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SAFEGUARDING GLOBAL HEALTH®
We are driven by our mission – Safeguarding Global Health®.
Our purpose is bigger than the products and services we provide.
We ensure that healthcare around the worldis consistently and reliably safe every day.
Our purpose, our conduct and our values are at the heart of our commitment to employee safety, environmental responsibility and sustainability principles.
Our shared values guide how we operate each and every day.
Our Values
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Although collectively we faced many challenges, in looking back, it was a year of growth for our company and I am proud of what we accomplished. In 2020, we launched Sotera Health as a new publicly traded company. Our highly successful initial public offering was the culmination of decades of hard work by the entire team, and reflects our company’s achievements in:
Being a global leader in providing mission-critical end-to-end sterilization solutions and lab testing and advisory services for the healthcare industry;
Providing an unmatched global network of local facilities to support customer requirements and growth;
Growing the company organically and inorganically, by being thoughtful and highly strategic about our transformational and bolt-on acquisitions to build for the long-term;
Maintaining a relentless focus on nurturing a values-driven culture of safety, quality, people, accountability and excellence;
Demonstrating revenue growth every year since 2005; and
Deploying capital in a productive and meaningful way.
Since our IPO, I have greatly valued the opportunity to meet and speak with so many of our shareholders. I am pleased to share with you more information about our governance practices. The Board is committed to sound corporate governance practices and the promotion of the long-term interests of our stockholders.
In summary, on behalf of the Board and our Executive Team, we are deeply grateful to our employees, our customers and our partners for your ongoing support in 2020. To our investors, we thank you for your investment in Sotera Health. We will strive to live up to, and exceed, your expectations.
Michael B. Petras, Jr.
Chairman of the Board of Directors
and Chief Executive Officer
| Sotera Health Company 9100 South Hills Blvd, Suite 300 Broadview Heights, Ohio 44147 |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS
Time and Date |
Place |
Record Date | ||
Thursday, May 9:00 a.m., Eastern Daylight Time | Virtual
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Only | ||
Items of Business
| ∎ | To elect Constantine S. Mihas, James C. Neary, Michael B. Petras, Jr. |
| ∎ | To approve, on an advisory basis, the compensation of named executive officers. |
| ∎ | To ratify the appointment of Ernst & Young LLP as our independent auditors for the fiscal year ending December 31, |
| ∎ | To approve an amendment to our amended and restated certificate of incorporation allowing officer exculpation consistent with Delaware law. |
| ∎ | To transact any other business that may properly come before the Annual Meeting or any adjournment or postponement thereof. |
Our board of directorsBoard recommends you vote (1) FORthe election of the four nominees for directors named in this proxy statement andProxy Statement, (2) FOR the compensation of named executive officers, (3) FOR the ratification of our independent auditors.auditors, and (4) FOR the approval of an amendment to our amended and restated certificate of incorporation allowing for officer exculpation consistent with Delaware law.
Your vote is important to us. You may vote via the Internet or by telephone, or if you requested to receive printed proxy materials, bysigning, dating and returning your proxy card. If you are voting via the Internet or by telephone, your vote must be received by 11:59 p.m., Eastern Daylight Time, on Wednesday, May 26, 2021.22, 2024. For specific voting instructions, please refer to the information provided in the followingthis Proxy Statement, together with your proxy card or the voting instructions you receive by e-mail or that are provided via the Internet.
If you received only a Notice of Internet Availability of Proxy Materials on how to access the proxy materials via the(“Notice of Internet a proxy card was not sent toAvailability”) but you and you may vote only via the Internet, unless you have requestedwant a paper copy of the proxy materials in which case, you may alsoto vote by telephone or by signing, dating and returning your proxy card. Shares cannot be voted by marking, writing on and returningmail, the Notice of Internet Availability. Any Notices of Internet Availability that are returned will not be counted as votes. Instructions for requestingincludes instructions on how to request a paper copy of the proxy materials are set forth onmaterials.
Whether or not you plan to attend the NoticeAnnual Meeting online, we encourage you to promptly vote and submit your proxy via the Internet, by telephone or mail in advance of Internet Availability.the meeting.
By order of the boardBoard of directors,Directors,
Matthew J. Klaben
Alexander Dimitrief
Secretary
April 15, 2021[●], 2024
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on May 27, 2021. 23, 2024. Our proxy statementProxy Statement and Annual Report to StockholdersShareholders are being made available on or about April 15, 2021[●], 2024 at www.proxyvote.com. We are providing access to our proxy materials over the Internet under the rules adopted by the Securities and Exchange Commission (“SEC”).
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Proxy Statement Summary
Annual Meeting of StockholdersShareholders
Your proxy is being solicited on behalf of the board of directors (“Board”) of Sotera Health Company (“Sotera Health”,Health,” the “Company”, “we”,“Company,” “we,” “us” or “our”) to vote at the 2024 Annual Meeting of Shareholders (“Annual Meeting”). We are making this Proxy Statement available to stockholdersshareholders beginning on April 15, 2021.[●], 2024. This summary represents only selected information. We encourage you to read the entire Proxy Statement before voting.
Annual Meeting of StockholdersShareholders
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| Place | The Annual Meeting will be a virtual meeting held online at www.virtualshareholdermeeting.com/
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Proposals and Board Recommendations
Proposal | Description | Board Voting Recommendation | ||
1. Election of directors | Election of Constantine S. Mihas, James C. Neary, Michael B. Petras, Jr.
| FOR these nominees | ||
2. Vote to approve, on an advisory basis, named executive officer compensation (Say-on-Pay) | Advisory vote to approve our named executive officers’ compensation | FOR | ||
3. Ratification of appointment of independent auditors | Ratification of the appointment of Ernst & Young LLP as our independent auditors for | FOR | ||
4. Approval of an officer exculpation amendment to our amended and restated certificate of incorporation | Vote to approve an amendment to our amended and restated certificate of incorporation to adopt provisions allowing officer exculpation consistent with Delaware law | FOR | ||
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Proxy Statement Summary
Information on Director Nominees
Information on Director Nominees
Information as of March 28, 2024 about the four nominees for director, as of April 1, 2021,Class I directors is includedset forth below. The nominatingNominating and corporate governance committee hasCorporate Governance (NCG) Committee reviewed the individual director attributes and contributions of theseeach of the nominees (without Dr. Wheadon’s involvement in the review and discussion of his attributes or contributions) and the board of directorsBoard recommends that stockholdersshareholders vote FOR the election of each of these nominees.
Name and Occupation | Age | Company Director or Member of Topco Parent Board of Managers Since | Independent | Committees | ||||
Constantine S. Mihas | 54 | 2015 | ✓ | Compensation | ||||
James C. Neary | 56 | 2015 | ✓ | Compensation (Chair) | ||||
Michael B. Petras, Jr. | 53 | 2016 | ||||||
David E. Wheadon | 63 | Director Nominee | ✓ |
Name and Occupation | Age | Director Since (1) | Independent | Committees | ||||
Constantine S. Mihas | 57 | 2015 | ✓ | Leadership Development and Compensation (LDC) Committee | ||||
James C. Neary | 59 | 2015 | ✓ | LDC Committee (Chair) | ||||
Michael B. Petras, Jr. | 56 | 2016 |
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David E. Wheadon, M.D. | 66 | 2021 | ✓ | Audit Committee; NCG Committee | ||||
| (1) | Year in which director began service as a Company director or a member of Topco Parent’s (as defined below) board of managers. |
Virtual Annual Meeting
This year’sOur Annual Meeting will be held exclusively online in a virtual format through a live audio webcast. You are entitled to participate in the Annual Meeting if you were a stockholdershareholder as of the close of business on April 1, 2021,March 28, 2024, the record date, or hold a valid proxy for the meeting.
