rights as of December 31, 2023. |
(2) | Includes: (a) shares held by certain relatives or in estates; (b) shares held in various fiduciary capacities; and (c) shares for which the shareholder has shared power to dispose or to direct disposition. These shares may be deemed to be beneficially owned under the rules and regulations of the SEC, but the inclusion of such shares in the table does not constitute an admission of beneficial ownership. |
(3) | The following directors hold shares in the Common Stock account of the Directors’ Deferred Compensation Plan: Mr. Beck 49,343 shares; Ms. Bingham 9,344 shares; and Mr. Henkel 48,074 shares. |
(2) Includes: (a) shares held by certain relatives or in estates; (b) shares held in various fiduciary capacities; and (c) shares for which the shareholder has shared power to dispose or to direct disposition. These shares may be deemed to be beneficially owned under the rules and regulations of the SEC, but the inclusion of such shares in the table does not constitute an admission of beneficial ownership.
Stock Ownership by Certain Shareholders
The following table shows, as of March 13, 2018,14, 2024, any person (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act) who, to our knowledge, was the beneficial owner of more than 5% of theour Common Stock.
Name and Address of Beneficial Owner | Shares Beneficially Owned | Percentage Owned | ||||||||||
BlackRock, Inc.
| 16.02% | |||||||||||
FMR LLC 245 Summer Street, Boston, MA 02210 | 10,431,010(2) | 13.62% | ||||||||||
The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | 8,587,684(3) | |||||||||||
Deerfield Partners, L.P. 345 Park Avenue South, 12th Floor, New York, NY 10010 | 5,229,779(4) | 6.83% | ||||||||||
Dimensional Fund Advisors LP
| 4,211,031(5) |
(1)
(1) | Based upon a Schedule 13G report or amendment filed by BlackRock Inc. with the SEC on January 22, 2024. |
Owens & Minor, Inc. with the SEC on January 19, 2018.●2024 Proxy Statement39
(2) Based upon a Schedule 13G report or amendment filed by Vanguard Group, Inc. with the SEC on February 9, 2018.
Stock Ownership Information |
(3) Based upon a Schedule 13G report or amendment filed by Dimensional Fund Advisers LP with the SEC on February 9, 2018.
(2) | Based upon a Schedule 13G report or amendment filed by FMR LLC with the SEC on February 9, 2024. |
(3) | Based upon a Schedule 13G report or amendment filed by Vanguard Group, Inc. with the SEC on February 13, 2024. |
(4) | Based upon a Schedule 13G report or amendment filed by Deerfield Partners, L.P. with the SEC on February 12, 2024. |
(5) | Based upon a Schedule 13G report or amendment filed by Dimensional Fund Advisors LP with the SEC on February 9, 2024. |
Equity Compensation Plan Information
The following table shows, as of December 31, 2017,2023, information with respect to compensation plans under which shares of Common Stock are authorized for issuance.
Plan Category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) | (b) Weighted-average exercise price of outstanding options, warrants and rights (1) | (c) Number of securities | (a) Number of securities to be issued upon exercise of outstanding options, warrants and | (b) Weighted-average exercise price of outstanding options, warrants and rights(1) | (c) Number of securities issuance under equity | |||||||||||||||
Equity compensation plans approved by shareholders (2) | 360,556 | — | 1,292,281 | 866,989 | — | 4,051,626(3) | |||||||||||||||
Equity compensation plans not approved by shareholders (3) | — | — | — | ||||||||||||||||||
Equity compensation plans not approved by shareholders(4) | — | — | — | ||||||||||||||||||
Total | 360,556 | — | 1,292,281 | 866,989 | — | 4,051,626 |
(1) There are no outstanding options, warrants or rights as of December 31, 2017. The total in column (a) above relate
(1) | There are no outstanding options, warrants or rights as of December 31, 2023. The total in column (a) above relates to performance shares. |
(2) | These equity compensation plans are the 2023 Omnibus Incentive Plan adopted and approved by shareholders on May 11, 2023, and the 2018 Stock Incentive Plan (the “2018 Plan”) adopted and approved by shareholders on May 8, 2018 (as amended May 10, 2019 and May 1, 2020). No additional awards may be made under the 2018 Plan. The Company assumed shares from the Apria, Inc. 2021 Omnibus Incentive Plan (the “Apria Plan”) that became available as of March 29, 2022 under the 2018 Plan. |
(3) | Includes 3,216,759 shares of Common Stock that were assumed from the Apria Plan under the 2018 Plan pursuant to an exception under Section 303A.08 of the NYSE Listed Company Manual that remain subject to the terms and conditions set forth in such exception. |
(4) | The Company does not have any equity compensation plans that have not been approved by shareholders. |
(2) These equity compensation plans are the 2015 Stock Incentive Plan adopted40Owens & Minor, Inc.●2024 Proxy Statement
Executive Compensation
