UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
(Amendment No. )
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Definitive Proxy | ||
Definitive Additional | ||
Soliciting Material |
HOLOGIC, INC.Hologic Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other thanOther Than the Registrant)
No fee required. | |||
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2020 Notice of Annual Meeting
of Stockholders and Proxy Statement
Thursday, March 5, 2020 | 8:00 a.m. Eastern Time
OurPURPOSE—to enable healthier lives
everywhere, every day—is driven by aPASSIONto
become global champions for women’s health.
Wednesday,We succeed by fulfilling ourPROMISEto bring
The Science of Sure® alive through product quality,
clinical differentiation, customer relationships and
our team’s talent and engagement.
At Hologic, ourpurpose is to enable healthier lives, everywhere, every day. This higher sense of purpose ultimately helps us drive financial performance. | Dear Fellow Stockholders: Over the last year, Hologic’s 6,000-plus employees have relentlessly pursued the Purpose, Passion and Promise that we introduced in our 2019 proxy statement, and that we highlighted on the previous page. As a result, each of our major divisions and regions is stronger today than it was 12 months ago. As we approach our 2020 Annual Meeting of Stockholders, our clinically differentiated products continue to lead their respective categories, and we are leveraging these strengths to accelerate our growth. In our largest division, Breast and Skeletal Health, we are building a steadier, more diversified global business that spans the continuum of breast health care. In the last year, we introduced multiple new products and acquired two companies to complement our capabilities in breast surgery and ultrasound. In our Diagnostics division, we now have 16 molecular diagnostic tests approved on our fully automated Panther platform in the United States. This makes us a broad-based leader in women’s health and infectious disease testing and is enabling us to further deepen our partnerships with customers. In GYN Surgical, we have upgraded our commercial talent, overhauled our incentive system, and launched new products to supplement our market-leading instruments for fibroid removal and endometrial ablation. Our recent results demonstrate strong momentum in this division. In our Europe and Asia Pacific regions, we have built strong foundations for long-term, sustainable growth by enhancing our teams and bolstering our market development capabilities. As a result, many of our key products are beginning to realize market leadership positions like those we have attained in the United States. With the continued strengthening of our core divisions and regions, we were able to divest Cynosure, our underperforming Medical Aesthetics division, this past December. This transaction was a classic example of addition by subtraction, as it removed an overhang on our valuation and enabled us to double down on what we do best -- improving women’s health through early detection and treatment. Based on all these activities, revenue of $3,367 million grew 4.6%, or 5.7% on a constant currency basis, in fiscal 2019, an acceleration compared to the prior year. Overall, our financial results exceeded our initial guidance, and our stock price performed well, appreciating 21.1% over the course of our fiscal year. Underlying our financial performance are our employees, who are motivated and inspired to enable healthier lives, everywhere, every day. I’d like to thank these team members, as well as our Board of Directors, for their dedication and contributions over the last fiscal year. And I’d like to acknowledge our stockholders for their ongoing interest and support. We look forward to hearing from you at our Annual Meeting and throughout the year. Sincerely, Stephen P. MacMillan |
Chairman, President and Chief Executive Officer |
www.hologic.com | 1 |
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
250 Campus Drive
Marlborough, Massachusetts
01752
January 20, 2017
Dear Fellow Stockholders:
As we approach Hologic’s 2017 Annual Meeting of Stockholders, I’d like to update you on the significant progress we’ve made in our shared journey from turnaround story to sustainable growth company. This progress can be seen clearly in our financial results.
In fiscal 2016, our total revenues were $2.833 billion, an increase of 4.7%, or 5.4% in constant currency. Our Surgical and Breast Health divisions led the way by posting strong growth, especially in the United States, where our commercial execution was outstanding. We also enhanced the profitability of our Company, as gross, operating and net margins all improved. As a result, earnings per share increased by 158% on a GAAP basis, much faster than sales growth. We also generated operating cash flows of $787 million, far greater than net income. This healthy cash generation enabled us to reduce total debt by $267 million, consistent with our long-term goal to strengthen our balance sheet.
While we were very focused on short-term execution in fiscal 2016, we also laid the foundations for long-term, sustainable growth. We increased our investment in research and development, and are beginning to see the fruits of our labor as new products are launching around the world. We are particularly proud of the rapid development of a Zika virus screening and diagnostic assay during 2016. We also strengthened our sales and marketing capabilities outside of the United States, where we see tremendous potential for future growth.
Underlying our financial results are our employees, who are motivated and inspired by the knowledge that we are enabling healthier lives, everywhere, every day. We know that tens of millions of times a year, healthcare professionals use our products to detect breast cancer, cervical cancer and infectious diseasesearly, when patient outcomes are best. Our employees around the world wake up every day knowing that the stronger we become as a company, the more lives we can positively impact – and this is a very rewarding feeling.
I’d like to thank those employees, as well as our board of directors, for their dedication and contributions throughout fiscal 2016. And I’d like to acknowledge our stockholders for their ongoing interest and support as we build a sustainable growth company. We look forward to hearing from you at our Annual Meeting and throughout the year.
Sincerely,
Steve MacMillan
Chairman, President and Chief Executive Officer
The Proxy Statement, the Hologic Annual Report on Form 10-K for the fiscal year ended September 28, 2019 and the Proxy Card are available atwww.proxyvote.com. |
Wednesday, March 8, 2017
8:00 a.m. Eastern Time
250 Campus Drive, Marlborough, Massachusetts 01752
1. | To consider and act upon the election of the eight (8) nominees identified in the accompanying proxy statement to serve as directors for the ensuing year | |
2. | To conduct an advisory vote to approve our executive compensation | |
3. | ||
To ratify the appointment of Ernst & Young LLP as our independentregistered public accounting firm for fiscal | ||
To transact such other business as may properly come before the meeting or any adjournment thereof. |
The foregoing items of business are more fully described in the proxy statement accompanying this Notice.
Our Board of Directors has fixed the close of business on January 9, 20178, 2020 as the record date. Only stockholders of record at the close of business on the record date are entitled to notice of, and to vote at, the meeting and any adjournment or postponement thereof. All stockholders are cordially invited to attend the meeting. Stockholders who plan to attend the meeting must present valid photo identification. Stockholders of record will be verified against an official list available at the registration area. If your shares are held in the name of a bank, broker or other holder of record (an intermediary), please also bring to the Annual Meeting your bank or brokerage statement evidencing your beneficial ownership of Hologic stock to gain admission to the meeting; if you wish to vote these shares in person at the meeting, you must obtain a legal proxy from the holder of record of your shares and present it at the meeting. We reserve the right to deny admittance to anyone who cannot show valid identification or sufficient proof of share ownership as of the record date.
We are pleased to continue utilizing the Securities and Exchange Commission (“SEC”) rules that allow issuers to furnish proxy materials to their stockholders on the internet. We believe these rules allow us to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting. On or about January 20, 2017,22, 2020, we will mail to our stockholders of record as of January 9, 20178, 2020 (other than those who previously requested electronic or paper delivery on an ongoing basis) a Notice of Meeting and Important Notice Regarding the Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement and our Annual Report on Form 10-K.
Our Board of Directors appreciates and encourages stockholder participation in the Company’s affairs. Whether or not you plan to attend the meeting, it is important that your shares be represented.
January 20, 2017
22, 2020
By order of the Board of Directors,
Patricia K. Dolan
Vice President and Corporate Secretary
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MARCH 8, 2017: The Proxy Statement, the Hologic Annual Report on Form 10-K for the fiscal year ended September 24, 2016 and the Proxy Card are available at www.proxyvote.com.
2 | 2020 Proxy Statement |
Hologic, Inc. 2017 Proxy Statement 2
Hologic, Inc. 2017 Proxy Statement 3
www.hologic.com | 3 |
Your Vote is Important
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement and the Company’s most recent Annual Report on Form 10-K before casting your vote. References to “Hologic,” the “Company,” “we,” “us” or “our” refer to Hologic, Inc.
and its subsidiaries.
Time and Date: | 8:00 a.m. Eastern Time | Record Date: January 8, | |||
Place: Hologic, Inc. |
Meeting Agenda and Voting Recommendations | ||||
Board Recommendation | Page | |||
FOR | 16 | |||
Say-on-Pay: Advisory Vote to Approve Executive Compensation | FOR | 37 | ||
Ratification of the Appointment of Ernst & Young LLP for fiscal 2020 | FOR | 75 |
Attendance:
All stockholders who were stockholders of record and beneficial owners as of January 8, 2020 may attend the meeting. Stockholders who plan to attend the meeting must present a valid government-issued picture identification such as a driver’s license or passport. Stockholders of record will be verified against an official list available at the registration area. If your shares are held in the name of a bank, broker or other holder of record (an intermediary), please also bring your bank or brokerage statement evidencing your beneficial ownership of Hologic stock to gain admission. As the beneficial owner, you have the right to direct your intermediary on how to vote and are also invited to attend the meeting; however, since you are not the stockholder of record, you may not vote these shares in person at the meeting, unless you obtain a legal proxy from the holder of record of your shares and present it at the meeting. We reserve the right to deny admittance to anyone who cannot show valid identification or sufficient proof of share ownership as of the record date.
Vote By Internet Go towww.proxyvote.com | |
Vote By Telephone Call 800-690-6903 or the number on your proxy card or voting instruction form. You will need the 12-digit control number provided on your proxy card or voting instruction form. | |
Vote By Mail Complete, sign and date the proxy card or voting instruction form and mail it in the accompanying pre-addressed envelope. | |
Vote In Person See the instructions above regarding attendance at the |
Voting: | Stockholders as of January 8, 2020, the record date, are entitled to vote. Each share of common stock is entitled to one vote for each of the proposals presented at the meeting. |
Meeting Agenda
Hologic, Inc. 2017 Proxy Statement 4Summary
Director NomineesPerformance Highlights
Nominee and Principal Occupation | Age | Director Since | Independent | Current Committee Membership | |||||
Christopher J. Coughlin Former Executive Vice President and CFO Tyco International | 64 | 2016 | • | Audit and Finance (chair) | |||||
Sally W. Crawford Former Chief Operating Officer Healthsource, Inc. | 63 | 2007 | • | Compensation (chair) | |||||
Scott T. Garrett Senior Operating Partner Water Street Healthcare Partners | 67 | 2013 | • • | Compensation Nominating and Corporate Governance | |||||
Lawrence M. Levy Former Partner Brown Rudnick LLP | 78 | 2005 | • | Nominating and Corporate Governance | |||||
Stephen P. MacMillan Chairman, President and CEO Hologic, Inc. | 53 | 2013 | • | N/A | |||||
Christiana Stamoulis CFO and Head of Corporate Development Unum Therapeutics | 46 | 2011 | • | Audit and Finance | |||||
Elaine S. Ullian Former President and CEO Boston Medical Center | 69 | 2007 | • | Lead Independent Director | |||||
• | Compensation | ||||||||
• | Nominating and Corporate Governance (chair) | ||||||||
Amy M. Wendell Former Senior Vice President, Strategy & BD&L Covidien plc | 56 | 2016 | • | Audit and Finance |
BusinessHologic, Inc. is an innovative medical technology company primarily focused on improving women’s health through early detection and Financial Highlights
As a leading global healthcaretreatment. The Company operates in three main areas: Breast and diagnostics company, we strive to make advances towards greater certainty for our customers by providing them with cutting-edge technology that makes a real difference, enabling healthier lives, everywhere, every day.