To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/SHC2021SHC2024, you must enter the 16-digit control number found next to the label “Control Number” on your Notice of Internet Availability, proxy card, or the voting instructions you receive by email. StockholdersShareholders may vote their shares electronically during the Annual Meeting through the virtual meeting platform; for more information on how to vote your shares, please see “Questions and Answers About the Proxy Statement and Our 20212024 Annual Meeting”Meeting of Shareholders” on the following page.page 75.
We are committed to ensuring that stockholders will beshareholders who attend our virtual Annual Meeting are afforded the same rights and opportunities to participate as they wouldshareholders receive at an in-person meeting. Stockholders meetings. Shareholders will be able to submit questions to Sotera Health’s management and directors online during the Annual Meeting usingthrough the virtual meeting platform and we will answer as many properly submitted questions as time permits.possible.
The meetingAnnual Meeting webcast will begin promptly at 9:00 a.m., Eastern Daylight Time, on May 27, 2021.23, 2024. Online access and check-in will begin approximately 15 minutes prior to the 9:00 a.m. start time. We encourage you to access the meeting prior to the start time to allow ample time for check-in procedures. If you encounter any difficulties accessing the virtual meeting during check-in or during the meeting, please call 844-986-0822 (US) or 303-562-9302 (International). If there are any technical issues in convening or hosting the meeting, we plan to promptly post information to our investor relations website, https://investors.soterahealth.com/, including information on when the meeting will be reconvened.
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Questions and Answers About the Proxy Statement and Our 2021 Annual MeetingShareholder Engagement – 2023
QUESTIONS AND ANSWERS ABOUT THE PROXY STATEMENT AND OUR 2021 ANNUAL MEETINGSHAREHOLDER ENGAGEMENT – 2023
Shareholder feedback is a valuable input that we incorporate into Board, committee and management discussions. Our executive ESG Committee, which reports to our Chief Executive Officer (“CEO”) and provides regular reports to the NCG Committee, seeks opportunities to connect with our investors to discuss current and ongoing corporate responsibility trends and hear their views about governance policies and practices. In 2023, we reached out to institutional shareholders representing over 60% of shares not held by affiliates to solicit their feedback and to address shareholder questions. An external consultant also provides input on these discussions. Members of our executive ESG Committee participated in most of these meetings with institutional investors and the Chairs of the NCG and LDC Committees separately attended two of these meetings. These governance engagements are in addition to the discussions that our senior leadership and investor relations teams regularly have with institutional and other shareholders regarding governance and numerous other issues, which includes quarterly outreach to our largest shareholders after we release our earnings reports.
| Scope of Outreach | Who We Met With | |||||
60% | We reached out to shareholders1 representing over 60% of outstanding shares not held by affiliates on ESG topics | 48% | We met with shareholders1 representing approximately 48% of outstanding shares not held by affiliates on ESG topics | |||
The following table highlights key themes that shareholders raised about governance matters during our engagement and how management and the Board address these issues. Shareholder feedback is shared with the NCG Committee and the Board.
| What We Heard |
| What We Do |
| Some investors disfavor our classified board and the supermajority voting standards for charter amendments after our Sponsors own less than a majority of shares | NCG Committee regularly reviews board and voting governance structures, including board classification and voting standards, to confirm that a classified board and supermajority voting standards remain appropriate | |
| Ensure Board and Committees are independent | All our directors (with the single exception of our CEO) and all the members of all Board Committees are independent under Nasdaq standards | |
| Enhance diversity of Board | Following the addition of Karen Flynn to our Board in November 2023, four of our 11 directors are diverse under Nasdaq’s standards | |
| Oversight and disclosure related to EO risks and litigation | Robust and transparent disclosure in our investor communications of EO risks and developments; website dedicated to EO education and updates; regular investor updates on EO developments; and comprehensive Board oversight of EO risks and litigation | |
| Appropriate governance oversight of business risks | Board annually reviews our strategic plans; Audit Committee annually reviews our enterprise risk management programs, including cybersecurity risks; established a new risk committee comprising a cross-section of senior executives | |
| Enhance executive compensation disclosures | Expanded disclosures on compensation topics in our proxy statements | |
The |
These proxy materials are being provided on or about April 15, 2021 to all stockholders of record of Sotera Health as of April 1, 2021.
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If you requested to receive printed proxy materials, these materials also include an accompanying proxy card. If you received more than one proxy card, this generally means your shares are registered differently or are in more than one account. Please provide voting instructions for each proxy card or, if you vote via the Internet or by telephone, vote once for each proxy card you receive to ensure that all of your shares are voted.
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At the time this Proxy Statement was mailed, we were not aware of any other matters to be presented at the Annual Meeting other than those set forth in this Proxy Statement and in the notice accompanying this Proxy Statement.
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Questions and Answers About the Proxy Statement and Our 2021 Annual Meeting
Stockholders of Record. If your shares are registered directly in your name with Sotera Health’s transfer agent, Computershare, you are considered the stockholder of record with respect to those shares, and these proxy materials are being sent directly to you. As a stockholder of record, you have the right to grant your voting proxy directly to Sotera Health or to vote electronically at the Annual Meeting. If you requested printed proxy materials, we have enclosed an accompanying proxy card for you to use. You may also submit voting instructions via the Internet or by telephone by following the instructions on the accompanying proxy card, as described below under “How can I vote my shares?”
Beneficial Owners. If your shares are held in a brokerage account or by a broker, bank, or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker, bank, or other nominee, which is considered the stockholder of record with respect to those shares. As a beneficial owner, you have the right to direct your broker, bank, or other nominee on how to vote the shares in your account. However, because you are not the stockholder of record, you may not vote these shares electronically at the Annual Meeting, unless you follow the instructions from your broker, bank or other nominee. Your broker, bank, or other nominee has included a voting instruction form for you to use to direct them how to vote your shares. Please instruct your broker, bank, or other nominee how to vote your shares using the voting instruction form you received from them.
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Voting over the Internet. To vote over the Internet, please follow either the instructions included on your proxy card or the voting instructions you receive by e-mail or that are being provided via the Internet. You will be asked to provide the control number on the Notice of Internet Availability or Voting Instruction Form. If you vote over the Internet, you do not need to complete and mail a proxy card.
Voting by Telephone. To vote by telephone, dial 1-800-690-6903 and follow the recorded instructions. You will be asked to provide the control number on the Notice of Internet Availability or Voting Instruction Form. If you vote by telephone, you do not need to complete and mail a proxy card.
Voting by Mail. If you have requested printed proxy materials, you may vote by mail by signing the proxy card and returning it in the prepaid and addressed envelope enclosed with the proxy materials. By signing and returning the proxy card, you are authorizing the individuals named on the proxy card to vote your shares at the Annual Meeting in the manner you indicate. We encourage you to sign and return the proxy card even if you plan to attend the Annual Meeting so that your shares will be voted if you are unable to attend the Annual Meeting. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted. Your printed proxy materials may also indicate methods whereby you may vote by telephone or over the Internet instead of signing, dating a returning the proxy card by mail.
Voting Electronically at the Meeting. If you attend the virtual Annual Meeting and plan to vote electronically at the Annual Meeting, you can vote by following the instructions provided when you log in to the online virtual Annual Meeting platform. If you are a stockholder of record, you have the right to vote electronically at the Annual Meeting. If you are the beneficial owner of shares held in street name, you may also vote electronically at the Annual Meeting if you follow the instructions from your broker, bank or other nominee to vote those shares.