A Message from Our People & Culture Committee The Our People & Culture (“OP&C”) Committee of the Board of Directors oversees Owens & Minor’s executive compensation philosophy and reviews and approves compensation programs, opportunities, and awards for our named executive officers (“NEOs”). While Owens & Minor management and our independent compensation consultant provide input to the OP&C Committee, it is the sole responsibility of the OP&C Committee to approve our executive compensation philosophy, plans, policies, programs, and decisions. The OP&C Committee also oversees programs relating to the culture of the Company, and, during 2023, was engaged with executive leadership in the evolution of the Company’s corporate culture through the introduction of our Purpose and Vision, which is vital to our continued growth and long term success. Guided by our executive leadership team, we delivered on our commitments in 2023 and closed an outstanding year. Our Patient Direct segment continued to outperform the market and continues to position itself as a leader amid healthy demand for home-based care. Likewise, our Products & Healthcare Services (“P&HS”) segment overachieved in both revenue and adjusted operating income as compared to our expectations, which resulted from our intense focus on and execution of our strategic initiatives. In 2023, the OP&C Committee approved annual equity award grants to executive management in a mix of 50% time-based restricted stock units (“RSUs”) vesting over a three-year period and 50% performance share units (“PSUs”). The 2023 PSU grant design consists of a three-year performance period and the PSU metric is three-year cumulative adjusted EPS; also included in the grant design is a relative total shareholder return (“TSR”) modifier to further enhance alignment of our executives with shareholder returns as compared to that of other comparable companies in the performance index. PSUs can be earned in an amount ranging from 0% to 200% of target. We strengthened our leadership talent during the year by appointing Perry Bernocchi as our Executive Vice President, CEO of Patient Direct, our segment that includes both the Byram and Apria divisions. A key focus area in 2023 was the company-wide Operating Model Realignment (“OMR”) Program. The OMR Program was a broad-based effort to evaluate and improve our business, which was led by a dedicated team committed to accelerating profit improvement and reducing costs. The OP&C Committee will continue to evaluate our compensation and governance practices to support the objectives of the business (including ongoing Operating Model improvements), align with our compensation philosophy and prevailing market practices, and provide incentives to deliver key financial metrics that are directly linked to value creation for our shareholders. We are committed to ensuring that our executive compensation programs evolve as necessary to support our business strategy and organizational structure. More details are provided on the following pages, and we look forward to getting shareholder feedback in the future. Thank you for your continued engagement. The Our People & Culture Committee Robert J. Henkel, Chair Mark A. Beck Kenneth Gardner-Smith |
Owens & Minor, Inc.●2024 Proxy Statement41
Executive Compensation |
Compensation Discussion and approved by shareholders on April 30, 2015 and the 2005 Stock Incentive Plan. No additional awards may be made under the 2005 Stock Incentive Plan.
(3) The Company does not have any equity compensation plans that have not been approved by shareholders.
COMPENSATION DISCUSSION AND ANALYSISAnalysis
This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation philosophy and programs, the role of our OP&C Committee and its independent consultant, the compensation decisions made by the CompensationOP&C Committee under these programs and the considerations that went into our decisions in lightas a result of the Company’s operational and financial performance in 2017.
Our fiscal year 2017 named executive officers (“NEOs”) are:2023, all as they relate to our NEOs.
Our Executive Compensation Philosophy Our executive compensation programs are designed to reflect a pay-for-performance philosophy that aligns with the business’s strategy and goals, both short and long-term, and pays for sustained performance, profitable growth, and achievement of results. We generally target the 50th percentile of our peer group and the relevant market as a reference point for positioning target total compensation for our executives1,with the ability to earn above or below the 50th percentile based on Company and/or individual performance. Key considerations when determining an executive’s compensation include experience, size and scope of role, pay position relative to the market, internal equity, and talent retention. We designed our executive compensation program framework to reward for Company and individual performance, with a focus on the following objectives: • Reasonable but market-competitive base salaries to attract, motivate, and retain executives. • Appropriate balance between short- and long-term incentives and fixed and at-risk incentive compensation, to weigh cost against expected benefit and to align with the creation of shareholder value, including: • Annual cash incentives to drive critical business results each year; and • Long-term equity awards to retain management and incentivize executives to focus on longer-term financial performance and execution of our operational and strategic plans. • Retirement, severance, and other market-competitive benefits to attract executive talent and encourage retention. 1 This is a reference point, not a policy, and actual compensation may be above or below the target level based on Company and/or individual performance. |
2023 CD&A At-a-Glance
The following section identifies our NEOs for 2023, highlights our performance for the year, and discusses considerations in the resulting compensation approved by the OP&C Committee. We believe the OP&C Committee’s actions in 2023 and outcomes of the 2023 incentive programs were in-line with the Company’s compensation philosophy. Further, we believe the 2023 pay results illustrate and emphasize the strong link between executive pay and the actual results of our Company.