Skeletal Health, Diagnostics and GYN Surgical. Our market-leading products include our innovative Genius™Genius 3D MAMMOGRAPHY™MAMMOGRAPHY technology, our Affirm™ prone biopsy system, our ThinPrep ® papPap test, our Aptima ® infectious disease tests,assays, our Panther and Panther Fusion fully automated molecular diagnostics instruments, our NovaSure ® device for endometrial ablation, and our MyoSure system for intrauterine tissue removal.
Over the Procleix ® family of blood screening assays and instruments, which are marketed and sold worldwide by Grifols S.A. Our products are focused on early detection and intervention, and we enjoy a strong position in women’s health.
The past threesix years, have been transformative ones for the Company. Underunder the guidance of a highly-engagedfocused and motivated senior management team, almost all of whom joined the Company in fiscal 2014 or later, we continue our transition from turnaround mode tohave built a sustainable growth company. The Company’s strongOn average, revenue has increased by 6.0% annually over that time period, and our solid financial results in fiscal 2016 reflect2019 continued this trend. All three divisions contributed to total revenue growth of 4.6%, or 5.7% in constant currency, an acceleration compared to the progress we have made. Improved commercial execution generated consistent growth across our three primary areas ofprior year. Operational highlights from the business – diagnostics, breast health and GYN surgical.
year include:
Breast Health emerged as a more diversified, sustainable growth business across the continuum of breast health care. For example, we completed the acquisition of Focal Therapeutics to boost our expansion into the adjacent growth market of breast-conserving surgery. We also announced the acquisition of French ultrasound innovator SuperSonic Imagine. | |
● | Our Molecular Diagnostics business continued to perform well as we placed more fully automated Panther and Panther Fusion systems and increased the number of assays that customers can run on the platform. |
● | In our GYN Surgical division, growth rates improved sequentially in each quarter of the year, as we improved commercial execution and launched new products. |
● | Our international franchises showed strong, consistent growth, reflecting the investments we have made in new leadership, capabilities and infrastructure. |
● | Research and development pipelines matured across our businesses, and sales of new products increased significantly. |
● | Also, we began the process (completed in early fiscal 2020) to divest our under-performing Medical Aesthetics business to unlock shareholder value and enable the Company to focus on what it does best – helping women and their families live healthier lives through the early detection of disease. |
Financial highlights from fiscal 2019 are shown below:
Worldwide Revenue | U.S. Revenue | International Revenue | Capital Deployment | Stock Price |
4.6% | 4.9% | 3.9% | 21.1% | |
Full-year | US revenue increased 4.9% based on strong commercial execution and new products, a significant acceleration compared to the | Revenue from outside the U.S. increased 3.9%, or 8.2% in constant currency. | We used our cash flows to acquire several businesses, as well as $200 million of | |
The price per share of our common stock |
Looking ahead, we are focused on driving sustainable, long-term revenue growth, and believe we have significant opportunities ahead of us.
We | ||||
We | We continue our commitment to fuel growth by enhancing the research and development | |||
We intend to use our strong cash flows to accelerate growth by executing strategic, tuck-in acquisitions as well as share repurchases. | | Multiple opportunities to increase operational efficiency |
www.hologic.com | 5 |
Hologic, Inc. 2017 Proxy Statement Summary
5Corporate Governance Highlights
Director Nominees
Nominee and Principal Occupation | Age | Director Since | Current Committee Membership | |||||
Stephen P. MacMillan•Non-Independent | 56 | 2013 | ●N/A | |||||
Sally W. Crawford•Independent | 66 | 2007 | ●Lead Independent Director ●Compensation ●Nominating and Corporate Governance (CHAIR) | |||||
Charles J. Dockendorff•Independent | 65 | 2017 | ●Audit and Finance (CHAIR) | |||||
Scott T. Garrett•Independent | 69 | 2013 | ●Compensation (CHAIR) ●Nominating and Corporate Governance | |||||
Ludwig N. Hantson•Independent | 57 | 2018 | ●Compensation ●Nominating and Corporate Governance | |||||
Namal Nawana•Independent | 49 | 2018 | ●Compensation ●Nominating and Corporate Governance | |||||
Christiana Stamoulis•Independent | 49 | 2011 | ●Audit and Finance | |||||
Amy M. Wendell•Independent | 59 | 2016 | ●Audit and Finance |
Our Board Profile
Given its smaller size, our Board is a highly engaged group, with each member contributing and having his or her voice heard while supporting and appropriately challenging management.
We believe that a board composed of directors with diverse backgrounds, experiences, perspectives and viewpoints improves the dialogue and decision-making in the boardroom and contributes to overall Board effectiveness. Our Board is exceptionally balanced by age, gender and geographic experience. We believe the mix of experience, diversity and fresh perspectives on the Board serves to strengthen management and the Company.
Director Age | Director Tenure | Gender Diversity | ||
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Proxy Statement Summary
Board Refreshment
Our Board has an on-going commitment to Board refreshment and to having highly qualified, independent voices in the boardroom. The Board believes the fresh perspectives brought by new directors are critical to a forward-thinking and strategic Board when appropriately balanced with the deeper understanding of our business provided by longer-serving directors.
Through purposeful refreshment, four new independent directors have been elected to our Board since December 2016. Since March 2016, eight directors have rotated off of our Board, including two representatives from the Icahn Group, one director who resigned due to a conflict with another board, and five who were among our longest-tenured directors (including a director who reached retirement age).
Currently, 50% percent of our directors have been on our Board for five years or less.
2016 | ||
●Two long-tenured directors did not stand for re-election ●Two representatives from the Icahn Group resigned from our Board ●Stockholders elected Christopher J. Coughlin ●The Board appointed Amy M. Wendell | ||
2017 | ||
●Our then longest-tenured director did not stand for re-election ●Mr. Coughlin resigned from our Board due to a conflict ●Elaine S. Ullian decided to retire from our Board ●The Board appointed Charles J. Dockendorff ●The Board appointed Sally W. Crawford as our new Lead Independent Director | ||
2018 | ||
●The Board appointed Namal Nawana ●Our then longest-tenured director did not stand for re-election in compliance with the retirement age policy ●The Board appointed Ludwig N. Hantson | ||
2019 | ||
●Stockholders re-elected all eight nominees |
Board Changes Since 2016 |
Four new highly skilled independent directors have joined our Board | |
Eight directors have left our Board |
Skills of Directors Joining the Board Since 2016 |
Strategic planning and business development | |
Worldwide operations experience | |
Leadership of global, innovative organizations | |
Financial expertise | |
Healthcare industry experience |
Board Assessment
The Board recognizes that a robust and constructive evaluation process is an essential part of good corporate governance and Board effectiveness. The Board is committed to an annual evaluation process and recognizes this process promotes continuous improvement. Our Lead Independent Director also serves as Chair of the Nominating and Corporate Governance Committee. As such, she oversees the annual Board evaluation process and actively participates in the work related to overall Board effectiveness, including Board development, succession planning and refreshment. The annual self-assessment evaluates the performance of the Board and its committees, in accordance with a procedure established by the Nominating and Corporate Governance Committee. Results are compiled and are discussed by the Board and each committee, as applicable, and changes in practices or procedures are considered as necessary. In 2019, the full Board and each Board committee completed anonymous written evaluations, the results of which were shared with the Board and each respective committee. The evaluation results were reviewed in detail by the Chairman and the Lead Director, who led a discussion with the full Board highlighting both areas of strength and areas of opportunity.
www.hologic.com | 7 |
Proxy Statement Summary
Board Leadership Structure The Board annually assesses the efficacy of having a Lead Independent Director and a combined Chairman/ CEO. As in past years, in 2019, the Board affirmed its June 2015 decision to Committee Rotation The Board assesses the structure and composition of its committees at least annually. In late 2017 and throughout 2018, the Board made considerable changes in its committee membership as a result of newly appointed Board members and also rotated all committee chairs. Because directors develop an understanding of the Company and an ability to work effectively as a group over time, which we believe provides significant value, a degree of continuity year over year is beneficial. As a result, committee memberships did not change in fiscal 2019. Board Retirement Age Policy The Board believes that a mix of longer-tenured directors and newer directors with fresh perspectives contributes to an effective Board. In order to promote thoughtful Board refreshment, the Board adopted a retirement age policy in 2015. Independent directors may not stand for re-election after reaching age 72. The Board may make exceptions to this policy if circumstances warrant. For example, the Board could waive the retirement age for an individual director with particular skills or qualifications that are valuable to the Board’s effectiveness until a suitable replacement is found. |
●Business Strategy Our Board works with management to guide a strategy that positions the Company for long-term success, focusing on pursuing innovation that supports long-term opportunity and sustainability but also considering near-term growth. This includes continually evaluating acquisitions as well as divestitures. | ●People The Board and management share a fundamental belief that people matter. From employeeengagement totalent development toretention tosuccession planning to theCompany culture underlying it all, the Board is informed and involved. |
●Risk Oversight Risk oversight, a key responsibility of the Board, is handled by the full Board as well as at the individual committee level, with the Board focusing on the evolving business and risk landscape. | ●Sustainability The Board, understanding the importance of sustainability to investors, employees and other stakeholders, is engaged and supportive of the Company’s issuance of its first Sustainability Report and, more importantly, the mission, strategy and actions that underlie the report. |
Leadership Restructure and Succession Planning
When Mr. MacMillan restructured his leadership team at the end of fiscal 2017, eliminating the role of Chief Operating Officer and expanding his leadership team, he began driving even more urgency in commercial execution and also gained visibility to a broader range of business development opportunities more quickly. Following this leadership restructuring, growth rates for the Company’s largest businesses accelerated and the Company completed several key tuck-in acquisitions in the Breast Health division.
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Proxy Statement Summary
Diversity Drives Performance
As our passion is to be global champions for women’s health, Hologic is committed to creating an inclusive and diverse work environment that promotes equal opportunity, dignity and respect, starting with our Board and our leadership team. As noted above, three of our directors, representing 38% of the Board, are women. Also, three of our directors were born outside of the United States, and two were predominantly educated outside of the United States, which promotes global diversity for our Board. Hologic seeks to identify and develop high-potential women and other diverse individuals within the Company, and we are seeing our next generation of leaders emerge. In addition to women moving into several key corporate roles (Chief Financial Officer, Chief Information Officer, Chief HR Officer, Treasurer, Vice President of Tax, Corporate Secretary and Chief of Staff), half of our domestic commercial leaders are women. Also, given that our commercial teams are an important pipeline for senior management, we are pleased that a significant number of our commercial team members below the level of vice president are women and/or people of color.
We don’t, however, set diversity targets or quotas. Rather, we strive to hire the most talented person for the job and believe that, over time, this will lead to an increasingly diverse workforce. As a part of finding the most qualified people, we are committed to ensuring that diverse slates of candidates are identified and considered. We believe our focus on talent identification, development, engagement and succession planning has been particularly successful in developing a deep talent pipeline.
www.hologic.com | 9 |
Proxy Statement Summary
Governance
Hologic is committed to good corporate governance, which we believe will help us to sustain our success and build long-term stockholder value. In fiscal 2016, we continuedWe have in place Corporate Governance Guidelines that provide a framework for the effective governance of the Company. We also have written charters for the Board of Directors’ standing committees, as well as a Code of Conduct applicable to improve ourall directors, officers and employees. Information about Hologic’s corporate governance structure, focusing on the following:
Board Assessment, Compositionpractices and Structure
Our Nominating and Corporate Governance Committee is continually evaluating our Board composition. In 2015, our Nominating and Corporate Governance Committee led a Board assessment which included a Board peer review, managed by our general counsel. In 2016, the Nominating and Governance Committee continued to spearhead the assessment process by leading a facilitated discussion to evaluate the functioning and composition of the Board and its committees. As a part of this discussion, the Board also assessed the efficacy of having a Lead Independent Director and a combined Chairman/CEO. The Board affirmed its June 2015 decision to combine the Chairman and CEO roles and to appoint a Lead Independent Director.