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Shareholder Engagement – 2023
Questions and Answers About the Proxy Statement and Our 2021 Annual Meeting
| What We Heard |
| What We Do |
| Transition our compensation programs toward more performance-based metrics | Please see the Compensation Discussion and Analysis, beginning on page 27, for a discussion of how we are responding to shareholder feedback on our compensation programs. | |
| Enhance disclosures around governance structures that we believe best meet our governance needs (e.g., combining the roles of Chairman and CEO, whether to appoint a lead independent director, supermajority voting requirements for charter amendments) | Expanded disclosures on governance topics in our proxy statements | |
| Disclosure of more information around ESG goals and metrics | Published our second Corporate Responsibility Report in 2023; enhancing our metrics with ongoing refinements around goals and metrics planned for future | |
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Sign and return a later-dated proxy card, or enter a new vote over the Internet or by telephone; or
Provide written notice of the revocation to Sotera Health’s Corporate Secretary at: Sotera Health Company, Attention: Matthew J. Klaben, Secretary, 9100 South Hills Blvd, Suite 300, Broadview Heights, Ohio 44147, before the proxies vote your shares at the Annual Meeting; or
Attend the virtual Annual Meeting and vote electronically at the meeting.
If you are a beneficial stockholder, you may revoke your proxy or change your vote only by following the separate instructions provided by your broker, trust, bank or other nominee.
Only the latest validly-executed proxy that you submit will be counted.
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Abstentions and broker non-votes are counted as present for the purpose of determining a quorum.
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Proposal 2: Ratification of Ernst & Young LLP. You may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to the ratification of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2021. If you elect to abstain from this proposal, the abstention will have the same effect as an “AGAINST” vote with respect to such proposal. The affirmative vote of the holders of not less than a majority of the outstanding common stock entitled to vote and present, in person or by proxy, at the meeting is required.
If you are a stockholder of record and you sign and return your proxy card without giving specific voting instructions, your shares will be voted on the proposals as recommended by our board and in accordance with the discretion of the persons named on the proxy card with respect to any other matters that may properly come before the Annual Meeting.
If your shares are held in street name and you do not instruct your broker on a timely basis on how to vote your shares, your brokerage firm, in its discretion, may either leave your shares unvoted or vote your shares on routine matters. Only the ratification of Ernst & Young LLP as our independent registered public accounting firm is a routine matter. Without your voting instructions, your brokerage firm cannot vote your shares on the election of directors. These unvoted shares, called “broker non-votes,” refer to shares held by brokers who have not received voting instructions from their clients and who do not have discretionary authority to vote on non-routine matters. Broker non-votes are not considered entitled to vote on non-routine proposals. Broker non-votes will not have an effect on the election of any director nominee.
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Questions and Answers About the Proxy Statement and Our 2021 Annual Meeting
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This process is designed to expedite stockholders’ receipt of proxy materials, lower the cost of the Annual Meeting and help conserve natural resources. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.
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If you share an address with another stockholder and received only one set of proxy materials and would like to request a separate paper copy of these materials, please contact the Broadridge Householding Department by phone at 1-866-540-7095 or by mail to Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY 11717.
Corporate Social Responsibility Highlights
CORPORATE SOCIAL RESPONSIBILITY HIGHLIGHTS
At Sotera Health our mission is Safeguarding Global Health®. Across our businesses, we serve this mission by providing mission-critical, end-to-end sterilization solutions and lab testing and advisory services for the healthcare industry. Our mission was never more important than this past year. We were called upon to assist in the global effort to combat COVID-19, and we were proud to adapt quickly and focus our expertise on testing and sterilizing medical equipment, pharmaceutical products, and other items needed in the fight against the pandemic. These items included swabs, collection vials and alcohol wipes, and supplies needed by healthcare workers, such as personal protective equipment, saline and IV sets, labware and other supplies used in drug development, as well as for vaccine research and delivery. In fulfilling our mission, our actions and culture are continually shaped by our values. In addition, we strive to advance corporate responsibility, with a focus on employee health, safety and well-being, improving our diversity, equity and inclusion (“DE&I”) efforts, and proactively engaging with the communities in which we operate. Below are some highlights of our corporate social responsibility in 2020.
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Board Composition, Nominations Process and Director Qualifications
Board of Directors Composition
BOARD COMPOSITION, NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS
Our Board of Directors Composition
On November 24, 2020, we completedrepresents the interests of our initial public offering (“IPO”). Pursuant to the termsshareholders and oversees our business and affairs. Our Board currently consists of eleven members, six of whom were members of the corporate reorganization that was completed in connection withboard of managers (“Board of Managers”) of our IPO, our predecessor company, Sotera Health Topco Parent, L.P. (“Topco Parent”),. In connection with our initial public offering (“IPO”) in November 2020, Topco Parent distributed shares of Sotera Health Company common stock to its partners, including investment funds and entities affiliated with Warburg Pincus LLC (“Warburg Pincus”) and GTCR, LLC (“GTCR” and, together with Warburg Pincus, the “Sponsors”), in accordance with the limited partnership agreement of Topco Parent.
Our business and affairs are managed under the direction of Sotera Health Company’s board of directors. Our board of directors currently consists of nine members, seven of whom were members of Topco Parent’s board of managers and elected to. The Company, our current board of directors in connection with our IPO. Each of the nine current members were elected to our board in compliance with the provisions of the stockholders’ agreement (“Stockholders’ Agreement”), entered into in connection with our IPO among our CompanySponsors and certain holders of our common stock.stock also entered into a stockholders agreement (the “Stockholders Agreement”) pursuant to which our Sponsors are entitled to designate certain numbers of our directors, who are reviewed by the NCG Committee, until such time as the Sponsors’ holdings of our common stock is reduced below particular thresholds. Six of our nineeleven directors were designated by our Sponsors. In particular, Warburg Pincus designated Mr. Chen, Ms. GevedaMr. Knauss and Mr. Neary and mayis currently entitled to designate up to twoone additional directors,director for election to our board of directors, andBoard. GTCR designated Messrs.Mr. Cunningham, Mr. Donnini and Mihas for election to our board of directors.Mr. Mihas.
The board has determined to increase the size of the board from nine to ten members, and to increase the number of directors in Class I from three to four effective as of the 2021 Annual Meeting. Each of the three current members of Class I and one new candidate, Dr. David E. Wheadon, will stand for election at theour Annual Meeting. Our directors hold office until their successors have been elected and qualified or until the earlier of their resignation or removal. The following table provides summary information, as of April 1, 2021,March 28, 2024, about each director and director nominee, including the four nominees for election at theour Annual Meeting.Meeting and our other directors. Additional information about each directors’director’s background and experience can be found in the sectionsections “Board Skills, Experience and Attributes,” “Board Diversity” and “Proposal 1 — Election of Directors.”