2023 Named Executive Officers
Named Executive Officer | |||||
Edward A. Pesicka | President | Full Year | |||
Alexander J. Bruni | Executive Vice President & Chief Financial Officer | Full Year | |||
Andrew G. Long | Executive Vice President, | ||||
Perry A. Bernocchi1 | President & CEO, Byram Healthcare Executive Vice President, |
*Mr. Morris-Hipkins joined the Company effective March 13, 2017 as its Executive Vice President, Manufacturing Services, and was promoted to President, Global Solutions on January 3, 2018.
**Mr. Colpo became Senior Vice President, Strategic Supplier Management on November 26, 2017, having previously served as Senior Vice President, Europe Operations.
Executive Summary
2017 Business Transformation, Performance and Compensation Review
2017 was a year of strategic transformation for Owens & Minor in an effort to strengthen our core Domestic distribution and logistics business and to reposition the Company for future success as a global healthcare solutions company. At the outset of 2017, the Company recognized that its core Domestic distribution and logistics business was under margin and competitive pressures as a result of market dynamics and vertically integrated competitors bundling and subsidizing distribution with product margins. The business was also being impacted by thede-leveraging effect of the loss of a large customer in 2016.
To combat these pressures, the Board and executive management resolved to:
January – February March—December | ||||
Daniel J. Starck2 | Executive Vice President, President – Patient Direct & CEO of Apria, Inc. Executive Vice President, Business Excellence | January – February March—December |
1 | Mr. Bernocchi was appointed Executive Vice President, CEO, Patient Direct effective March 1, 2023. Prior to that, Mr. Bernocchi served as President & CEO of the Company’s |
2 | Mr. Starck was appointed Executive Vice President, Business Excellence effective March 1, 2023. Prior to that |
Recognizing the competitive pressures in the Domestic segment earnings (which makes up the vast majority of the Company’s revenue and operating earnings), in February 2017 the Compensation Committee approved the Company’s 2017 Annual Incentive Plan (“2017 AIP”) for our NEOs that would:
42Owens & Minor, Inc.●2024 Proxy Statement
Executive Compensation
We base a significant portion of compensation on the achievement of objective financial measures to create a strong link between pay and performance. We have no specific policies on the percentage of total compensation that should be “performance-based,” but consider this relationship in determining the overall balance and reasonableness of the executives’ total direct compensation packages. In 2023, our President & CEO’s total target compensation was 87% performance-based and 13% fixed, and our other NEOs’ total target compensation was 81% performance-based and 19% fixed.
Owens & Minor, Inc.●2024 Proxy Statement43
Because the successful operation of our business requires near-term execution and a long-term approach, our executive compensation program is designed to enhance both short- and long-term performance. We consider the relationship of short-term to long-term compensation in determining the overall balance and reasonableness of our executives’ total direct compensation packages. We believe that short-term compensation is a necessary complement to long-term compensation to provide remuneration for the attainment of near-term goals that ultimately lead to the achievement of our long-term objectives and strategic initiatives. In 2023, our President & CEO’s total target compensation consisted of 69% long-term and 31% short-term compensation, and our other NEOs’ total target compensation consisted of 63% long-term and 37% short-term compensation. We believe our proportionate mix of compensation opportunities is appropriate in that we provide a slightly greater relative percentage of incentive-based compensation tied to financial performance and long-term objectives to the CEO versus other NEOs because the CEO is able to more directly impact financial results and the creation of long-term shareholder value. Performance Goals and Results
Say-on-Pay Voting History
Learn more about recent shareholder input on compensation on page 48. 44Owens & Minor, Inc.●2024 Proxy Statement
Summary of Our 2023 Decisions The OP&C Committee makes decisions regarding NEO total compensation (base salary, annual bonus objectives and payments, and annual equity grants) in connection with our annual performance review process. The table below summarizes the OP&C Committee’s considerations and their decisions for 2023.
Owens & Minor, Inc.●2024 Proxy Statement45
Aligning Pay with Performance In 2023, our executive compensation structure consisted of
46Owens & Minor, Inc.●2024 Proxy Statement
Compensation Factors and Governance The OP&C Committee applies several corporate governance features related to executive compensation, which are summarized below. We believe that these mechanisms help to ensure the alignment of executive and shareholder interests.