Our Board continues to evolve. Two of our long-tenured directors did not stand for re-election at our 2016 Annual Meeting, and, at that meeting, stockholders elected a new director, Christopher J. Coughlin. In addition, the day after the 2016 Annual Meeting, Jonathan Christodoro and Samuel Merksamer resigned from our Board. Messrs. Christodoro and Merksamer were originally appointed to the Board pursuant to the Nomination and Standstill Agreement, dated December 8, 2013 (the “Standstill Agreement”), by and among the Company and Icahn Partners Master Fund LP, Icahn Partners Master Fund II LP, Icahn Partners Master Fund III LP, Icahn Partners LP, Icahn Onshore LP, Icahn Offshore LP, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings LP, Icahn Enterprises G.P. Inc., Beckton Corp., High River Limited Partnership, Hopper Investments LLC, Barberry Corp., Carl C. Icahn, Jonathan Christodoro and Samuel Merksamer (collectively, the “Icahn Group”). Following the resignations of Messrs. Christodoro and Merksamer (each, an “Icahn Designee”) from our Board, we received written notice from the Icahn Group irrevocably waiving any right to designate a replacement for any Icahn Designee under the Standstill Agreement, and, accordingly, that the standstill period ended as of the date of the notice. Continuing the refreshment process, in December 2016, our Board appointed a new director, Amy M. Wendell, who is standing for election at this Annual Meeting. Additionally, our longest-tenured director, Nancy L. Leaming, decided not to stand for re-election at this meeting. Her decision not to stand for re-election did not involve any disagreement with any Board member or with management.
Effective in 2016, the Board restructured its committees, disbanding the Corporate Development Committee, expanding the role of the Audit Committee to assume some of the responsibilitiescopies of the Corporate Development Committee,Governance Guidelines, committee charters and renaming the Audit Committee as the Audit and Finance Committee. The Board,Code of Conduct are available at the recommendation of the Nominating andinvestors.hologic.com.
Risk Management Process
Our general counsel led an initiative in 2015 to strengthen the Company’s risk management process, resulting in a comprehensive but targeted enterprise risk management report to the Board. In 2016, our general counsel continued to strengthen the process, refining the risks and mitigating actions.
Additionally, the Compensation Committee worked with Mr. MacMillan to align the executive leadership team’s individual performance objectives with the top three risks identified in the annual Enterprise Risk Management process.
Continued Stockholder Outreach
Continuing the year-round approach to stockholder engagement we implemented last year, in addition to discussions that take place before our Annual Meeting, we initiated discussions in early fall 2016 during a quieter period, reaching out to our largest stockholders, representing over 50% of our shares.
We ultimately met with seven of our investors to discuss business highlights, compensation and governance matters. Details of the stockholder feedback are incorporated throughout this proxy statement.
Sustainability
We are committed to improving the health of our communities, customers, patients and employees, and to ensuring that the decisions we make today have a positive effect on future generations. In October 2016, we made our first foray into sustainability disclosure, posting information on our website in four initial areas of focus: Energy and Greenhouse Gas Efficiency, Recycling/Reuse, Supply Chain and Workplace Health and Safety. Our sustainability program is evolving and this initial disclosure is designed to provide a foundation on which we can build.
Hologic, Inc. 2017 Proxy Statement 6
Election and Removal of Directors
In March 2016, we amended our Bylaws to permit stockholders holding a majority of shares entitled to vote to remove directors with or without cause, in accordance with Delaware law. Our Bylaws previously provided that a director could be removed from office only for cause by vote of the holders of eighty percent (80%) of the voting stock then outstanding.
In this proxy statement, we are proposing to amend our Bylaws further to provide for a majority vote standard in the case of uncontested elections of directors.
2019 Enhancements – Proxy Access | ||
In June of 2019, our Board proactively amended its Bylaws to allow proxy access. The proxy access Bylaw permits a stockholder, or a group of up to 20 stockholders, owning three percent (3%) or more of the Company’s outstanding common stock continuously for three years, to nominate as directors and include in our proxy materials the greater of two individuals or twenty percent (20%) of the Board. This construct was supported by our largest stockholders when we discussed potential adoption during our annual outreach meetings. | ||
Board Practices | ||
●Annual election of directors | ||
●Seven of our eight director nominees are independent | ||
●All committees consist solely of independent directors | ||
●Regular executive sessions of independent directors ●Lead Independent Director ●38% of our board nominees are women, including our Lead Independent Director and Chair of our Nominating and Corporate Governance Committee | ||
Stockholder Matters | ||
●Active stockholder engagement ●Stockholders permitted to act by written consent ●Stockholder right to request a special meeting ●Annual say-on-pay advisory vote ●No shareholder rights plan ●Majority vote standard in uncontested elections of directors | ||
Other Best Practices | ||
●No hedging or pledging of our securities by ●Robust executive and director stock ownership guidelines ●Majority of shares may remove directors with or without cause | ||
Sustainability | ||
We are committed to | ||
Beyond numbers and statistics, we look for deeper meaning in our work. As employees, we focus on our Purpose as a company: to enable healthier lives, everywhere, every day. Within this Purpose, we place a special emphasis on the healthcare needs of women – it is our Passion to become global champions for women’s health. We are inspired by the deep belief that our success as a company will fundamentally improve the health of millions of women and families globally. By focusing on our unique Purpose, Passion and Promise, we strive to generate long-term, profitable growth that benefits not just our stockholders, but also our customers and patients around the globe. |
Board Composition and Skills*
*Director nominees
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Hologic, Inc. 2017 Proxy Statement 7Summary
Executive Compensation Highlights
The Compensation Committee has responsibility for oversight of the Company’s executive compensation framework, and within that framework, works with management to align pay with performance.
2019 Executive Compensation Framework
Component | % of Total Target(1) | Rationale | Key Characteristics | |||||
Base Salary | ●Attract and retain talent with a competitive level of pay that reflects executive’s experience, role and responsibilities | ●Cash Award | ||||||
Short-Term Incentive Plan (“STIP”) Award | ●Incentivize and reward for corporate and individual performance ●Drive achievement of specific goals | ●Cash Award based primarily on two metrics: ●Adjusted Revenue ●Adjusted EPS | ||||||
Restricted Stock Units | ●Encourage long-term focus ●Align interests of executives with stockholders ●Attract and retain talent | ●Equity Award ●Annual vesting over three years | ||||||
Stock Options | ●Encourage long-term focus ●Align interests of executives with stockholders ●Attract and retain talent | ●Equity Award ●Annual vesting over four years | ||||||
Performance Stock Units | ●Encourage long-term focus ●Incentivize and reward for performance ●Align interests of executives with stockholders ●Attract and retain talent ●Drive achievement of specific goals | ●Equity Award ●Cliff vest after three years, based on performance ●ROIC ●Relative TSR ●Free Cash Flow (FY2020) | ||||||
Deferred Compensation Program (“DCP”) Contributions | ●Incentivize and reward for performance ●Attract and retain talent | ●Cash Award ●Annual vesting over three years |
(1) | Based on the average of the target direct annual compensation elements for all of the named executives in 2019, excluding Mr. MacMillan’s matching grant. |
2019 Annual Target CEO Pay
($ in millions)
2019 Annual Target Average NEO Pay
($ in millions)
The charts above, which reflect target total direct compensation, exclude the value of other benefits and perquisites and, for Mr. MacMillan, exclude his matching equity grant, as this was not considered when setting his annual compensation.
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Proxy Statement Summary
CEO Pay for Performance Alignment
Long-Term Focus
Financial results for one year are a snapshot of short-term performance. Our focus is on the long term. Since Mr. MacMillan joined the company in 2013, the Company has invested significantly in its people, infrastructure and products. The power of focused, motivated people is evident, and has driven growth in revenue and profits over the past six years.
Under the stewardship of our management team, with significant contributions by our commercial teams, we have accomplished the following:
2013 | 2019 | ||||
●$4.0 billion net debt ●Declining organic sales and earnings ●No meaningful product pipeline | Net Debt Decreased to $2.5 Billion ●Disciplined approach to strengthening the balance sheet ●Eliminated all convertible debt from our balance sheet in 2018 | Growth in Sales ●Significant contributions by our commercial teams and international businesses drive sustainable growth, with our largest businesses gaining momentum | Acquisitions and Multiple New Product Launches ●Significantly improved the product pipeline from 2013 to 2019, resulting in numerous new product launches ●Executed on several smaller tuck-in acquisitions | ||
As a result | |||||
Executive Compensation Best Practices
What | What | |||
●Double-trigger for accelerated equity vesting upon a change of control | ||||
●Golden parachute policy | ||||
Compensation recoupment | ||||
●Heavy emphasis on performance-based compensation | ||||
●Meaningful stock ownership guidelines for our CEO, non-employee directors and executive officers ●Independent compensation consultant ●Compensation Committee composed of independent, non-employee directors only ●Annual risk assessments | ●No tax gross-ups on severance or change of control payments ●No hedging/pledging of Hologic stock ●No option repricing without stockholder approval ●No excessive perquisites for executives ●No excessive risk-taking in our compensation programs |
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Proxy Statement Summary
Stockholder Engagement
Targeted Outreach (Winter 2018 and Spring 2019)
During 2018 and 2019, we continued discussions with our largest stockholders regarding the December 2017 (fiscal 2018) special performance-based retention equity grant to Mr. MacMillan, reaching out to stockholders representing more than 50% of our outstanding shares. We also had numerous conversations on the subject with stockholders and investment analysts as part of our normal investor relations activities.
After we filed our proxy statement in January 2019, and, following negative say-on-pay vote recommendations from proxy advisory firms, we filed additional soliciting materials to respond to the advisory firms’ concerns. We then reached out again to a number of our largest investors to discuss the additional soliciting materials and answer any questions they might have. While during the course of our discussions, investors were interested in understanding the Board’s decision to award the grant, feedback from stockholders and investment analysts was overwhelmingly positive.