Members of the Board and Standing Committees | Members of the Board and Standing Committees | |||||||||||||||||||||||||||
Name | Age | Position | Class and Year in Which Current Term Will Expire | Company Director or Member of Topco Parent Board of Managers Since | Age | Class and Year in Term Will Expire | Director Since (1) | Independent | Audit Committee | Leadership Development & Compensation Committee | Nominating & Corporate Governance Committee | |||||||||||||||||
Nominees for Election | ||||||||||||||||||||||||||||
Nominees for Election | ||||||||||||||||||||||||||||
Constantine S. Mihas | 54 | Director | Class I — 2021 | 2015 | ||||||||||||||||||||||||
Constantine S. Mihas | 57 | Class I — 2024 | 2015 | Yes | ✓ | |||||||||||||||||||||||
James C. Neary | 56 | Director | Class I — 2021 | 2015 | ||||||||||||||||||||||||
Michael B. Petras, Jr. | 53 | Chairman and CEO | Class I — 2021 | 2016 | ||||||||||||||||||||||||
James C. Neary | 59 | Class I — 2024 | 2015 | Yes | C | |||||||||||||||||||||||
Michael B. Petras, Jr. Chair and CEO | ||||||||||||||||||||||||||||
Michael B. Petras, Jr. Chair and CEO | 56
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David E. Wheadon | 63 | Director Nominee | Class I | — | ||||||||||||||||||||||||
David E. Wheadon | 66 | Class I — 2024 | 2021 | Yes | ✓ | ✓ | ||||||||||||||||||||||
Continuing Directors | ||||||||||||||||||||||||||||
Continuing Directors | ||||||||||||||||||||||||||||
Ruoxi Chen | 37 | Director | Class II — 2022 | 2020 | ||||||||||||||||||||||||
Ruoxi Chen | 40 | Class II — 2025 | 2020 | Yes | ✓ | |||||||||||||||||||||||
David A. Donnini | 55 | Director | Class II — 2022 | 2015 | ||||||||||||||||||||||||
David A. Donnini | 58 | Class II — 2025 | 2015 | Yes | ✓ | |||||||||||||||||||||||
Ann R. Klee | 59 | Director | Class II — 2022 | 2020 | ||||||||||||||||||||||||
Ann R. Klee | 62 | Class II — 2025 | 2020 | Yes | ✓ | C | ||||||||||||||||||||||
Karen A. Flynn | ||||||||||||||||||||||||||||
Karen A. Flynn | 61 | Class II — 2025 | 2023 | Yes | ✓ | |||||||||||||||||||||||
Sean L. Cunningham | 45 | Director | Class III — 2023 | 2015 | ||||||||||||||||||||||||
Stephanie M. Geveda | 41 | Director | Class III — 2023 | 2015 | ||||||||||||||||||||||||
Sean L. Cunningham | 48 | Class III — 2026 | 2015 | Yes | ✓ | |||||||||||||||||||||||
Robert B. Knauss | ||||||||||||||||||||||||||||
Robert B. Knauss | 70 | Class III — 2026 | 2022 | Yes | ||||||||||||||||||||||||
Vincent K. Petrella | 60 | Director | Class III — 2023 | 2020 | ||||||||||||||||||||||||
Vincent K. Petrella | 63 | Class III — 2026 | 2020 | Yes | C | |||||||||||||||||||||||
(1) Year in which director began service as a Company director or as a member of Topco Parent’s Board of Managers. | ✓ Member C Committee Chair |
| 2024 Notice and Proxy Statement | 6 |
Board Composition, Nominations Process and Director Qualifications
Board Skills, Experience and Attributes
Board Skills, Experience and Attributes
Our Board comprises a group of individuals with diverse skills, experience and attributes, which provides us with a wide range of perspectives and judgment necessary to guide our strategies, monitor their execution and advance the interests of our shareholders. As described in further detail in “Director Nominee Criteria and Process,” our NCG Committee regularly evaluates the composition of our Board. The table below summarizes several of the key characteristics of each of our directors relevant to their Board service. The table is intended as a high-level summary and not an exhaustive list of each director’s skills or contributions to our Board.
Name | Healthcare/ MedTech | Finance | International | Legal/ Regulatory | Technology & Science | Corporate Responsibility | C-Suite/ Operations | Cybersecurity | ERM | Strategy | Service on Other Public Company Boards | ||||||||||||||||||||||||||||||||||||||||||||
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Ruoxi Chen |  | | | | | | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Sean L. Cunningham | | | | | | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||
David A. Donnini | | | | | | | | 1 | |||||||||||||||||||||||||||||||||||||||||||||||
Karen A. Flynn | | | | | | | | 1 | |||||||||||||||||||||||||||||||||||||||||||||||
Ann R. Klee | | | | | | | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Robert B. Knauss | | | | | | | | — | |||||||||||||||||||||||||||||||||||||||||||||||
Constantine S. Mihas | | | | | | | | | | | 1 | ||||||||||||||||||||||||||||||||||||||||||||
James C. Neary | | | | | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Michael B. Petras, Jr. | | | | | | | | — | |||||||||||||||||||||||||||||||||||||||||||||||
Vincent K. Petrella | | | | | | | | | | 2 | |||||||||||||||||||||||||||||||||||||||||||||
David E. Wheadon | | | | | | | | | 1 | ||||||||||||||||||||||||||||||||||||||||||||||
As further described in “Director Nominee Criteria and Process,” all directors and director nominees must demonstrate integrity, strength of character and judgment, and have extensive business experience, specific areas of expertise and the ability to devote adequate time and effort to Board responsibilities. Additional information regarding the skills, experience and attributes of each of the four nominees for election as a director at the Annual Meeting, and for each of the continuing members of our Board, is included in directors’ individual biographies on the following pages.
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Board Composition, Nominations Process and Director Qualifications
Board Diversity
Board Diversity
Our Board composition reflects our commitment to diversity. Of the eleven current directors on our Board, two have self-identified as women, one has self-identified as Asian, one has self-identified as African American or Black, one has self-identified as a member of the LGBTQ+ community, and our directors range in age from 40 to 70. We are committed to achieving a mix of Board members that represents a diversity of skills, experience and backgrounds, including with respect to age, gender identity, sexual orientation, race, ethnicity, education, cultural background and professional experience. In furtherance of this commitment, in 2022, the Board adopted amendments to the charter of the NCG Committee and the Corporate Governance Guidelines to include an explicit commitment to include candidates with the aforementioned diversity characteristics on slates of potential nominees to fill new positions on the Board.
| (1) | The EO Litigation Committee and Nordion Pricing Committee are not standing committees of the Board and do not have chairs. See “Committees of the Board of Directors” on page 20 for more information. |
| 2024 Notice and Proxy Statement | 8 |
Board Composition, Nominations Process and Director Qualifications
Board Diversity
The following Board Diversity Matrix presents our Board diversity statistics in accordance with Nasdaq Listing Rule 5606, as self-disclosed by our directors. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Listing Rule 5605(f).
| Board Diversity Matrix as of April 2024 | ||||||
Total Number of Directors 11 | ||||||
| Female | Male | |||||
Part I: Gender Identity |
| |||||
Directors | 2 | 9 | ||||
Part II: Demographic Background |
| |||||
African American or Black | — | 1 | ||||
Alaskan Native or Native American | — | — | ||||
Asian | — | 1 | ||||
Hispanic or Latinx | — | — | ||||
Native Hawaiian or Pacific Islander | — | — | ||||
White | 2 | 7 | ||||
Two or More Races or Ethnicities | — | — | ||||
LGBTQ+ | 1 | |||||
Did Not Disclose Demographic Background | — | |||||
Director Nominee Criteria and Process
The nominating and corporate governance committee (“governance committee”)NCG Committee is responsible for identifying and screening candidates, for developing and recommending candidates to the board,Board, for evaluating candidates recommended or nominated by stockholders,shareholders (including nominees designated by our Sponsors), for recommending to the boardBoard all nominees for election to the boardBoard at the annual meeting of stockholders,shareholders, and for recommending any other action with respect to candidates nominated by stockholders.shareholders. The governance committee’sNCG Committee’s recommendations must be consistent with our organizational documents and applicable law, as well as the company’sCompany’s obligations under our Stockholders’Stockholders Agreement. See “Corporate Governance — Structure“Board Composition” and Role of
Board Composition, Nominations Process“Certain Sponsor Rights” on pages 6 and Director Qualifications
Director Nominee Criteria and Process
the Board of Directors — Certain Sponsor Rights”.17, respectively. In evaluating candidates, the boardBoard seeks individuals of high integrity and good judgment who have a record of accomplishment in their chosen fields, and who display the independence of mind and strength of character to effectively represent the best interests of all stockholdersshareholders and provide practical insights and diverse perspectives. In addition, as described above in “Board Diversity,” the NCG Committee’s charter and our Corporate Governance Guidelines include an explicit commitment to include diverse candidates on slates of potential nominees to fill new positions on the Board.