Market Compensation
Executive Summary Compensation
Total Program Owens & Minor, Inc.●2024 Proxy Statement47
Risk
In 2023, approximately 97% of the votes cast approved the compensation for our NEOs. We believe that this support resulted largely from the improvements that we have made and continue to make to our executive compensation programs and the effect that they have had on the Company’s performance. Owens & Minor held an Investor Day event in December and 78 unique investment firms participated either in-person or via webcast. During the event, key members of the management team presented the Company’s strategic vision, operating and growth strategies and multi-year financial targets. Additionally, members of the management team participated in four institutional investor conferences and held in-person or telephonic discussions with more than 100 individual firms. Key feedback included:
To strengthen our pay-for-performance culture, the OP&C Committee considered the feedback obtained from our investor outreach when making decisions relating to compensation for our NEOs for 2023. 48Owens & Minor, Inc.●2024 Proxy Statement
Role of the OP&C Committee The OP&C Committee establishes, approves, and administers the Company’s executive compensation programs. This process ensures that performance metrics are consistent with the financial, operational, and strategic goals set by the Board. The following table provides the steps the OP&C Committee follows to ensure the total compensation for our NEOs is competitive, appropriately tied to performance, and does not promote undue risk taking. Role of the Independent Compensation Consultant The OP&C Committee has the authority under its charter to retain independent consultants to assist it in making decisions regarding compensation. In 2023, the OP&C Committee engaged Willis Towers Watson (“WTW”) as its independent consultant to, among other things:
Our consultant reports directly to the OP&C Committee, and, aside from its work with the OP&C Committee and Governance & Nominating Committee, performs no other work for the Company. The OP&C Committee has analyzed whether the work of WTW raised any conflict of interest and has concluded that the work of our advisors, including the individuals employed by our advisors who provide consulting services to the OP&C Committee, have not created, nor are they encumbered by, any conflict of interest. The OP&C Committee also considered and confirmed the independence of legal advisors retained by the OP&C Committee during 2023. Owens & Minor, Inc.●2024 Proxy Statement49
Risk Assessment in Compensation Programs In December 2023, the OP&C Committee reviewed a risk assessment of our compensation policies and practices conducted by management. Management prepares both a top-down and bottom-up assessment and reviews findings with the Committee’s independent consultant, WTW. Based on this review, WTW determined that the Company’s compensation programs promote and reward prudent business judgment without encouraging undue risk. The risk assessment included a global inventory of incentive plans and programs and considered factors such as plan eligibility, the variety of plan metrics, threshold and maximum payments, and the mix of short- and long-term compensation. Based on the review, the OP&C Committee concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Role of the Executive Compensation Peer Group
The 12 peer companies we used to inform 2023 compensation decisions are outlined below. Covetrus, Inc. was acquired in October 2022 and is no longer a publicly traded company; as a result, it was removed from our peer group in 2023.
50Owens & Minor, Inc.●2024 Proxy Statement
Elements of the Executive Compensation Program Owens & Minor executive compensation consists of fixed pay and variable pay, including cash and non-cash components. The chart below summarizes the various elements of Owens & Minor’s executive compensation and their purpose:
NEO Employment Events
Owens & Minor, Inc.●2024 Proxy Statement51
Analysis of Base Salary
2023 Base Salary Decisions With the
Annual Performance-Based Cash Incentives We provide annual performance-based cash incentive opportunities to executive officers to
The OP&C Committee also structured our 2023 AIP to include MBOs as performance metrics that allow for a modifier of incentive compensation earned by the NEOs. The relative weighting of each of these metrics is set forth in the table below.