Annual Outreach (Fall 2019)
During the “offseason”, we reached out to ten stockholders representing over 66% of our shares | Meetings We ultimately met with eightof our largest investors as part of this outreach | ||||
Matters Discussed We discussed business highlights as well as compensation | and governance matters, including compensation design and performance metrics, CEO pay, sustainability and other governance matters. Details of stockholder feedback are incorporated throughout this proxy statement. | ||||
Annual Outreach Feedback
Compensation ●We discussed general compensation structure, with a focus on performance metrics. Investors were supportive of the continued use of relative TSR and ROIC as performance measures in our long-term incentive plan and also supported our relative TSR construct – which has no absolute component and which sets target at median – agreeing that this structure is market practice. ●Investors also expressed support for adding free cash flow as a performance measure in our long-term incentive plan, understanding the relevance to Hologic, which we discussed. ●Several investors noted the emerging investor sentiment towards simplification of compensation programs. | ||
CEO Employment Agreement
At the end of fiscal 2016, Mr. MacMillan’s Employment Agreement was amended to:
What We Did We shared the The Committee determined to continue using the performance measures of relative TSR and | |||||
ROIC for fiscal 2020 PSU grants and also determined to add the measure of free cash flow. The Committee reviewed the relative TSR construct and, considering market practice and with a view to maintaining the relative nature of the measure, determined to continue to use the existing structure, which was supported by investors. | |||||
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Proxy Statement Summary
What We Heard Compensation ●We also discussed our challenging say-on-pay results from the 2019 Annual Meeting, which seem to be driven by the fiscal 2018 special CEO retention equity grant. ●Investors expressed support for our overall compensation program design and also understood the unique nature of the situation leading to the special retention equity grant. Investors did comment on ●Overall, investors seemed ready to move on from the grant. | What We Did Following the announcement of Mr. MacMillan’s special retention equity grant We also shared what we heard from stockholders with our Compensation Committee and with our Nominating and Corporate Governance Committee. Please see the “Compensation Discussion and Analysis” beginning on page 39 for more detailed information. | ||||
Sustainability ●We have been discussing sustainability with several of our investors over the past few years. All of these investors appreciate our corporate purpose focus, which was highlighted in Mr. MacMillan’s letter to stockholders in our 2019 proxy statement (a letter which was also mailed to every employee). ●We have recently been encouraged to enhance our sustainability-related disclosures, with additional focus on human capital management, product governance and safety. ●One investor commented that they believe we have good practices and noted that they look forward to disclosure supporting their views. | The Nominating and Corporate Governance Committee has considered sustainability disclosure, as has the full Board. We have also established a high-level management steering committee to drive our sustainability efforts. Based on input from the Board, investors and employees, in January 2020, Hologic issued its first sustainability report, available on our website atwww.hologic.com. This is a foundation upon which we plan to continue to build. | ||||
Culture, Succession Planning, Proxy Access ●Several investors asked about Board culture. ●Several investors also asked about succession planning. ●One investor commented favorably on the Company’s voluntary adoption of proxy access and asked about discussions leading to adoption. | The Board has kept its size relatively small, which has bolstered the engaged nature of the Board. All directors contribute at every meeting, with no single director dominating discussion. The full Board as well as the Compensation Committee and Nominating and Corporate Governance Committee focus on succession planning, considering both long-term and short-term potential needs. See page 25 for more details. The Nominating and Corporate Governance Committee has been considering proxy access adoption over the past several years. In June 2019, based on | ||||
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Details about the specific arrangement made with Mr. MacMillan can be found in the “Employment, Change of Control and Severance Agreements” section beginning on page 33.Proxy Statement Summary
Note About Forward-Looking Statements
This proxy statement includescontains forward-looking information that involves risks and uncertainties, including statements about the Company’s plans, objectives, expectations and intentions. Such statements include, without limitation: financial or other information included herein based upon or otherwise incorporating judgments or estimates projections and statements relating to our business plans, objectivesfuture performance, events or expectations; the Company’s strategies, positioning, resources, capabilities, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this proxy statement, including but not limited to this Proxy Statement Summaryexpectations for future performance; and the Compensation DiscussionCompany’s business and Analysis.financial outlook. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based onupon current expectations and assumptions thatand are subject to risksknown and uncertainties that may cause actual results to differ materially. We describeunknown risks and uncertainties that could cause actual results and events to differ materially from those anticipated.
These risks and uncertainties include, without limitation: the ability of the Company to successfully manage leadership and organizational changes, including the ability of the Company to attract, motivate and retain key employees; U.S., European and general worldwide economic conditions, trade relations and related uncertainties; the Company’s reliance on third-party reimbursement policies to support the sales and market acceptance of its products; changes to applicable laws and regulations, including tax laws, global health care reform, and import/export trade laws; changes in “Risk Factors,” “Quantitativeguidelines, recommendations and Qualitative Disclosures about Market Risk,”studies published by various organizations that could affect the use of the Company’s products; uncertainties inherent in the development of new products and “Management’s Discussionthe enhancement of existing products, including FDA approval and/or clearance and Analysis” sectionsother regulatory risks, technical risks, cost overruns and delays; the risk that products may contain undetected errors or defects or otherwise not perform as anticipated; risks associated with strategic alliances and the ability of the Company to realize anticipated benefits of those alliances; risks associated with acquisitions, including, without limitation, the Company’s ability to successfully integrate acquired businesses, the risks that the acquired businesses may not operate as effectively and efficiently as expected even if otherwise successfully integrated, and the risks that acquisitions may involve unexpected costs or unexpected liabilities; the risks of conducting business internationally; the risk of adverse exchange rate fluctuations on the Company’s international activities and businesses; manufacturing risks, including the Company’s reliance on a single or limited source of supply for key components, the need to comply with especially high standards for the manufacture of many of its products and risks associated with utilizing third party manufacturers; the Company’s ability to predict accurately the demand for its products, and products under development, and to develop strategies to address its markets successfully; the early stage of market development for certain of the Company’s products; the Company’s leverage risks, including the Company’s obligation to meet payment obligations and financial covenants associated with its debt; cybersecurity risks; risks related to the use and protection of intellectual property; expenses, uncertainties and potential liabilities relating to litigation, including, without limitation, commercial, intellectual property, employment and product liability litigation; technical innovations that could render products marketed or under development by the Company obsolete; and competition.
The risks included above are not exhaustive. Other factors that could adversely affect the Company’s business and prospects are described in the filings made by the Company with the SEC. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements presented herein to reflect any change in expectations or any change in events, conditions or circumstances on which any such statements are based.
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PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Eight directors are to be elected at the Annual Meeting. Our Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated the individuals listed below for election as directors. All of the director nominees were previously elected by our stockholders.
Unless otherwise instructed, the proxy holders will vote the proxies received by them for the Board’s nominees named below. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for the nominee, if any, who shall be designated by the present Board to fill the vacancy. Each nominee has consented to serve as a director if elected. The proposed nominees are being nominated in accordance with the provisions of our Forms 10-KBylaws. The term of office of each person elected as a director will continue until the next Annual Meeting of Stockholders or until a successor has been elected and 10-Q. We undertake no obligationqualified.
Vote Required
Under our Bylaws, a nominee will be elected to update or revise publiclythe Board of Directors if the votes cast “for” the nominee’s election exceed the votes cast “against” the nominee’s election. Abstentions and broker non-votes will not have any forward-looking statements, whether becauseeffect on this proposal.
Recommendation of new information, future events, or otherwise.
Hologic, Inc. 2017 Proxy Statement 8the Board
Our Board unanimously recommends that you vote“FOR”the nominees listed below. Management proxy holders will vote all duly submitted proxies FOR the nominees listed below unless instructed otherwise. |
Composition, Assessment and Qualifications
Understanding the importance of its responsibility to provide effective oversight, our Board strives to maintain an appropriate balance of tenure, diversity, skills and experience on the Board. In evaluating potential candidates for director, the Nominating and Corporate Governance Committee considers the entirety of each candidate’s credentials, including: character and integrity, business acumen, experience, commitment and diligence. The Nominating and Corporate Governance Committee considers diversity as one of a number of factors in identifying nominees for director. It does not, however, have a formal policy in this regard. The Nominating and Corporate Governance Committee views diversity broadly to include diversity of experience, skills and viewpoint, as well as diversity of gender, race and ethnicity. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. The Nominating and Corporate Governance Committee believes that the backgrounds and qualifications of the directors considered as a whole should provide a significant breadth of experience, knowledge and abilities to assist the Board in fulfilling its responsibilities. Generally, directors should be individuals who have succeeded in their particular fields and who demonstrate integrity, reliability and extensive knowledge of corporate affairs. The Nominating and Corporate Governance Committee also considers other relevant factors as it deems appropriate, including the current composition of the Board.
The Board has employed a variety of assessment formats, depending on the perceived needs of the Board at the time. Formats over the past few years have included individual Board member peer reviews managed by the general counsel, a facilitated discussion with the full Board, and individual Board and committee written evaluations followed by a discussion at each committee level and with the full Board. As a part of these evaluations, the Nominating and Corporate Governance Committee as well as the Board examine characteristics which they believe will augment the current skill set of the Board. In 2016, the Board identified as key skill sets: experience as a senior executive in a large, complex, global company; extensive operational and transactional experience; deep understanding of the Company’s markets and/or customers; and a product background. In 2017, the Board determined that adding another director with extensive global experience would benefit the Board.
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Proposal No. 1 - Election of Directors
In 2016 and 2017, respectively, Ms. Wendell and Mr. Dockendorff joined the Board, both of whom had been senior executives in a large, complex, global medical device company, had operational and transactional experience and an understanding of the Company’s markets and customers. Ms. Wendell brings particular expertise in business development and strategy, which is key at a time when the Company is increasing its business development activity. Mr. Dockendorff brings extensive financial expertise for complex global healthcare organizations. In 2018, Mr. Nawana and Dr. Hantson joined the Board, each bringing strong global perspectives, industry knowledge and executive leadership experience – key attributes as we seek to expand internationally and continue to focus on commercial and operational execution.
Role of the Nominating and Corporate Governance Committee
As provided in its charter, the Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become directors. As the Nominating and Corporate Governance Committee seeks to identify and evaluate director candidates, it may rely on input provided by a number of sources, including the Nominating and Corporate Governance Committee members, our other directors or officers, our stockholders, and third parties such as professional search and screening firms. A copy of the Nominating and Corporate Governance Committee’s current charter is publicly available on our website atinvestors.hologic.com.
The Nominating and Corporate Governance Committee will consider stockholder recommendations for Board nominees using the criteria described in the preceding paragraphs. The name of any recommended candidate for director, together with a brief biographical sketch, a document indicating the candidate’s willingness to serve, if elected, and evidence of the nominating stockholder’s ownership of the Company’s stock should be sent to the attention of our Corporate Secretary, Hologic, Inc., 250 Campus Drive, Marlborough, Massachusetts 01752. If you wish to formally nominate a candidate, you must follow the procedures described in our Bylaws.
Alignment of Director Skills and Strategy Hologic is an innovative medical technology company primarily focused on improving women’s health and well-being through early detection and treatment. We are focused on generating long-term, sustainable growth through commercial and operational execution, targeted acquisitions and international expansion, among other things. Our Nominating and Corporate Governance Committee has determined that each of our director nominees possesses the appropriate qualifications, skills and experience to | |
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Table of ContentsGOVERNANCE OF THE COMPANY
Proposal No. 1 - Election of Directors
HologicSet forth below is committedcertain biographical information regarding the nominees as of January 1, 2020, as well as the experiences, qualifications, attributes or skills that caused the Nominating and Corporate Governance Committee and the Board to gooddetermine that the person should serve as a director.