Our governance committeeNCG Committee reviews with our board of directors,Board, on an annual basis, the independence, skills, experience and characteristicsbackground of boardBoard members, and the experience, skills and characteristicsbackground of the boardBoard as a whole, in determining whether to recommend incumbent directors for re-election.reelection. In identifying potential new candidates for boardBoard membership, the governance committeeNCG Committee considers recommendations from directors, stockholders,shareholders, management, and from time to time it will engage executive search firms to assist in the locationidentification of qualified candidates. Our new nominee
| 9 | |
Board Composition, Nominations Process and Director Qualifications
Director Nominee Criteria and Process
Once potential director candidates are identified, the NCG Committee begins an extensive evaluation process. The evaluation and selection of qualified directors involves the consideration of many factors, including the needs of our Board at that time. In addition to the board, Dr. Wheadon, was identified to the governance committee by an executive search firm. Other than those qualifications necessary to meet the requirements of our organizational documents, applicable U.S. legal, regulatory and Nasdaq listing requirements, as well asand the company’sCompany’s obligations under our Stockholders’Stockholders Agreement, the board has not established a specific set of minimum qualifications or skills that a nominee must possess.
Once potential director candidates are identified,NCG Committee and Board consider the governance committee begins an extensive evaluation process. The evaluation and selection of qualified directors is a complex process that involves the consideration of many factors, including the needs of our board at that time. Under our corporate governance guidelines, in selecting director nominees the board considers, among other things, a candidate’s integrity, strength of character, judgment, business experience, specific areas of expertise, ability to devote adequate time and effort to board responsibilities, and principles of diversity. The company values diversity and seeks to achieve a mix of board members that represent a diversity of skills, background and experience, includingfollowing with respect to age, gender, race and ethnicity.each potential director nominee:
• Integrity | • Ability to devote adequate time and effort to Board responsibilities | |
• Strength of character and judgment | • Participation on other boards | |
• Business experience | • Specific areas of expertise | |
• Principles of diversity (including diversity of gender, race, ethnicity, sexual orientation, age, education, cultural background and professional experience) | ||
Shareholder Nominations for Directors
The nominating and governance committeeNCG Committee will consider potential director candidates recommended by stockholdersshareholders in accordance with the procedures set forth in our corporate governance guidelines,Corporate Governance Guidelines, organizational documents, our Stockholders’Stockholders Agreement and applicable law. As part of this responsibility, the nominating and governance committee is responsible for conducting,NCG Committee conducts, subject to applicable law, any and all inquiries into the background and qualifications of any candidate for board of directors.the Board. The governance committee shallNCG Committee also overseeoversees the nomination of director candidates by stockholdersshareholders in accordance with our organizational documents, our Stockholders’Stockholders Agreement and applicable law.
Our amended and restated bylaws provide advance notice procedures for stockholdersshareholders seeking to nominate candidates for election as directors at our annual meeting of stockholders, other than nominations made by or at the direction of the board of directors or pursuant to our Stockholders’ Agreement.shareholders. Any stockholdershareholder nomination must comply with the requirements set forth in our amended and restated bylaws and should be sent in writing to our Corporate Secretary at Sotera Health Company, 9100 South Hills Blvd, Suite 300, Broadview Heights, Ohio 44147. To be considered timely, notice,the Secretary must receive a stockholder’sshareholder’s notice must be received by the Corporate Secretary not earlier than the opening of business 120 days before, and not later than the close of business 90 days before, the first anniversary of the date of the preceding year’s annual meeting of stockholders (which date shall, for purposes of the Corporation’s first annual meeting of stockholders after its shares of common stock are first publicly traded, be deemed to have occurred on May 28, 2020).shareholders. If no annual meeting was held in the previous year, or if the date of the applicable annual meeting has been changed by more than 30 days from the date of the previous year’s annual meeting, then the Secretary must receive a stockholder’sshareholder’s notice, in order to be considered timely, must be received by the Corporate Secretary not earlier than the opening of business 120 days before the date of such annual meeting, and not later than the close of business on the later of (x)(i) 90 days prior to the date of such annual meeting; and (y)(ii) the 10th day following the day on which public announcement of the date of such annual meeting was first made. No such nominations were made for the Board’s consideration this year.
|
Board Composition, Nominations Process and Director Qualifications
Board Experience and Skills
Our board is comprised of a group of individuals with diverse experience, qualifications and skills relevant to our Company. Many of our directors have deep experience in areas such as management, finance, strategy, environmental, social and governance (“ESG”) matters, and health care or professional service industry expertise. Our nine-member board of directors currently includes two women, one ethnic minority, and directors ranging in age from 37 to 60. The diverse experience and skills of our directors provide us with a wide range of perspectives and judgement necessary to guide our strategies and monitor their execution.
The experiences, qualifications and skills of each of the four nominees for election as a director at the Annual Meeting, and for each of the continuing members of our board of directors, are included in directors’ individual biographies on the following pages. Our board of directors concluded that each nominee should serve as a director based on the specific experience, qualifications, attributes and skills listed and each nominee’s previous service with the company on our board of directors and Topco Parent’s board of managers.
Proposal 1: Election of Directors
Nominees for Election as Class I Directors
PROPOSAL 1: ELECTION OF DIRECTORS
Our board isBoard currently comprised of ninecomprises eleven directors, divided into three classes, each of whose members serve for staggered three-year terms. Each class consists, as nearly as possible, of one-third of the total number of directors. In accordance with the terms of our amended and restated certificate of incorporation, effective as of the 2021 Annual Meeting the board determined to increase the size of the board from nine to ten members, and increase the number of directors in Class I from three to four. Upon his election at the Annual Meeting, Dr. Wheadon will join our board of directors in Class I, with a term expiring at the Annual Meeting of Stockholders in 2024.
The members of the classes are divided as follows:
the current Class I directors are Mr. Mihas, Mr. Neary, and Mr. Petras, and their term expires at this Annual Meeting;
| • | The Class I directors are Mr. Mihas, Mr. Neary, Mr. Petras and Dr. Wheadon, and their terms will expire at the Annual Meeting; |
the Class II directors are Mr. Chen, Mr. Donnini and Ms. Klee, and their term will expire at the Annual Meeting of Stockholders in 2022; and
| • | The Class II directors are Mr. Chen, Mr. Donnini, Ms. Flynn and Ms. Klee, and their terms will expire at the Annual Meeting of Shareholders in 2025; and |
the Class III directors are Mr. Cunningham, Ms. Geveda and Mr. Petrella, and their term expires at the Annual Meeting of Stockholders in 2023.
| • | The Class III directors are Mr. Cunningham, Mr. Petrella and Mr. Knauss, and their terms will expire at the Annual Meeting of Shareholders in 2026. |
Upon the expiration of the termterms of a class of directors, directors in that class will be eligible to be elected for a new three-year termterms at the annual meeting of stockholdersshareholders in the year in which their term expires. An election of our directors by our stockholders will be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. In addition, in accordance with our corporate governance guidelines, sinceCorporate Governance Guidelines, when the election of directors at the Annual Meeting is uncontested, a director nominee must receive more votes cast “FOR” than “AGAINST” her or his election in order to be elected.
Our amended and restated certificate of incorporation does not provide for cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of common stock (i.e., our Sponsors) can elect all of the directors standing for election and the holders of the remaining shares are not able to elect any directors, subject to their rights under our Stockholders’ Agreement, discussed above.directors.
Nominees for Election as Class I Directors
At the Annual Meeting, the stockholdersshareholders will vote to elect the four Class I director nominees to serve until the 20242027 Annual Meeting of StockholdersShareholders and until their successors are duly elected and qualified. On the recommendation of the governance committee,NCG Committee, our boardBoard has unanimously nominated Constantine S. Mihas, James C. Neary, Michael B. Petras, Jr., and David E. Wheadon, M.D. for election to our board.Board. If any of the director nominees becomes unable or for good cause, unwilling to serve, proxies may be voted for the election of such other personanother candidate as shall be designated by our board,Board or the boardBoard may decrease the size of the board.
|
Proposal 1: Election of Directors
Nominees for Election as Class I Directors
Board.