52Owens & Minor, Inc.●2024 Proxy Statement
The
In setting 2023 annual cash incentive
The OP&C Committee approved the 2023 Revenue, AOI, and the
Owens & Minor, Inc.●2024 Proxy Statement53
2023 NEO MBOs and Performance MBOs are performance metrics that allow for a modification (+/- 0-35%) to the annual incentive earned by the
While each NEO had unique 2023 MBOs applicable to his respective span of control and duties, all MBOs were designed to advance the Company’s three primary areas of focus for 2023:
The following table summarizes the MBOs and key achievements of each NEO in 2023:
54Owens & Minor, Inc.●2024 Proxy Statement
Considering the performance of our NEOs against their specific MBOs, the OP&C Committee determined that each of our NEOs had successfully achieved, in aggregate, the NEO’s respective MBOs. Following the determination of the financial achievement of 100% for the Owens & Minor, Inc.●2024 Proxy Statement55
2023 AIP Awards In early 2024, considering the Company’s
Long-Term Incentives Equity grants help to align executive interests with those of our shareholders. The OP&C Committee considers Company performance, individual performance, long-term potential, and market practices when determining the Our Equity Granting Practices The
In 2023, we made annual equity award grants to
We believe that the mix between
56Owens & Minor, Inc.●2024 Proxy Statement
The 2023 PSU grant design maintained a three-year performance period. The PSU metric is a three-year cumulative adjusted EPS; in addition, the OP&C Committee added relative TSR as a modifier to further enhance the alignment of our executives with shareholder returns relative to that of other companies in the performance index. On March 1, 2023, the Company granted RSUs to Messrs. Pesicka, Bruni, Long, Bernocchi, and
Common Stock Ownership We have established Common Stock ownership guidelines for our executive officers that they are expected to
The CEO’s higher ownership target reflects the larger portion of his total compensation represented by long-term incentive award value. Hedging, Pledging and Derivatives Trading Prohibition The Impact of Accounting and Tax Requirements on Compensation The OP&C Committee considers certain tax implications when designing the Company’s executive compensation programs. Section 162(m) of the Internal Revenue Code (the “Code”) generally precludes a tax deduction by any publicly-traded Owens & Minor, Inc.
company for compensation paid to any “covered employee” to the extent the compensation paid to such covered employee exceeds $1 million during any taxable year of the company. “Covered Employees” include any employee (i) serving as the CEO or the CFO of the Company at any time during the taxable year, (ii) whose total compensation is required to be reported to the shareholders of the Company by reason of being among the three highest paid officers of the Company (other than the CEO and the CFO) for the applicable taxable year, or (iii) any employee who qualified as a “covered employee” for any previous taxable year of the company (or any predecessor) beginning after December 31, 2016. While we prefer to maximize the deductibility of any compensation we pay, we also believe that it is important to preserve flexibility in administering our compensation programs to promote various corporate goals. Accordingly, we have not adopted a policy that all compensation must be deductible in full. Certain of the amounts paid under our compensation and other executive programs will not likely be deductible as the result of Section 162(m). We intend to continue to design our executive compensation arrangements to be consistent with our best interests and the interests of our shareholders and we understand that certain of our compensation arrangements will not be deductible in full. Recoupment Policy In an effort to mitigate any imprudent risk-taking behavior associated with incentive compensation, the Company has a policy that provides for the recoupment of performance-based cash compensation and all equity compensation (including both time- and performance-vesting equity awards) granted or paid to our current and former executive officers and other senior executives and teammates as the OP&C Committee may from time to time designate under circumstances involving a restatement of our financial statements. Performance-based compensation is recoverable from an executive officer (i) in the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirement under applicable securities laws (an “Accounting Restatement”) and (ii) a lower payment would have been made to the executive officer based upon the restated financial results. In addition, upon an Accounting Restatement, time-based equity compensation is recoverable in amounts as determined by the OP&C Committee. The recoupment policy does not apply to covered compensation after the third anniversary of the date on
The
58Owens & Minor, Inc.●2024 Proxy Statement
2023 Summary Compensation Table The following table summarizes the total compensation of our NEOs for 2023, and earlier years as applicable:
Mr. Pesicka, $3,084,848; Mr. Bruni $560,891; Mr. Long, $1,290,028; Mr. Bernocchi $1,121,764; and Mr. Starck, $911,448. The grant date value of the above performance-based awards for 2023 would equal the following for each NEO assuming achievement of the highest level of performance conditions: Mr. Pesicka, $6,169,696; Mr. Bruni, $1,121,782; Mr. Long, $2,580,056; Mr. Bernocchi, $2,243,529; and Mr. Starck, $1,822,895. The amounts included in column (e) for Mr. Long reflect his annual grant of RSUs as well as a special grant of RSUs on March 1, 2023 in recognition of his recent appointment as CEO, Products & Healthcare Services in October of 2022. Assumptions used in the calculation of the stock awards included in column (e) are included in Note 10 “Share-Based Compensation” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which is incorporated herein by reference. The actual value an NEO may receive for stock awards depends on market prices, and there can be no assurance that the amounts shown are the amounts that will be realized.
Owens & Minor, Inc.●2024 Proxy Statement59
60Owens & Minor, Inc.●2024 Proxy Statement
2023 Grants of Plan-Based Awards
Owens & Minor, Inc.●2024 Proxy Statement61
Outstanding Equity Awards at 2023 Fiscal Year-End Table The following table summarizes information regarding outstanding equity awards held by the NEOs as of December 31, 2023.
62Owens & Minor, Inc.●2024 Proxy Statement
2023 Option Exercises and Stock Vested The following table summarizes for each NEO information regarding shares of our Common Stock subject to restrictions, RSUs or PSUs held by the NEOs that vested during 2023. No stock appreciation rights or stock options were outstanding during 2023.