Stephen P. MacMillan
Age Director Since | Key Experience and Qualifications | ||
Mr. MacMillan was appointed as President, Chief Executive Officer and a director in December 2013 and was elected Chairman of the Board in June 2015. From October 2012 to December 2013, Mr. MacMillan was the Chief Executive Officer of sBioMed, LLC, a biomedical research company. From 2003 to 2012, he served in various roles at Stryker Corporation, including Chief Operating Officer from 2003 to 2005, Chief Executive Officer from 2005 to 2012 and Chairman from 2010 to 2012. Prior to 2003, Mr. MacMillan was a senior executive with Pharmacia Corporation, where he oversaw five global businesses. Prior to joining Pharmacia, Mr. MacMillan spent 11 years with Johnson & Johnson in a variety of senior roles in both the U.S. and Europe, including as President of its consumer pharmaceuticals joint venture with Merck. Mr. MacMillan began his career with Procter & Gamble in 1985. Mr. MacMillan currently serves on the Board of Trustees of Davidson College. Mr. MacMillan holds a Bachelor of Arts degree in economics from Davidson College, and is a graduate of Harvard Business School’s Advanced Management Program. | |||
Other Current Public Company Boards ●Boston Scientific Corporation | |||
Former Public Company Boards ●Alere, Inc. ●Stryker Corporation ●Texas Instruments Incorporated | |||
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Proposal No. 1 - Election of Directors
Sally W. Crawford
Age Director Since Lead Independent Director Since Committees ●Compensation ●Nominating and Corporate Governance (Chair) | Key Experience and Qualifications Ms. Crawford’s service in various senior executive positions in the managed care sector and her continuing healthcare consulting practice contribute to her significant management and leadership experience and expertise in operational, regulatory and related disciplines applicable to our business and operations. Ms. Crawford became one of our directors effective upon our merger with Cytyc Corporation in October 2007, having previously served as a director of Cytyc since January 1998. From April 1985 until January 1997, Ms. Crawford served as Chief Operating Officer of Healthsource, Inc., a publicly held managed care organization headquartered in New Hampshire. During her tenure at Healthsource, Inc., Ms. Crawford held a variety of positions and responsibilities, including leading that company’s Northern Region operations and marketing efforts. Since January 1997, Ms. Crawford has been a healthcare consultant in New Hampshire. Ms. Crawford earned a bachelor’s degree from Smith College and a master’s degree in communications from Boston University. Other Current Public Company Boards ●Insulet Corporation Former Public Company Boards ●Exact Sciences Corporation ●Universal American Corporation ●Zalicus Inc. (now EPIRUS Biopharmaceuticals, Inc.) | ||
Charles J. Dockendorff
Age Director Since Committees ●Audit and Finance (Chair) | Key Experience and Qualifications Mr. Dockendorff has extensive experience with financial accounting matters for complex global healthcare organizations as well as substantial experience overseeing the financial reporting processes of large public companies. He has a strong track record of value creation and brings a depth of experience in operations and strategy to our Board. Mr. Dockendorff was appointed to our Board in May 2017. He was formerly Executive Vice President and Chief Financial Officer of Covidien plc, a global medical device and supplies company. He was CFO at Covidien and its predecessor, Tyco Healthcare, from 1995 to 2015. Mr. Dockendorff joined the Kendall Healthcare Products Company, the foundation of the Tyco Healthcare business, in 1989 as Controller and was named Vice President and Controller in 1994. He was appointed Chief Financial Officer of Tyco Healthcare in 1995. Prior to joining Kendall/Tyco Healthcare, Mr. Dockendorff was the Chief Financial Officer, Vice President of Finance and Treasurer of Epsco Inc. and Infrared Industries, Inc. In addition, Mr. Dockendorff worked as an accountant for Arthur Young & Company (now Ernst & Young) and the General Motors Corporation. Mr. Dockendorff holds a bachelor’s degree in accounting from the University of Massachusetts at Amherst and a Master of Science in finance from Bentley College. Other Current Public Company Boards ●Boston Scientific Corporation ●Haemonetics Corporation ●Keysight Technologies, Inc. | ||
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Proposal No. 1 - Election of Directors
Scott T. Garrett
Age Director Since Committees ●Compensation (Chair) ●Nominating and Corporate Governance | Key Experience and Qualifications Mr. Garrett’s experience as a Chief Executive Officer and in other senior leadership positions with biomedical and diagnostics companies enables him to bring to the Board an operational perspective as well as valuable insights and experience, particularly in the diagnostics space. Mr. Garrett joined our Board in May 2013. Mr. Garrett is currently a Senior Operating Partner at Water Street Healthcare Partners. He joined Water Street in 2011 after approximately 35 years in the global healthcare industry. Prior to joining Water Street, Mr. Garrett served as Chairman, President and Chief Executive Officer of Beckman Coulter, a leading biomedical company, from 2008 to 2011. Mr. Garrett joined Beckman Coulter in 2002 as President, Clinical Diagnostics Division and was promoted in 2003 to President and Chief Operating Officer. In January 2005, he became Chief Executive Officer, adding the position of Chairman in 2008. Prior to that, Mr. Garrett served as Vice Chairman and Interim Chief Executive Officer of Kendro Laboratory Products from 1999 to 2001. From 1994 to 1998, he served as Chairman, President and Chief Executive Officer of Dade Behring, a leading diagnostics company. He began his career at American Hospital Supply Corporation and continued there after that company was acquired by Baxter International, ultimately serving as Chief Executive of Baxter’s global laboratory business, Baxter Diagnostics. Mr. Garrett received a Bachelor of Science in mechanical engineering from Valparaiso University and a Master of Business Administration from Lake Forest Graduate School of Management. Other Current Public Company Boards ●Immucor, Inc. ●Mr. Garrett also serves on the boards of companies in which Water Street has an ownership interest, including MarketLab Inc., Orgentec Diagnostics and Pathnostics. | ||
Ludwig N. Hantson
Age Director Since Committees ●Compensation ●Nominating and Corporate Governance | Key Experience and Qualifications With over 30 years of experience in the biopharmaceutical industry as well as extensive experience as an executive leading global, innovative organizations, Dr. Hantson brings a global perspective and an understanding of operational matters to our Board. Dr. Hantson was appointed to our Board in November 2018. Since March 2017, Dr. Hantson has been the Chief Executive Officer of Alexion Pharmaceuticals, Inc. Prior to joining Alexion, he was President and Chief Executive Officer of Baxalta Incorporated. In July 2015, Dr. Hantson led Baxalta’s successful spin-off as a public company from Baxter International Inc., where he was President of Baxter BioScience. He joined Baxter in May 2010 and established the BioScience division as an innovative specialty and rare disease company. Prior to Baxter, from 2001 to 2010, Dr. Hantson held several leadership roles at Novartis AG, including CEO of Pharma North America, CEO of Europe, and President of Pharma Canada. Prior to Novartis, he spent 13 years with Johnson & Johnson in roles of increasing responsibility in marketing and R&D. Dr. Hantson received his Ph.D. in motor rehabilitation and physical therapy, master’s degree in physical education, and a certification in high secondary education, all from the University of Louvain in Belgium. Other Current Public Company Boards ●Alexion Pharmaceuticals, Inc. Former Public Company Boards ●Baxalta Incorporated | ||
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Proposal No. 1 - Election of Directors
Namal Nawana
Age Director Since Committees ●Compensation ●Nominating and Corporate Governance | Key Experience and Qualifications Mr. Nawana brings to our Board a wealth of complex management and worldwide operational experience in the healthcare industry. He has a strong product background, understands our markets, and brings in-depth knowledge of the opportunities and challenges facing global companies. Mr. Nawana joined our Board in January 2018. Mr. Nawana most recently served as the Chief Executive Officer and a member of the Board of Directors of Smith & Nephew plc, from May 2018 to November 2019. Prior to joining Smith & Nephew, he was Chief Executive Officer, President and a member of the Board of Directors of Alere, Inc. from October 2014 until October 2017, when Alere was acquired by Abbott Laboratories. Mr. Nawana joined Alere as Chief Operating Officer in December 2012 before being named Interim Chief Executive Officer in July 2014. Before joining Alere, Mr. Nawana spent 15 years at Johnson & Johnson in various leadership roles. Most recently, he served as the Worldwide President of DePuy Synthes Spine, a Johnson & Johnson company, from February 2011 to November 2012. Prior to that, Mr. Nawana served as Area Vice President for Johnson & Johnson Medical in Australia and New Zealand from January 2009 to February 2011, Chairman of the DePuy Asia Pacific Franchise Council, General Manager for DePuy Australia from 2007 to December 2008 and General Manager for DePuy Canada from 2004 to 2007. Mr. Nawana holds an Honors degree in Mechanical Engineering and a Master of Medical Science from the University of Adelaide, South Australia, and an MBA from Henley Management College. Former Public Company Boards ●Alere, Inc. ●Smith & Nephew plc | ||
Christiana Stamoulis
Age Director Since Committees ●Audit and Finance | Key Experience and Qualifications Ms. Stamoulis’ strength in strategy and corporate finance, coupled with her extensive experience in executing initiatives for growth in the medical products field and related industries, enable her to provide valuable insights to the Board. She also contributes a unique perspective on financial and capital markets operations. Ms. Stamoulis has been a director since November 2011. In February 2019, Ms. Stamoulis assumed the role of Executive Vice President and Chief Financial Officer of Incyte Corporation. From January 2015 to the end of January 2019, Ms. Stamoulis served as Chief Financial Officer of Unum Therapeutics, adding the role of President in February 2018. Prior to Unum, from January 2014 to December 2014, she was an independent advisor to biopharmaceutical companies. Prior to that, from 2009 until December 2013, Ms. Stamoulis served as Senior Vice President of Corporate Strategy and Business Development at Vertex Pharmaceuticals Incorporated. Ms. Stamoulis joined Vertex in 2009 with approximately 15 years of experience in the investment banking and management consulting industries where she advised global pharmaceutical and biotechnology companies on strategic and corporate finance decisions. Prior to joining Vertex, from 2006 to 2009, she was a Managing Director in the Investment Banking division of Citigroup where she led the building of the firm’s U.S. Life Sciences investment banking practice. Prior to her role at Citigroup, she was at Goldman, Sachs & Co. where she spent the majority of her investment banking career. Ms. Stamoulis started her career as a strategy consultant at The Boston Consulting Group. Ms. Stamoulis holds a Bachelor of Science in economics and a Bachelor of Science in architecture from the Massachusetts Institute of Technology (MIT). Additionally, she holds a Master of Business Administration from the MIT Sloan School of Management where she focused on applied economics and finance. | ||
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Proposal No. 1 - Election of Directors
Amy M. Wendell
Age Director Since Committees ●Audit and Finance | Key Experience and Qualifications Ms. Wendell brings to our Board deep expertise in all areas of mergers and acquisitions, portfolio management, resource allocation and identification of new market opportunities, with a focus on the medical devices industry. This expertise, together with her extensive knowledge of developed and emerging markets as well as of early-stage technologies, enables her to provide valuable insights on strategy and potential growth opportunities. Ms. Wendell was appointed to our Board in December 2016. From January 2016 until April 2019, Ms. Wendell served as a Senior Advisor for Perella Weinberg Partner’s Healthcare Investment Banking Practice. Her scope of responsibilities involved providing guidance and advice with respect to mergers and acquisitions and divestures for clients and assisting the firm in connection with firm-level transactions. From 2015 until September 2018, Ms. Wendell served as a Senior Advisor for McKinsey’s Strategy and Corporate Finance Practice and also served as a member of McKinsey’s Transactions Advisory Board to help define trends in mergers and acquisitions, as well as help shape McKinsey’s knowledge agenda. From 1986 until January 2015, Ms. Wendell held various roles of increasing responsibility at Covidien plc (including its predecessors, Tyco Healthcare and Kendall Healthcare Products), including engineering, product management and business development. Most recently, from December 2006 until Covidien’s acquisition by Medtronic plc in January 2015, she served as Senior Vice President of Strategy and Business Development, where she led the company’s strategy and portfolio management initiatives and managed all business development, including acquisitions, equity investments, divestitures and licensing/distribution. She is Chairman of the Board of Por Cristo, a non-profit charitable medical service organization involved in health care work for at-risk women and children in Latin America. Ms. Wendell holds a Bachelor of Science in mechanical engineering from Lawrence Technological University and a Master of Science degree in biomedical engineering from the University of Illinois. Other Current Public Company Boards ●AxoGen, Inc. ●Baxter International Inc. Former Public Company Boards ●Ekso Bionics | ||
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Proposal No. 1 - Election of Directors
Our Board’s Role and Responsibilities
The Board, on behalf of the Company and its stockholders, oversees the management of the Company. While the Company’s senior officers, under the direction of the Chief Executive Officer, are responsible for the day-to-day operations of the Company, implementation of the strategic, financial and management policies of the Company, and preparation of financial statements and other reports that accurately reflect requisite information about the Company, the Board oversees these activities. Taking an active role in the Company’s strategic direction, the Board continually educates itself on the Company’s products, markets, customers, competition and culture. The Board assesses risk, evaluates management’s performance, plans for successors and provides overall guidance and direction to the Company.