The following brief biographical descriptions ofinformation regarding each director includes the primary individual experience, qualifications, attributes and skills and a brief statement of those aspects of our directors’ backgrounds that led us to conclude that each director should continue to serve as a member of our board of directors.Board.
Constantine Age: Director |
Biographical Information:Constantine S. Mihas has served as a member of our Mr. Mihas is | ||
Qualifications: | |||
| 11 | |
Proposal 1: Election of Directors
Nominees for Election as Class I Directors
James Age: Director |
Biographical Information:James C. Neary has served as a member of our Mr. Neary serves on the board of directors of WEX Inc. (NYSE:WEX) and several private companies. He | |
Qualifications: |
Proposal 1: Election of Directors
Nominees for Election as Class I Directors
Michael Age: Chairman |
Biographical Information:Michael B. Petras, Jr. has served as our Chief Executive Officer since June 2016 and as the Chairman of our Mr. Petras was named to the board of directors of the Cleveland Clinic in 2016 and elected vice chair of the board in 2020. Mr. Petras holds a B.S.B.A. in finance from John Carroll University and an M.B.A. in marketing from Case Western Reserve University. | ||
Qualifications: | |||
| 2024 Notice and Proxy Statement | 12 |
Proposal 1: Election of Directors
Nominees for Election as Class I Directors
David Age: Director |
Biographical Information:David E. Wheadon, M.D. has served as a member of our Board since May 2021. Dr. Wheadon served as senior vice president of global regulatory affairs, patient safety, and quality assurance at AstraZeneca Plc from December 2014 to July 2019. Prior to that, he was executive vice president, research and advocacy at Juvenile Diabetes Research Foundation International Inc., from May 2013 to December 2014, and senior vice president, scientific and regulatory affairs at Pharmaceutical Research and Manufacturers of America (PhRMA) Dr. Wheadon | |
Qualifications:Dr. Wheadon was selected to serve on our | ||
|
The Board recommends a vote “FOR” the election of each of the director nominees set forth above to serve until the |
|
Proposal 1: Election of Directors
Directors Continuing in Office
Directors Continuing in Office
SixSeven directors are serving for terms that endwill continue after the Annual Meeting atuntil the 20222025 or 2023 annual meetings2026 Annual Meetings of stockholders.Shareholders. The following brief biographical descriptions include certainprovide information regarding ourthese directors’ individual experience, qualifications, attributes and skills and a brief statement of those aspects of our directors’ backgrounds that led us to conclude that they should serve as directors.
Class II Directors (Term Expires(Terms Expire at 20222025 Annual Meeting)
Ruoxi Chen Age: Director |
Biographical Information:Ruoxi Chen has served as a member of our
Qualifications: | ||
David Age: Director |
Biographical Information:David A. Donnini has served as a member of our
Qualifications: | ||
Proposal 1: Election of Directors
Directors Continuing in Office
Age: Director |
Biographical Information:Karen A. Flynn has served as a member of our board since November 2023. Ms. Flynn retired in October 2023 from her position as President, Biomodalities of Catalent Pharma Solutions, a position she held since April 2023. Prior to this, she was Senior Vice President and Chief Commercial Officer at Catalent until September 2022. She joined Catalent as President, Biologics and Chief Commercial Officer in 2020. Before Catalent, Ms. Flynn was Senior Vice President and Chief Commercial Officer for West Pharmaceutical Services, Inc. from 2016 to 2019, and served as its President of Pharmaceutical Packaging Systems from 2014. Ms. Flynn serves on the board of Quanterix Corporation (NASDAQ:QTRX) and a privately held company. She previously served on the boards of Recro Pharmaceuticals (NASDAQ:SCTL) from September 2015 to January 2020 and Catalent (NYSE:CTLT) from September 2022 to January 2024. She serves on the Board of the Franklin Institute and previously served on the Chester County Economic Development Council and the Advisory Board of the Downingtown STEM Academy. Ms. Flynn holds a Master of Science in Business Administration from Boston University and a Master of Science in Engineering from the University of Pennsylvania. She received her Bachelor of Science in Pre-Professional Studies from the University of Notre Dame. Qualifications: Ms. Flynn was selected to serve on our Board because of her extensive experience in commercial strategy, strategic planning, innovation, quality management and the healthcare industry. | ||
Ann Klee Age: 62 Director | Biographical Information: Ann R. Klee has served as a member of our Ms. Klee is | ||
Qualifications: |
| 15 | |
Proposal 1: Election of Directors
Directors Continuing in Office
Class III Directors (Term Expires(Terms Expire at 20232026 Annual Meeting)
Sean Age: Director |
Biographical Information:Sean L. Cunningham has served as a member of our Mr. Cunningham
Qualifications: | ||
|
Proposal 1: Election of Directors
Directors Continuing in Office
Age: Director |
Biographical Information: | |
Qualifications: | ||
Vincent Age: Director |
Biographical Information:Vincent K. Petrella has served as a member of our He | |
Qualifications: |
Corporate Governance
Structure and Role of the Board of Directors
Structure and Role of the Board
Board Structure and Leadership
In accordance with our amended and restated certificate of Directorsincorporation, and as the Delaware General Corporation Law (“DGCL”) permits, our Board is divided into three classes, a structure that has been in place since our IPO. While the Board believes this structure continues to be in the best interests of the Company and our shareholders at this time, the NCG Committee annually considers the Board’s classified structure and will make recommendations to the Board with respect thereto as the NCG Committee deems appropriate.
Our Corporate Governance Guidelines provide that the Chair of our Board may be an officer of the Company. It is presently the Company’s policy that the positions of the Chair and the CEO be held by the same person except in unusual circumstances. The principal duty of the Chair is to lead and oversee the Board. Mr. Petras has served as our CEO since June 2016. He served as chairman of the Board of Managers of Topco Parent from January 2019 through November 2020 and has been Chairman of the Board since October 2020. The Board believes that combining the Chair and CEO roles is currently the most effective leadership structure because of Mr. Petras’ extensive knowledge of and experience in the Company’s operations, his knowledge of the industries we serve and his collaborative working and leadership style.
If the Chair is also the CEO, the independent directors may, but are not required to, select a lead director. We do not currently have a lead director. The Board believes that its function to monitor the performance of senior management is fulfilled by the presence of independent directors of stature who have substantive knowledge of the Company’s business. Pursuant to our Corporate Governance Guidelines, our independent directors are required to meet at least two times per year without the Chair and CEO or other members of management present. In view of our independent directors’ open and active communications, at this time the Board believes its current leadership structure is appropriate.
The NCG Committee annually considers the Board’s leadership structure, including the combined Chair and CEO roles and whether to appoint a lead director, and makes recommendations to the Board with respect thereto as the NCG Committee deems appropriate.
Certain Sponsor Rights
Our Stockholders’Stockholders Agreement provides that investment funds and entities affiliated with Warburg Pincus areis entitled to designate up to:
| • | five directors for election to our Board for so long as Warburg Pincus holds 80% or more of the shares of our common stock that Warburg Pincus immediately following our IPO; |
five directors for election to our board of directors for so long as certain investment funds and entities affiliated with
| • | four directors for election to our Board for so long as Warburg Pincus holds 60% or more of the shares of our common stock that Warburg Pincus held immediately following our IPO; |
| • | three directors for election to our Board for so long as Warburg Pincus holds 40% or more of the shares of our common stock that Warburg Pincus held immediately following our IPO; |
| • | two directors for election to our Board for so long as Warburg Pincus holds 20% or more of the shares of our common stock that Warburg Pincus held immediately following our IPO; and |
| • | one director for election to our Board for so long as Warburg Pincus holds 6 2/3 % or more of the shares of our common stock that Warburg Pincus held immediately following our IPO. |
At present, Warburg Pincus hold 80% or moreholds 74.69% of the shares of our common stock that theyWarburg Pincus held immediately following our IPO;IPO.