Retirement Compensation We maintain market-competitive retirement programs for our executives as retirement compensation is an essential component of an overall
Owens & Minor, Inc.●2024 Proxy Statement63
Other Benefits In addition to the components of compensation discussed above, we provide $70,835 in incremental costs to the Company for use of the corporate aircraft by our President & Chief Executive Officer was determined to be a perquisite in accordance with SEC rules. Our President & Chief Executive Officer does not receive tax reimbursement for any imputed income associated with personal travel on our corporate aircraft. Pension Benefits Our NEOs do not participate in any defined benefit pension plans. Nonqualified Deferred Compensation Plan The Company maintains an Executive Deferred Compensation and Retirement Plan (“EDCP”) in which members of senior management, The Company maintains the Apria Deferred Compensation Plan (the “Apria DCP”), a nonqualified plan, into which Apria executives (participants prior to the Company’s acquisition of Apria, Inc. on March 29, 2022) may defer up to 50% of their salary, up to 75% of their annual bonus and 100% of their annual 401(k) plan refund offset amount. In 2023, the Company 64Owens & Minor, Inc.●2024 Proxy Statement
The following table sets forth information regarding contributions
Potential Payments Upon Termination or Change in Control Officer Severance Policy The Company has an Officer Severance Policy that applies to corporate officers whose employment is involuntarily terminated without cause (or who resign at the
For purposes of the Officer Severance Policy, “cause” is generally defined to include one or more of the following by a corporate officer: (i) misappropriation, theft or embezzlement of funds or property from the Company, (ii) conviction of, or entry of a plea of “nolo contendere” with respect to, a felony, or a misdemeanor which, in the reasonable opinion of the Company, is likely to cause material harm to the Company’s business, customer or supplier relations, financial condition or prospects, (iii) violation of the Company’s Code of Honor or any successor code of conduct, (iv) violation of any material law or regulation to the detriment of the Company, (v) engagement in conduct that results in or would be reasonably likely to result in material injury to the reputation of the Company, or (vi) failure to substantially perform (other than by reason of illness, temporary disability or approved leave of absence) the duties of the officer’s job. Owens & Minor, Inc.●2024 Proxy Statement65
The officer severance policy imposes certain non-competition and non-solicitation restrictive covenants on the executive officers for the duration of the severance period and includes perpetual confidentiality provisions. The severance policy does not address the disposition of outstanding equity awards upon an involuntary termination without cause. The treatment of outstanding equity awards is instead addressed in the applicable equity award agreements, as described in more detail on page 68 of this Proxy Statement below. Change in Control Agreements The Company has entered into change in control agreements (“CIC Agreements”) with The purpose of the CIC Agreements is to encourage key management personnel to remain with the Company and to help avoid distractions and conflicts of interest in the event of a potential or actual change in control of the Company so that executives will focus on a fair and impartial review of the acquisition proposal and the maximization of shareholder value despite the risk of losing their employment. The The CIC Agreements do not provide for excise taxgross-up payments. In addition, the severance payment obligation under the CIC Agreements has a “double trigger” such that the payment of
Termination of employment by the Company is for responsibilities; A change in control is generally deemed to have occurred under the
The
66Owens & Minor, Inc.●2024 Proxy Statement
In consideration for any benefits paid, the
Mr. Starck’s Severance Arrangements In connection with the acquisition of
In the event of For purposes of Mr. Starck’s severance arrangements, a “cause” event generally refers to the executive (i) engaging in or committing willful misconduct, (ii) engaging in or committing theft, fraud or other Owens &
Long-Term Incentive Awards under the 2018 Stock Incentive Plan Awards granted to our NEOs in 2023 were made under the Company’s 2018 Stock Incentive Plan, prior to our shareholders’ approval of the 2023 Omnibus Incentive Plan, which replaces the 2018 Stock Incentive Plan. In general, the award agreements under the Company’s 2018 Stock Incentive Plan provide that, upon an involuntary termination without “cause” or a termination due to disability, a pro-rata portion of the NEOs’ time-based awards and earned performance-based awards (as applicable) vests as of the termination date (with vesting of time-based awards based on the number of months worked during the applicable vesting period). Upon a termination due to death, the unvested portion of the NEOs’ time-based awards vests in