Hologic’s governance responsibilities are built on a foundation of interactive dialogue with stockholders, written principles and continuous improvement, which we believe will help us sustain our success, build trust in the Company and continue to buildcreate long-term stockholder value. To that end, the Company has in place Corporate Governance Guidelines which are designed to assist the Company and the Board in implementing effective corporate governance practices. The Board has also adopted a Code of Conduct that applies to all of our employees, officers and directors and a Code of Ethics that applies specifically to senior financial officers (included as Appendix A to our Code of Conduct) that applies specifically to senior financial officers.. These policies are publicly available on our website atinvestors.hologic.com.investors.hologic.com. Hologic posts additional information on our website from time to time as the Board makes changes to our corporate governance practices.
Our Board believes that good governance requires not only an effective set of specific practices, but also a culture of responsibility and accountability throughout the organization. Governance at Hologic is intended to achieve both. Good governance ultimately depends on the quality of an organization’s leadership, and our Board is committed to recruiting and retaining directors and officers with proven leadership ability and personal integrity.
The Board has implemented corporate governance practices that it believes are both in the best interests of Hologic and our stockholders as well as compliant with the rules and regulations of the SEC and the listing standards of NASDAQ. The Board reviews these practices on an ongoing basis. Highlights
Strategy
One of the Board’s key responsibilities is overseeing the Company’s corporate strategy. The Board has deep expertise in strategy development and insight into the most important issues facing the Company. Using its knowledge, expertise and diverse composition, the Board regularly discusses the key priorities of our Company and its businesses, taking into consideration global economic, socioeconomic and regulatory trends, stakeholder interests and developments in healthcare.
● | Annually, the Board conducts an extensive review of the Company’s long-term strategic plans. |
● | Throughout the year and at most Board meetings, the Board receives information and updates from management and actively engages with senior leaders with respect to the Company’s strategy, including the strategic plans for our businesses, research and development, and the competitive environment. |
● | The Company’s independent Directors hold regularly scheduled executive sessions, without management present, to discuss strategy. |
● | The Board discusses and reviews feedback on strategy from our shareholders and other stakeholders. |
● | Corporate strategy discussions are enhanced with periodic engagements held outside the boardroom, such as visits to our business locations and research and development facilities. These visits provide the Directors with an opportunity to observe the execution and impact of the company’s strategy and to engage with senior leaders and employees to deepen their understanding of our businesses, competitive environments and our corporate culture. |
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Proposal No. 1 - Election of Directors
Risk
Our Board is responsible for risk oversight. A fundamental part of risk oversight is understanding the risks that we face, the steps management is taking to manage those risks, and assessing our appetite for risk. Risk management systems, including our internal auditing procedures, internal control over financial reporting and corporate compliance programs, are designed in part to inform management about our material risks. Our Board receives regular reports from management on matters relating to strategic and operational initiatives, financial performance and legal developments, including the related enterprise-risk exposures. The involvement of the Board in the oversight of our strategic planning process is a key part of its assessment of the risks inherent in our corporate strategy.
Each year, the Board also reviews an enterprise risk management report (ERM report) compiled by business leaders who have assessed risk throughout the business over a three-year horizon, focusing on financial risk, legal/compliance risk and operational/strategic risk. The ERM report details the Company’s top 10 risks as well as mitigating actions and plans relating to those risks. The ERM report includes a rolling three-year evaluation period reflecting mitigation activity progress and risk rating changes and is presented to and discussed with the Board each year. Underscoring the Board’s and management’s focus on enterprise risk are the individual performance objectives of the executive leadership team for fiscal 2020, which are aligned with the Company’s top enterprise risks, as identified in the ERM report.
While the Board has overall responsibility for risk oversight, each of the three standing committees of the Board regularly assesses risk in connection with executing their responsibilities. In particular, the Audit and Finance Committee focuses on financial risk, including internal controls, and receives an annual risk assessment report from the Company’s internal auditors. At the Compensation Committee’s direction, its independent compensation consultant conducts a risk assessment of our executive compensation programs, and members of our internal legal, human resources and sales operations departments evaluate our other compensation programs. The Compensation Committee and its independent compensation consultant reviewed and discussed these assessments for fiscal 2019, and the Compensation Committee concurred with the assessment that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on our business.
Human Capital Management
Attracting and retaining key talent is a high priority for our management team and our Board. At Hologic, we believe our people are our most important asset. They deliver on our Purpose, Passion and Promise with great ideas, innovations and leadership to propel our organization forward. Hologic offers a range of programs to develop our managers and drive effective leadership across the Company. Over the past several years, we have increased the number of women in commercial and executive leadership positions including our Chief Financial Officer and Chief Information Officer. In 2019, nearly 69% of our leadership roles were filled internally. Our Board encourages diversity and inclusion by setting the tone from the top. Valuing diversity and an inclusive culture helps to drive our innovation in women’s health and creates a stronger, more sustainable workforce.
Our culture is fueled by our talented and highly engaged workforce which has a positive impact on our performance and, more importantly, on our customers and their patients. To that end, we have been conducting an annual engagement survey since 2015 in which more than 90% of employees regularly participate, reflecting the emphasis we place on engagement.
To enhance the Board’s understanding of the Company’s culture and talent pipeline, the Board conducts meetings and schedules site visits at the Company’s locations, meets regularly with high-potential executives in formal and informal settings and also reviews and discusses the results of the Company’s annual employee engagement survey. During 2019, some of the informal interactions included, among other things, several members of our Board engaging in individual consultations with division teams, the Audit and Finance Committee Chair informally mentoring our CFO, and our Lead Director joining employees for the ringing of the opening bell at NASDAQ for breast cancer awareness month, including lunch and dinner with employees.
For more information on our commitment to engagement, diversity, talent, pay equity, access to healthcare and corporate philanthropy, see our newly issued Sustainability Report, available on our website atwww.hologic.com.
24 | 2020 Proxy Statement |
Proposal No. 1 - Election of Directors
Sustainability
We believe that sustainability issues should be integrated with our business strategy, led by our senior management team and overseen by our Board of Directors, rather than managed as a separate set of issues. We are committed to improving the health of our communities, customers, patients and employees, and ensuring that the decisions we make today have a positive effect on future generations. We understand that creating value for our stockholders is one of our fundamental obligations as a public company, and we know that how we create that value is important. In October 2016, we made our first sustainability disclosure, posting information on our website in four initial areas of focus: Energy and Greenhouse Gas Efficiency, Recycling/Reuse, Supply Chain and Workplace Health and Safety. In January 2020, we published our first Sustainability Report, available on our websitewww.hologic.com.
Beyond numbers and statistics, we look for deeper meaning in our work. As employees, we focus on our purpose as a company: to enable healthier lives, everywhere, every day. Within this purpose, we place a special emphasis on the healthcare needs of women – it is our passion to become global champions for women’s health. We are inspired by the deep belief that our success as a company will fundamentally improve the health of millions of women and families globally. By focusing on our unique Purpose, Passion and Promise, we strive to generate long-term, profitable growth that benefits not just our stockholders, but also our customers and patients around the globe.
The Board is responsible for overseeing management and planning for management successors. Succession planning starts with Mr. MacMillan, his team and the Compensation and Nominating and Corporate Governance Committees but is continued with the full Board. The Board devotes significant time on its agenda to succession planning, reviewing and discussing the succession plans for the CEO and each of his direct reports. In recent years, the Board and Mr. MacMillan have intensified their focus on succession planning. Mr. MacMillan provides a talent update at every Board and Compensation Committee meeting and the Board reviews in-depth succession plans at least annually, considering long-term, medium-term and short-term options. The Board also has exposure to succession candidates through their periodic participation in Board meetings and/or engagement outside of Board meetings.
While the Board, through the Nominating and Corporate Governance Committee, oversees stockholder matters and participates in meetings with stockholders, as appropriate, management has the principal responsibility for stockholder communications and engagement. As discussed below, management provides written and oral updates to the Board concerning stockholder feedback.
During 2019, we continued the year-round approach to stockholder engagement we implemented in 2015. In addition to discussions just before our Annual Meeting, we initiated discussions during a quieter period several months later, reaching out to a number of our largest stockholders, representing approximately 66% of our outstanding shares. Our Lead Independent Director participates in these meetings as requested.
In addition to input on current governance and executive compensation topics specific to Hologic, we invite discussion on any other topics or trends stockholders may wish to share with us. We believe that positive, two-way dialogue builds informed relationships that promote transparency and accountability. Management provides written and oral updates on the discussions with stockholders to our Lead Independent Director, Chairman, and the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee in turn allocates specific issues to relevant Board committees for further consideration. Each Board committee reviews relevant feedback and determines if additional discussion and actions are necessary by the respective committee or full Board. The Board considers shareholder perspectives, as well as the interests of all stakeholders, when overseeing company strategy, formulating governance practices are summarized below.
and designing compensation programs.
YEAR-ROUND STOCKHOLDER ENGAGEMENT
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Proposal No. 1 - Election of Directors
Stockholder Communications with the Directors
In general, any stockholder communication directed to our Board or one of its committees will be delivered to our Board or the appropriate committee. However, the Company reserves the right not to forward to our Board any abusive, threatening or otherwise inappropriate materials. Stockholders may contact our Board and committees thereof by writing to them in care of Corporate Secretary, Hologic, Inc., 250 Campus Drive, Marlborough, MA 01752.
Chairman and Lead Independent Director Roles
Our Bylaws and Corporate Governance Guidelines permit the roles of Chairman and Chief Executive Officer to be filled by the same or different individuals. This allows the Board flexibility to determine whether the two roles should be combined or separated based upon ourthe Company’s needs and the Board’s assessment of its leadership from time to time. The Board and the Nominating and Corporate Governance Committee review the structure of the Board and Hologic leadership as part of the succession planning process on an ongoing basis. The Board also reviews its structure during its annual self-assessment.
The Board believes that Hologic and its stockholders are best served at this time by having our CEO, Stephen P. MacMillan, also serve as our Chairman, and Elaine S. Ullian,Sally W. Crawford, an independent director, serve as our Lead Independent Director. Combining the roles of Chairman and CEO makes clear that we have a single leader who is directly accountable to the Board and, through the Board, to our stockholders. It establishes one voice who speaks for the Company to customers, employees, stockholders and other stakeholders. This structure reinforces Mr. MacMillan’s overall responsibility for the Company’s business and strategy, under the oversight and subject to the review of the Board. It strengthens the Board and the Board’s decision-making process because Mr. MacMillan, who has first-hand knowledge of our operations and the major issues facing Hologic, chairs the Board meetings where the Board discusses strategic and business issues. The combined roles facilitate a Board process that is able to identify and respond to challenges and opportunities in a more timely and efficient manner than a non-executive chairman structure would provide. This structure also enables Mr. MacMillan to act as the key link between the Board and other members of management and facilitate an efficient Board process.