Our Stockholders Agreement also provides that GTCR is entitled to designate up to:
four directors for election to our board of directors for so long as certain investment funds and entities affiliated with Warburg Pincus hold 60%
| • | three directors for election to our Board for so long as GTCR holds 70% or more of the shares of our common stock that GTCR held immediately following our IPO; |
| 17 | |
Corporate Governance
Certain Sponsor Rights
| • | two directors for election to our Board for so long as GTCR holds 40% or more of the shares of our common stock that GTCR held immediately following our IPO; and |
| • | one director for election to our Board for so long as GTCR holds 10% or more of the shares of our common stock that GTCR held immediately following our IPO. |
At present, GTCR holds 74.69% of the shares of our common stock that they held immediately following our IPO;
three directors for election to our board of directors for so long as certain investment funds and entities affiliated with Warburg Pincus hold 40% or more of the shares of our common stock that they held immediately following our IPO;
two directors for election to our board of directors for so long as certain investment funds and entities affiliated with Warburg Pincus hold 20% or more of the shares of our common stock that they held immediately following our IPO; and
one director for election to our board of directors for so long as certain investment funds and entities affiliated with Warburg Pincus hold 6 2/3% or more of the shares of our common stock that theyGTCR held immediately following our IPO.
In addition, our Stockholders’ Agreement provides that investment funds and entities affiliated with GTCR are entitled to designate up to:
three directors for election to our board of directors for so long as certain investment funds and entities affiliated with GTCR hold 70% or more of the shares of our common stock that they held immediately following our IPO;
two directors for election to our board of directors for so long as certain investment funds and entities affiliated with GTCR hold 40% or more of the shares of our common stock that they held immediately following our IPO; and
one director for election to our board of directors for so long as certain investment funds and entities affiliated with GTCR hold 10% or more of the shares of our common stock that they held immediately following our IPO.
Our amended and restated certificate of incorporation provides that only our Board may change the authorized number of directors may be changed only by our board of directors, subject to the rights of any holders of any series of our preferred stock;stock, provided that, without the consent of Warburg Pincus or GTCR, the authorized number of directors may not exceed eleven as long as investment funds and entities affiliated with either Warburg Pincus or GTCR areis entitled to designate at least one director. Any additional directorships resulting from an increase in the number of directors willare to be distributed among the three classes of directors so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our board of directorsBoard may have the effect of delaying or preventing changes in our control or management.
Subject to restrictions under applicable law or the Nasdaq listing rules, our Stockholders Agreement also provides that Warburg Pincus and GTCR are each entitled to representation on each Board committee proportionate to the number of directors they are entitled to designate on our Board. Consistent with Nasdaq’s heightened independence standards for audit committees, however, no Sponsor-designated director sits on our Audit Committee. In addition, Warburg Pincus is entitled to appoint the Chair of our Leadership Development and Compensation Committee (the “LDC Committee”) for so long as Warburg Pincus has the right to designate at least one director for election to our Board. See “Stockholders Agreement” on page 71 for additional information about our Stockholders Agreement.
Our amended and restated certificate of incorporation provides that our directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the votes that all our stockholdersshareholders would be entitled to cast in an annual election of directors;directors, provided that for so long as investment funds and entities affiliated with either Warburg Pincus or GTCR collectively hold at least a majority of our outstanding capital stock, a director designated by investment funds and entities affiliated with either Warburg Pincus or GTCR respectively, may be removed with or without cause only by the affirmative vote of the holders of a majority of our outstanding capital stock and with the consent of Warburg Pincus or GTCR, respectively.
In late February 2024, the Delaware Court of Chancery issued a decision that invalidated certain provisions of a stockholder agreement between another company and the controlling stockholder of that company on the grounds that that those provisions violated Section 141(a) of the DGCL. While the stockholder agreement at issue contains some similarities to our Stockholders Agreement, our overall governance arrangements also differ in significant respects from those at issue in the Chancery Court’s decision. The decision remains subject to appeal to the Delaware Supreme Court, and we will continue to monitor how Delaware law in this area evolves.
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Corporate Governance
Director Independence
Our board of directors has undertaken aBoard, together with the NCG Committee and the Company’s legal counsel, conducts an annual review of the independence of each director. Based on information the directors provided by each director concerning his or her background,their backgrounds, employment and affiliations, including family relationships, our board of directorsBoard has determined that eachnone of our directors and director nominees with the exception of Mr. Petras, do not havehas any relationships that would interfere with theher or his exercise of independent judgment in carrying out the responsibilities of a director and that, eachwith the exception of theseMr. Petras, all the directors and director nominees isare “independent” as that term is defined under the listing standards of the Nasdaq.Nasdaq stock exchange. In making these determinations, our board of directorsthe Board considered the current and prior relationships that each director and director nominee has with our companyCompany and all other facts and circumstances our board of directorsthe Board deemed relevant in determining their independence, including thetheir beneficial ownership of our capital stock by each director and director nominee,any transactions between them and the transactions involving themCompany, as further described in the section titled “Certain Relationships and Related Party Transactions.”
The Sponsors beneficially own shares representing a majority of ourthe outstanding shares of our common stock. As a result, we may beare considered a “controlled company” within the meaning of the Nasdaq rules. Underunder the Nasdaq rules a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and therefore may elect not to comply with certain Nasdaq corporate governance standards, including:including the requirements that
the requirement that a majority of the board of directors consist of independent directors;
| • | a majority of the Board consist of independent directors; |
the requirement that our director nominations be made, or recommended to the full board of directors, by our independent directors or by a nominations committee that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;
the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
| 2024 Notice and Proxy Statement | 18 |
the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees.Corporate Governance
These requirements would not apply to us as long as we remain a “controlled company.” Director Independence
| • | our director nominations be made, or recommended to the full board of directors, by our independent directors or by a nominations committee comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; |
| • | we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and |
| • | an annual performance evaluation be conducted of the nominations and compensation committees. |
Although we may qualify as a “controlled company,” we do not currently rely on this exemptionthe exemptions for controlled companies and fullyintend to continue to comply with all corporate governance requirements under the Nasdaq corporate governance standards.standards for non-controlled companies.
Our corporate governance guidelines provide that the chair of the board (the “Chair” or “Chairman”) shall be a member of the board and may or may not be an officer or employee of the Company. It is the policy of the Company that the positions of the Chairman and the Chief Executive Officer be held by the same person, except in unusual circumstances. The board believes that its function to monitor the performance of the executive management of the Company is fulfilled by the presence of independent directors of stature who have a substantive knowledge of the Company’s business. Michael B. Petras, Jr., our Chief Executive Officer, currently serves as Chairman of the Board. The principal duty of the Chairman is to lead and oversee the board. The Chairman, in consultation with the Chief Executive Officer (if not the same as the Chairman), lead director, if any, (and any other executive officers as needed), shall also establish an agenda for each meeting of the board. If the Chairman is also the Chief Executive Officer, the independent directors may, but are not required to, select from themselves a lead director. We do not currently have a lead director.
Pursuant to our corporate governance guidelines, our independent directors are required to meet at least two times per year without management present. Given our independent directors’ open and active communications, at this time the board believes its current leadership structure is appropriate. Our governance committee annually considers our leadership structure and will make recommendations to the board of directors with respect thereto as the committee deems appropriate.
Corporate Governance
Board Role in Risk Oversight
Our boardBoard is responsible for overseeing senior management’s risk management responsibilities,of enterprise risks, including assessing senior management’s processes for identifying and controllingmitigating enterprise risks. This oversight is carried out at the level of the full boardBoard and through its fourfive committees.