full as of the termination date and NEOs are entitled to receive any performance-based awards that are earned based on achievement of performance conditions. In addition, the Company’s outstanding time-based equity awards generally include the same “double-trigger” feature discussed above under the CIC Agreements for accelerated vesting upon a termination without “cause” in the event of a change in control. Performance-based awards are deemed earned based on the target performance levels if there is a change in control prior to the applicable measurement date. If outstanding equity awards under the 2018 Stock Incentive Plan are not assumed or substituted in connection with a change in control, unvested awards will vest in full upon the change in control. For purposes of the 2018 Stock Incentive Plan, the definition of “change in control” is generally consistent with the definition set forth in the CIC Agreements, except that shares issued by the Company directly to the acquirer shall not be considered when determining whether the 30% beneficial ownership threshold of the first prong has been met. The same treatment generally applies to the equity awards of all teammates of the Company upon the termination scenarios noted above, including in the event of a change in control. Table of Potential Payments Upon Termination or Change in Control The following table reflects the estimated potential compensation payable to each of the NEOs under the Company’s compensation and benefit plans and arrangements in the event of certain terminations of employment, including following a change in control. Except as otherwise stated in footnote (4) to the table below, the amounts shown are estimates of the amounts that would be paid to the NEOs upon termination of their employment assuming that such termination was effective December 31,
68Owens & Minor, Inc.●2024 Proxy Statement
Owens & Minor, Inc.●2024 Proxy Statement69
Pay Ratio Disclosure As required by Section 953(b) of the
As disclosed in the Summary Compensation Table, the 2023 annual total compensation as determined under Item 402 of Regulation S-K for Mr. Pesicka was $8,389,910. The 2023 annual total compensation as determined under item 402 of Regulation S-K for the median teammate was $40,143. Based on the foregoing, our estimate of the On December 31, 2023, we and our subsidiaries employed a total of over 22,200 teammates. For 2023, we identified the median teammate based on total target compensation of each teammate within our global workforce as set forth in our human resources databases on December 31, 2023, which included target salary, cash bonus, equity compensation, and other compensation. We believe this method reflects a reasonable estimate for actual compensation paid. For the approximately 8,500 teammates outside the U.S., we converted their compensation to U.S. dollars using prevailing exchange rates as of December 31, 2023. We calculated the total annual compensation for the “median teammate” for 2023 in the same way Mr. Pesicka’s total annual compensation was calculated in the Summary Compensation Table. The integration of the Apria, Inc. population in 2023 which consisted of approximately 6,400 teammates, greatly reduced the CEO pay ratio. 70Owens & Minor, Inc.●2024 Proxy Statement
Pay versus Performance The following table sets forth certain information with respect to the Company’s financial performance and the compensation paid to our NEOs for the fiscal years (“FY”) ended on December 31, 2023, December 31, 2022, December 31, 2021 and December 31, 2020, as required by SEC rules.
Owens & Minor, Inc. ● 2024 Proxy Statement 71
72 Owens & Minor, Inc. ● 2024 Proxy Statement
Pay versus Performance Comparative Disclosure In accordance with Item 402(v) of Regulation S-K, the Company is providing the following graphs depicting the relationships between the information presented in the table above. The graphs below further depict the relationship between the compensation actually paid and the performance measures shown in the pay versus performance tabular disclosure above. In addition, the first graph below shows the relationship between Company total shareholder return and that of the Russell 3000 Medical Equipment and Services Sector Index. Compensation actually paid for purposes of the tabular disclosure and the following graphs were calculated in accordance with SEC rules and do not necessarily represent the actual amount of compensation earned by or actually paid to our NEOs during the applicable years.The peer group used to determine the Company’s Peer Group TSR for each applicable fiscal year is the following published industry index, as disclosed in our 2023 Annual Report on Form 10-K pursuant to Item 201(e) of RegulationS-K: Russell 3000 Medical Equipment and Services Sector Index.Owens & Minor, Inc. ● 2024 Proxy Statement 73
Pay versus Performance Tabular List The following table lists our most important performance measures used by us to link CAP to our NEOs to company performance for fiscal year 2023. The performance measures included in this table are not ranked by relative importance.