The Board recognizes the importance of having a strong independent Board leadership structure to ensure accountability. Accordingly, our Corporate Governance Guidelines provide that if the Chairman is not an independent director, then the independent directors will select a Lead Independent Director. The Board believes that a Lead Independent Director is an integral part of our Board structure and facilitates the effective performance of the Board in its role of providing governance and oversight. Ms. Ullian has been our Lead Director since June 2015. She bringsIn December 2017, the Board appointed Sally W. Crawford to the role considerable skills and experience, as described below in “Election of Directors.” In addition, Ms. Ullian is Chair of our Nominating and Corporate Governance Committee, which affords her increased engagement with Board governance and composition.
Ms. Ullian,serve as Lead Director, has significant responsibilities. Certain specific responsibilities are set forth in Hologic’s Corporate Governance Guidelines and include:
Independent Director.
2020 Proxy Statement |
Proposal No. 1 - Election of Directors
Ms. Crawford, as Lead Independent Director, has significant responsibilities. Certain specific responsibilities are set forth in Hologic’s Corporate Governance Guidelines and include: ●presiding at the meetings of the Board at which the Chairman is not present; | |
●convening meetings of the independent directors, including executive sessions held in conjunction with each | |
●serving as the principal liaison between the Chairman and the independent directors, including with respect to matters arising in executive sessions of the independent directors; | |
●working with the Chairman and the Nominating and Corporate Governance Committee to establish processes to assist the Board in the efficient discharge of its duties; | |
●approving Board meeting agendas as well as the quality, quantity and timeliness of information sent to the Board; | |
●approving Board meeting schedules to assure that there is sufficient time for discussion of all agenda items; | |
●recommending to the Chairman the retention of outside advisors, as appropriate, who report directly to the Board on board-wide matters; |
Hologic, Inc. 2017 Proxy Statement 9
●being available, if requested by stockholders, and when appropriate, for consultation and direct communication; and | |
●coordinating with the other independent directors in respect of each of the foregoing and performing such other duties as may be properly requested by the Board. |
Mr. MacMillan’s responsibilities as Chairman of the Board are also set forth in our Corporate Governance Guidelines and include:
Mr. MacMillan’s responsibilities as Chairman of the Board are also set forth in our Corporate Governance Guidelines and include: ●presiding at meetings of the Board of Directors and stockholders; | |||||
●establishing processes to assist the Board in the efficient discharge of its duties; | |||||
●organizing and presenting agendas for Board meetings based on advice from the Lead Independent Director, Committee Chairs, directors and members of senior management; | |||||
●facilitating the proper flow of information to the Board and working to see that meetings are efficient and informative; | |||||
●working with the Nominating and Corporate Governance Committee to develop processes for structuring Committees and overseeing their functions, including assignments of Committee members and Chairs; | |||||
●working with the Nominating and Corporate Governance Committee to develop processes for | |||||
●performing such other duties as may be properly requested by the Board. | |||||
In addition to discharging the specific responsibilities identified above, Mr. MacMillan consults regularly with Ms. UllianCrawford on a variety of matters, including governance and strategy. As Lead Independent Director and Chair of the Nominating and Corporate Governance Committee, Ms. UllianCrawford takes the lead in Board structure and composition. In addition, Ms. Ullian’s provenCrawford’s ability to assert independent leadership while working collaboratively with other directors, particularly evident when she served as chair of the Compensation Committee, as well as her diligence and building consensus around different points of viewpreparedness, enable her to serve effectively as our Lead Independent Director and as Chair of our Nominating and Corporate Governance Committee. During its self-assessment discussions in 2016,2019, the Board again considered and affirmed the current efficacy of thisthe Lead Independent Director and combined Chairman/CEO structure for the Company. We have also discussed this structure with a number of our largest stockholders. While several advised that they do scrutinize combined Chair/CEO structures as a matter of practice, none expressed concern over this structure for Hologic.
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Proposal No. 1 - Election of Directors
Independent Directors and Committees
In evaluating its leadership structure, the Board also considered that, eightother than Mr. MacMillan, all of our nine current directors are independent. Our independent directors appropriately challenge management and demonstrate independent judgment in making important decisions for our Company. In addition, each of the Board’s standing committees —– Audit and Finance, Compensation, and Nominating and Corporate Governance —– is comprisedcomposed entirely of independent directors. As a result, oversight of key matters, such as the integrity of Hologic’s financial statements, executive compensation, the nomination of directors and evaluation of the Board and its committees, is entrusted to independent directors. Finally, the
The Board meets in executive session without the CEO in connection with each regularly-scheduledregularly scheduled Board meeting.meeting as well as any other times it deems appropriate. The active involvement of the independent directors, combined with the qualifications and significant responsibilities of our Lead Independent Director, promote strong, independent oversight of Hologic’s management and affairs.
Risk OversightBoard Committees
Our Board is responsible for risk oversight. A fundamental part of risk oversight is understanding the risks that we face, the steps management is taking to manage those risks and assessing our appetite for risk. Risk management systems, including our internal auditing procedures, internal control over financial reporting and corporate compliance programs, are designed in part to inform management about our material risks. It is management’s responsibility to manage risk and bring to the Board’s attention material risks facing the Company. Our Board receives regular reports from management on matters relating to strategic and operational initiatives, financial performance and legal developments, including the related enterprise-risk exposures. The involvement of the Board in the oversight of our strategic planning process is a key part of its assessment of the risks inherent in our corporate strategy. Last year, our general counsel led an initiative to strengthen the Company’s enterprise risk management process, which continued this year. As part of this process, risk was assessed throughout the business, focusing on three primary areas: financial risk, legal/compliance risk and operational/strategic risk. The resulting enterprise risk management report (“ERM report”) detailed the Company’s top ten risks, as well as mitigating actions and plans relating to those risks, and was presented to and discussed with the Board. This year, the ERM report highlighted changes in the risks identified in the prior year’s report as well as mitigating actions. Underscoring the Board’s and management’s focus on enterprise risk are the individual performance objectives of the executive leadership team for fiscal 2017, which are again aligned with the Company’s top three enterprise risks, as identified in the ERM report.
While the Board has overall responsibility for risk oversight, each of the three standing committees of the Board regularly assesses risk in connection with executing their responsibilities. In particular, the Audit and Finance Committee focuses on financial risk, including
Hologic, Inc. 2017 Proxy Statement 10
internal controls, and receives an annual risk assessment report from the Company’s internal auditors. At the Compensation Committee’s direction, the Compensation Committee’s independent compensation consultant conducts a risk assessment of our executive compensation programs, and members of our internal legal, human resources and sales operations departments evaluate our other compensation programs. The Committee and its independent compensation consultant reviewed and discussed these assessments for fiscal 2016, and the Compensation Committee concurred with the assessment that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on our business.
While the Board, through the Nominating and Corporate Governance Committee, oversees stockholder matters and participates in meetings with stockholders, as appropriate, management has the principal responsibility for stockholder communications and engagement. As discussed below, management provides regular feedback to the Board concerning stockholder feedback.
During 2016, we continued the year-round approach to stockholder engagement we implemented in 2015. In addition to discussions just before our Annual Meeting, we initiated discussions during a quieter period several months later, reaching out to a number of our largest stockholders, representing over 50% of our outstanding shares. Topics discussed with these investors included business highlights, Board composition, Board and executive compensation, sustainability and other governance practices.
In addition to input on current governance and executive compensation topics specific to Hologic, we invite discussion on any other topics or trends stockholders may wish to share with us. We believe that positive, two-way dialogue builds informed relationships that promote transparency and accountability. Management provides written and oral updates on the discussions with stockholders to our Lead Director, Chairman and the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee in turn allocates specific issues to relevant Board committees for further consideration. Each Board committee reviews relevant feedback and determines if additional discussion and actions are necessary by the respective committee or full Board. The Board considers shareholder perspectives, as well as the interests of all stakeholders, when overseeing company strategy, formulating governance practices and designing compensation programs.
Director Nomination Process and Board Assessment
Understanding the importance of its responsibility to provide effective oversight, our Board strives to maintain an appropriate balance of tenure, diversity, skills and experience on the Board. As provided in its charter, the Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become directors. The Nominating and Corporate Governance Committee seeks to identify and evaluate director candidates and may rely on input provided by a number of sources, including the Nominating and Corporate Governance Committee members, our other directors or officers, our stockholders, and third parties such as professional search and screening firms.
In evaluating potential candidates for director, the Nominating and Corporate Governance Committee considers the entirety of each candidate’s credentials, including: character and integrity, business acumen, experience, commitment and diligence. The Nominating and Corporate Governance Committee considers diversity as one of a number of factors in identifying nominees for director. It does not, however, have a formal policy in this regard. The Nominating and Corporate Governance Committee views diversity broadly to include diversity of experience, skills and viewpoint, as well as diversity of gender and race. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria
Hologic, Inc. 2017 Proxy Statement 11
and no particular criterion is necessarily applicable to all prospective nominees. The Nominating and Corporate Governance Committee believes that the backgrounds and qualifications of the directors considered as a group should provide a significant breadth of experience, knowledge and abilities to assist the Board in fulfilling its responsibilities. Generally, directors should be individuals who have succeeded in their particular field and who demonstrate integrity, reliability, knowledge of corporate affairs and collegiality. The Nominating and Corporate Governance Committee also considers such other relevant factors as it deems appropriate, including the current composition of the Board.
Last year, the Nominating and Corporate Governance Committee led a Board assessment initiative, which included a Board peer review, managed by the general counsel. This year the Nominating and Corporate Governance Committee determined that a facilitated discussion with the full Board would be the most effective form of evaluation. As a part of this discussion, the Board examined several key characteristics which it believed would augment the current skill set of the Board, including experience as a senior executive in a large, complex, global company; extensive operational and transactional experience; deep understanding of the Company’s markets and/or customers and a product background.
The Nominating and Corporate Governance Committee will consider stockholder recommendations for candidates for the Board using the criteria described in the preceding paragraphs . The name of any recommended candidate for director, together with a brief biographical sketch, a document indicating the candidate’s willingness to serve, if elected, and evidence of the nominating stockholder’s ownership of the Company’s stock should be sent to the attention of our Corporate Secretary, Hologic, Inc., 250 Campus Drive, Marlborough, MA 01752. If you wish to formally nominate a candidate, you must follow the procedures described in Section 1.4 of our Bylaws.
Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, we have adopted a Code of Ethics for Senior Financial Officers that applies to our principal executive officer and principal financial officer, principal accounting officer and controller, and other persons performing similar functions. Our Code of Ethics for Senior Financial Officers is publicly available on our website atinvestors.hologic.com as Appendix A to our Code of Conduct. We intend to satisfy the disclosure requirement under Item 5.05 of Current Report on Form 8-K regarding an amendment to, or waiver from, a provision of this code by posting such information on our website, at the address specified above.