An important element of the Board’s oversight involves regular interaction with senior management. The boardBoard receives regular reports throughout the year from senior management, including from senior managementleaders in each of our three business units, to ensure itthe Board is well informed regarding risksof risk exposures related to our business,strategy and operations, including environment,regarding environmental, health and safety, sustainability, quality, operational, strategic, legal, financial and reporting, reputational and human capital management risks. In addition, the boardBoard has tasked each of its committees with the following risk-related responsibilities, which are described in more detail in the section entitled “Committees of the Board of Directors”:Directors.”
Primary Areas of Risk Oversight
Audit Committee |
• Receives regular briefings from the internal audit function regarding our systems of internal control and reviews and discusses the capacity and performance of the internal audit function.
• Regularly reviews with management our major financial risk and enterprise
• Regularly reviews significant regulatory and litigation matters. • Reviews any significant concerns our stakeholders raise, including reports received through our Global Ethics Line.
| |
Leadership Development and Compensation Committee |
• Oversees the compensation program for our senior executive team and evaluates any major compensation-related risk exposure.
• Reviews senior executive succession plans.
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Nominating and Corporate Governance Committee |
• Assesses risks related to our corporate governance practices and the independence of directors.
• Oversees our
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EO Litigation Committee
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• Receives regular briefings regarding ongoing litigation related to EO. • Oversees our strategy related to EO litigation. | |
Nordion Pricing Committee | • Reviews and approves Nordion customer contracts to ensure confidentiality and appropriate risk
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Corporate Governance
Board Meetings and Attendance
Board Meetings and Attendance
All directors are expected to attend all or substantially all meetings of the board of directors andBoard, all meetings of the committees of the boardBoard on which they serve as well asand our annual meeting of stockholders.shareholders. The board of managers of our predecessor, Topco Parent,Board met foursix times in 2023 and the company’s current board of directors, constituted in October 2020, in advance our IPO, met one time during the fiscal year ended December 31, 2020. During the last fiscal year, each current member of the board of directorsdirector attended at least 75% of the aggregate number of meetings (including meetings of the board of managers of our predecessor, Topco Parent) of the boardBoard and the committees on which he or she served during the period in which he or she was a director or committee member.member, with the average attendance at meetings of the Board and its standing committees exceeding 98 percent. All directors attended the 2023 Annual Meeting of Shareholders.
Executive Sessions
Executive sessions are typically scheduled with the Chairman at the beginning of each regular Board meeting and among only the directors immediately after each regular Board meeting. Throughout 2023, directors met in regular executive sessions, both with the Chairman and without the Chairman or any other member of management present. The Audit, NCG and LDC Committees also all met in executive sessions without members of management present. The Audit Committee also held regularly scheduled private sessions with our Chief Financial Officer, internal audit leadership and external auditors. The LDC Committee held regularly scheduled private sessions with our Chief Human Resources Officer and Exequity, LLP (“Exequity”), an independent compensation consultant that reports directly to the LDC Committee.
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Corporate Governance
Committees of the Board of Directors
Committees of the Board of Directors
We have an audit committee,Audit Committee, a compensation committee,Leadership Development and Compensation Committee, a nominatingNominating and corporate governance committeeGovernance Committee, an EO Litigation Committee and a Nordion pricing committee.Pricing Committee. The composition and responsibilities of each of the committees of our board of directorsBoard are described below. The governance committeeNCG Committee is responsible for reviewing committee membership and making recommendations to the boardBoard regarding committee composition, consistent with the company’sCompany’s organizational documents, our Stockholders’Stockholders Agreement and applicable law. Members serve on these committees until their resignation or until otherwise determined by our board of directors.Board determines otherwise. Our board of directorsBoard may change the membership of committees or establish other committees as it deems necessary or appropriate from time to time. Most recently, in October 2022, at the recommendation of the NCG Committee, the Board formed the EO Litigation Committee.
Audit Committee
The audit committee’sAudit Committee’s main purpose ispurposes are to oversee our accounting and financial reporting processes, our relationship with our independent auditors, our compliance with legal and regulatory requirements and our policies and procedures with respect to risk assessment and risk management.
In carrying out this purpose,these purposes, the audit committee will:Audit Committee:
oversee the design, implementation, adequacy and effectiveness of our disclosure controls and procedures, system of internal controls over financial accounting, internal audit function and the preparation and audits of our consolidated financial statements;
| • | oversees the design, implementation, adequacy and effectiveness of our disclosure controls and procedures, system of internal controls over financial accounting, internal audit function and the preparation and audit of our consolidated financial statements; |
appoint our independent auditors annually, review the annual audit plan, approve audit and pre-approve any non-audit related services provided to us, evaluate their qualifications and performance and ensure their independence;
| • | appoints our independent registered public accounting firm annually, reviews the annual audit plan, approves audit and pre-approves any non-audit related services provided to us, evaluates independent auditor qualifications and performance and ensures their independence; |
oversee procedures for the receipt, retention and treatment of complaints about accounting, internal accounting controls or audit matters, and for the confidential and anonymous submission by employees concerning such matters;
| • | oversees procedures for the receipt, retention and treatment of complaints about accounting, internal accounting controls or audit matters, and for the confidential and anonymous submission of complaints concerning such matters; |
review and approve or ratify, in accordance with our policies, all related party transactions as defined by applicable rules and regulations;
| • | reviews and approves, or ratifies, in accordance with our policies, all related-party transactions as defined by applicable rules and regulations; |
oversee legal and regulatory matters and review and approve the adequacy and effectiveness of our compliance policies and procedures, including the Global Code of Conduct;
| • | oversees legal and regulatory matters and reviews and approves the adequacy and effectiveness of our compliance policies and procedures, including the Company’s Global Code of Conduct; |
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approve the annual internal audit plan and budget, review with the internal audit executive the resultsCorporate Governance
Committees of the Board of Directors
| • | approves the annual internal audit plan and budget, reviews with internal audit the results of the audit work at least annually and more frequently as provided in the policy for reporting financial accounting and auditing concerns, and at least annually reviews the performance of the internal audit team; and |
| • | oversees Company policies and practices with respect to financial risk assessment and enterprise risk management, including cybersecurity and data security risks. |
The Audit Committee met five times in the policy for reporting financial accounting and auditing concerns, as approved by the committee and at least annually review the performance of the internal audit team; and
oversee company policies and practices with respect to financial risk assessment and risk management.
2023. The current members of the audit committeeCommittee are Mr. Petrella (chair), Ms. Klee and Ms. Geveda. Mr. Petrella and Ms. Klee are “independent,” as defined under the Nasdaq rules and Rule 10A-3 of the Exchange Act. Our board of directors has determined that each directorFlynn (who was appointed to the audit committee is financially literate,Audit Committee in February 2024), Ms. Klee and the board has determined that Mr. Petrella is a financial expert. Our board of directors determined that Ms. Geveda, who is aDr. Wheadon. Each member of our audit committee, does not satisfy applicable independence standards for audit committee membership because of the equity ownership in our Company held by investment funds and entities affiliated with Warburg Pincus, of which Ms. Geveda is a managing director, but determined that Ms. Geveda will be permitted to remain on the audit committee for a period of up to one year after our IPO in accordance with the phase-in period under the Nasdaq rules. If elected, we expect that Dr. Wheadon would be appointed to our audit committee. Dr. WheadonCommittee is “independent” as defined under the Nasdaq rules and Rule 10A-3 of the Exchange Act andAct. Our Board has determined that each member of the Audit Committee is financially literate.literate and that Mr. Petrella is a financial expert.
Our audit committeeAudit Committee operates under a written charter, which is available on our Investor Relations website at https://investors.soterahealth.com/.