74 Owens & Minor, Inc. ● 2024 Proxy Statement Proposal 4: Advisory Shareholder Vote to Approve Executive Compensation
In accordance with Section 14A of the Exchange Act, shareholders have the opportunity to cast an advisory vote to approve the compensation of our NEOs as disclosed in this
Accordingly, the Board of Directors recommends that shareholders vote in favor of the following resolution: “RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement for the The Board of Directors recommends a vote FOR the foregoing resolution approving, on an advisory basis, the compensation of our named executive officers as disclosed in this
Certain Relationships and Transactions In accordance with the Audit Committee charter, the Audit Committee shall review and discuss with management and the independent auditor any transactions or courses of dealing with parties related to the Company which transactions are significant in size or involve terms that differ from those that would likely be negotiated with independent parties and which are relevant to an understanding of the Company’s financial statements. The Audit Committee charter further provides that the Audit Committee shall review and approve all transactions between the Company and any related person that are required to be disclosed pursuant to Regulation S-K Item 404. The Company has not
Any shareholder desiring to make a proposal to be acted upon at the Director Nominations for Inclusion in our 2025 Proxy Materials (Proxy Access) Under certain circumstances, our Bylaws permit a shareholder, or a group of up to 20 shareholders, owning 3% or more of the outstanding shares of the Company’s stock eligible to vote in the election of directors continuously for at least three years, to nominate and include in the Company’s Annual Meeting proxy All proxy access shareholder requests must comply with the timing, disclosure, procedural and Other Shareholder Proposals Our bylaws establish an advance notice procedure for shareholders wishing to directly nominate a director candidate (other than for inclusion in our proxy 2025 Annual Meeting. Our Bylaws provide that a shareholder of record of the Company entitled to vote
76Owens & Minor, Inc.●2024 Proxy Statement
All shareholder proposals and director nominations must comply with the timing, disclosure, procedural and other requirements our Bylaws, which are available as described under “Corporate Governance — Corporate Governance Materials” on In addition to satisfying the forgoing requirements of the
In order for a shareholder to bring other business before a shareholder meeting, timely notice must be received by the Company within the time limits described in the immediately preceding paragraph. The shareholder’s notice must contain the information required by our Bylaws, including but not limited to:
The requirements found in our Bylaws are separate from the requirements a shareholder must meet to have a proposal included in the Company’s Our Bylaws further permit a shareholder, or a group of up to 20 shareholders, owning 3% or more of the outstanding shares of the Company’s stock eligible to vote in the election of directors continuously for at least three years, to nominate and include in the Company’s Annual Meeting proxy materials director candidates to comprise generally up to two or 20% of the Board seats (whichever is greater), provided that such shareholder or group of shareholders satisfies the requirements set forth in Article I, Section 1.09 of the Bylaws. Further Information About Attending the Virtual Annual Meeting You are entitled to participate in the Annual Meeting only if you were a shareholder as of the close of business on the Record Date, or if you hold a valid proxy for the Annual Meeting. No physical meeting will be held. You will be able to virtually attend the Annual Meeting online and submit your questions during the meeting by visiting www.meetnow.global/MQUPCLA. You also will be able to vote your shares online by attending the Annual Meeting by webcast. To participate in the Annual Meeting, you will need to log on using the control number from your proxy card or meeting notice. The control number can be found in the shaded box. If you are a registered shareholder, you do not need to register to attend the Annual Meeting virtually on the Internet. If you hold your shares through an intermediary, such as a bank or broker, you must register in advance in order to attend the meeting. To register to attend the Annual Meeting online by webcast you must submit proof of your proxy power (legal proxy) reflecting your Owens & Minor holdings along with your name and email address to Computershare. You must contact the bank or broker who holds your shares to obtain your legal proxy. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, three business days prior to the meeting date. You will receive a confirmation of your registration by email after we receive your legal proxy. Requests for registration should be directed to us by emailing an image of your legal proxy, to legalproxy@computershare.com or by mail to Computershare, Owens & Minor, Inc. Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001. If you do not have your control number, you may attend as a guest (non-shareholder) but will not have the option to vote your shares or ask questions at the virtual meeting. The online meeting will begin promptly at 9:00 a.m., EDT. We encourage you to access the meeting prior to the start time leaving ample time for the check in. Owens & Minor, Inc.●2024 Proxy Statement77 The Board of Directors is not aware of any matters to be presented for action at the March
ANNEX A
TO THE OWENS & MINOR, INC.
WHEREAS, the
NOW, THEREFORE, the Plan is hereby amended, as follows: Section 4.1 of the Plan is hereby amended by 4.1 Shares. The aggregate number of Shares that may be issued pursuant to this Plan shall not exceed 6,175,000 Shares (subject to any increase or decrease pursuant to this Article IV), which may be either authorized and unissued Shares or Shares held in or acquired for the treasury of the Company or both. The aggregate number of Shares that may be issued or used with respect to any Incentive Stock
This Amendment No. 1 to
[Remainder of
Owens & Minor, Inc.
▼IF
Please sign exactly as
03YPLC The 2024 Annual Meeting of Shareholders of Owens & Minor, Inc. Thursday, May To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. Important notice regarding the Internet availability of proxy materials for the The
▼IF
Annual Meeting of Shareholders to be held May 9, 2024 This Proxy Mark A. Beck, Stephen W. Klemash and Edward A. Pesicka, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned Shares represented by this proxy
(Items to be
|