Attendance by Directors at the Annual Meeting of Stockholders
Our Board has scheduled a Board meeting in conjunction with the Annual Meeting of Stockholders. Our directors are encouraged to attend the Annual Meeting of Stockholders on March 8, 2017. All of our current directors who were nominated for election at our Annual Meeting of Stockholders held on March 2, 2016 attended that Annual Meeting.
Stockholder Communications with the Directors
Stockholders may contact our Board and committees thereof by writing to them c/o Investor Relations, Hologic, Inc., 250 Campus Drive, Marlborough, MA 01752. In general, any stockholder communication directed to our Board or a committee thereof will be delivered to our Board or the appropriate committee. However, the Company reserves the right not to forward to our Board any abusive, threatening or otherwise inappropriate materials.
Hologic, Inc. 2017 Proxy Statement 12
In December 2015, the Nominating and Corporate Governance Committee embarked upon a thoughtful and deliberate process of assessing the Board’s standing committee structure and related membership. This review culminated in a recommendation to the Board to disband the Corporate Development Committee, to expand the role of the Audit Committee to assume some of the responsibilities of the Corporate Development Committee, to change the name of the Audit Committee to the Audit and Finance Committee to reflect these additional responsibilities, to rotate committee membership, and to reduce the size of each Committee. These changes were effective following the 2016 Annual Meeting. The standing committees of the Board currently are the Audit and Finance Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee.
The Board is composedhas adopted a charter for each of a majoritythe three standing committees that addresses the make-up and functioning of “independent” directors, and allsuch committee. The charters for each of the three standing committees are publicly available on our website atinvestors.hologic.com.
All of the Board committees are composed entirely of “independent” directors, as such term is defined in the listing standards of NASDAQ. The Board has determined that the following current directors and director nominees are “independent,” according to the above definition: Christopher J. Coughlin, Sally W. Crawford, Charles J. Dockendorff, Scott T. Garrett, Nancy L. Leaming, Lawrence M. Levy,Ludwig N. Hantson, Namal Nawana, Christiana Stamoulis, Elaine S. Ullian and Amy M. Wendell. Our former directors, Messrs. Christodoro, LaVance, Merksamer and Wilson were also determined to be independent when serving as members of our Board. Mr. MacMillan is not considered independent because he is an active officer of the Company. In addition, both the Audit and Finance Committee and the Compensation Committee are composed entirely of “independent” directors as such term is defined in Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Board has adopted a charter for each of the three standing committees that addresses the make-up and functioning of such committee. The charters for each of the three standing committees are publicly available on our website atinvestors.hologic.com.
The current membership of each committee is listed below.
Board Committees | ||||||||||||
Nominating | ||||||||||||
Director | Audit and | and Corporate | ||||||||||
Name | Age | Position | Since | Finance | Compensation | Governance | ||||||
Christopher J. Coughlin | 64 | Director | 2016 | Chair | ||||||||
Sally W. Crawford | 63 | Director | 2007 | Chair | ||||||||
Scott T. Garrett | 67 | Director | 2013 | |||||||||
Nancy L. Leaming(1) | 69 | Director | 2003 | |||||||||
Lawrence M. Levy | 78 | Director | 2005 | |||||||||
Christiana Stamoulis | 46 | Director | 2011 | |||||||||
Elaine S. Ullian | 69 | Lead Director | 2007 | Chair | ||||||||
Amy M. Wendell | 56 | Director | 2016 | |||||||||
Number of Meetings in Fiscal 2016 | 9 | 6 | 4 |
Board Committees | ||||||||||||
Name | Age | Position | Director Since | Audit and Finance | Compensation | Nominating and Corporate Governance | ||||||
Sally W. Crawford | 66 | Director | 2007 | Chair | ||||||||
Charles J. Dockendorff | 65 | Director | 2017 | Chair | ||||||||
Scott T. Garrett | 69 | Director | 2013 | Chair | ||||||||
Ludwig N. Hantson | 57 | Director | 2018 | |||||||||
Namal Nawana | 49 | Director | 2018 | |||||||||
Christiana Stamoulis | 49 | Director | 2011 | |||||||||
Amy M. Wendell | 59 | Director | 2016 | |||||||||
Number of Meetings in Fiscal 2019 | 9 | 5 | 4 |
Proposal No. 1 - Election of Directors
Meetings of the Board and its Committees
The Board met six (6) times during the fiscal year ended September 24, 2016 and each of our directors attended over 90% of the total number of meetings of the Board and all committees of the Board on which he or she served, including meetings of the now-defunct Corporate Development Committee. During fiscal 2016, the independent directors of the Board met in executive session during each of the Board’s regular quarterly meetings and at such other Board and committee meetings as the independent directors elected.
Hologic, Inc. 2017 Proxy Statement 13
Nominating and Corporate Governance Committee
|
|
Members
| The Audit and Finance Committee is responsible for assisting our Board in the oversight of (i) our financial reporting process, accounting functions, internal audit functions and internal control over financial reporting, and (ii) the qualifications, independence, appointment, retention, compensation and performance of our independent registered public accounting firm. The Audit and Finance Committee
None of the current or former members of the Audit and Finance Committee are employees of the Company and our Board has determined that each such member of the Audit and Finance Committee is independent (as independence is defined in the current listing standards of NASDAQ and Section 10A(m)(3) of the Exchange Act). Audit Committee Financial | ||
2019 Key Focus Areas ●Capital allocation and debt structure ●Cybersecurity ●Internal controls and compliance ●Adoption of new revenue recognition rules (ASC 606) ●Preparing for adoption of new lease standard (ASC 842) | |||
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Hologic, Inc. 2017 Proxy Statement 14Proposal No. 1 - Election of Directors
Members
Nawana
5 | The primary functions of the Compensation Committee include: (i) reviewing and approving the compensation for each of our executive officers and | ||
2019 Key Focus Areas
●Talent development and succession planning ●Executive compensation and pay for performance alignment ●Compensation program design structure, including appropriate metrics and goals for the ●Human capital management, including engagement, diversity and | |||
Compensation Committee Interlocks and Insider Participation
No current or former member of the Compensation Committee listed above is or has ever been an executive officer or employee of the Company (or any of its subsidiaries) and no “compensation committee interlocks” existed during fiscal 2016.
For further information about our processes and procedures for the consideration and determination of executive and director compensation, including the Compensation Committee’s retention of an independent compensation consultant, please see “Compensation Discussion and Analysis” beginning on page 21.
Hologic, Inc. 2017 Proxy Statement 15
Eight directors are to be elected at the Annual Meeting. Our Board of Directors (referred to herein as the “Board”), upon the recommendation of the Nominating and Corporate Governance Committee has nominated
Ms. Crawford Members FY2019 Meetings | The Nominating and Corporate Governance Committee is responsible for recommending to the Board potential candidates for director and considering various corporate governance issues, including evaluating the performance of the Board and its committees, developing and periodically reviewing our Corporate Governance Guidelines, reviewing and recommending to the Board any changes to the committee charters, recommending the composition and chair of our Board committees, monitoring compliance with our stock ownership guidelines, evaluating the performance of our CEO annually and leading the succession planning and process for our CEO. The Nominating and Corporate Governance Committee also considers suggestions regarding possible candidates for director as described under “Stockholder Recommendations” on page 17. | ||
2019 Key Focus Areas ●CEO succession planning ●Board composition and assessment ●Stockholder engagement ●Sustainability ●Proxy access ●Governance structures and best practices | |||
30 | 2020 Proxy Statement |
Proposal No. 1 - Election of Directors
Board Practices, Processes and Policies
Director Orientation and Continuing Education
When a new director joins the persons listed below for election as directors. AllBoard, or just before joining (assuming entry into a confidentiality agreement), he or she is provided with a business briefing book, which gives an overview of the Company, its products, its markets, its strategy and its risks. Materials in the book generally include our current strategic plan, a description of our divisions and products, our current product pipeline, the most recent enterprise risk management report, current budget, market dynamics study, biographies for the senior management team, investment analyst reports and the like. Once elected to the Board, the new director nominees, other than Ms. Wendell, were previously elected by our stockholders. Ms. Wendell was recommended initially bygenerally has the opportunity to have individual meetings with members of the senior management team. They also receive a non-management directorgovernance handbook, which includes general Board information, Board committee charters, the Company’s charter and Bylaws and all of the Company’s governance policies. Directors also have opportunities for continuing education, including access to third-party programs as well as our CEO. After considering her qualifications and conducting personal interviews, the Nominating and Corporate Governance Committee unanimously recommended that Ms. Wendell be appointed toregular presentations at Board meetings.
Meetings of the Board and in December 2016,its Committees
The Board met nine (9) times during the fiscal year ended September 28, 2019 and each of our directors attended over 90% of the total number of meetings of the Board and all committees of Directors unanimously elected her to the Board. Unless otherwise instructed,Board on which he or she served, with no director missing more than one (1) meeting. During fiscal 2019, the proxy holders will voteindependent directors of the proxies received by them forBoard met in executive session during each of the Board’s nominees named below. Inregular quarterly meetings and at such other Board and committee meetings as the event that any nominee is unable or declines to serve as a directorindependent directors elected.
Attendance by Directors at the time of the Annual Meeting the proxies will be voted for the nominee, if any, who shall be designated by the presentof Stockholders
Our Board to fill the vacancy. Each nominee has consented to serving asscheduled a director if elected. The proposed nominees are being nominatedBoard meeting in accordanceconjunction with the provisionsAnnual Meeting of our Bylaws. The term of office of each person elected as a director will continue untilStockholders. Our directors are encouraged to attend the next Annual Meeting of Stockholders or until a successor has been elected and qualified.
Ms. Leaming is not standingon March 5, 2020. Last year, all of our directors who were nominated for re-election at the Annual Meeting. Accordingly, the Board, which briefly increased the size of the Board to nine directors, has reduced the size of the Board to eight directors, effective immediately prior to the commencement of the Annual Meeting. Our Board extends its sincere gratitude to Ms. Leaming for her many years of dedicated service.
Vote Required
Directors are currently elected by a plurality of the votes cast by stockholders entitled to vote at the Annual Meeting. Abstentions and broker non-votes will not have any effect on this proposal. Accordingly, the nominees receiving the highest number of “for” votes atelection attended the Annual Meeting willof Stockholders held on March 7, 2019.
Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, we have adopted a Code of Ethics for Senior Financial Officers that applies to our principal executive officer, principal financial officer, principal accounting officer and controller, and other persons performing similar functions. The Company’s Code of Conduct applies to all directors, officers and employees. The Company requires all of its directors, officers and employees to adhere to this code in addressing legal and ethical issues that they encounter in the course of doing their work. This code requires our directors, officers, and employees to avoid conflicts of interest, comply with all laws and regulations, conduct business in an honest and ethical manner and otherwise act with integrity and in the Company’s best interest. All newly hired employees are required to certify that they have reviewed and understand this code. Our Code of Ethics for Senior Financial Officers is publicly available on our website atinvestors.hologic.comas Appendix A to our Code of Conduct.
Certain Relationships and Related-Party Transactions
As provided in its charter, the Audit and Finance Committee reviews and approves related-party transactions (unless such review and approval has been delegated to another committee consisting solely of disinterested independent directors). The non-exclusivity of this delegation provides the Board with flexibility to address the particular circumstances of any related-party transaction. For example, certain related-party transactions involving compensation are approved by the Compensation Committee. Additionally, if one or more members of the Audit and Finance Committee are otherwise conflicted, or for any other reason, the Board reserves the right to establish a separate committee of disinterested independent directors to review a particular transaction. Regardless of the deliberative body of disinterested independent directors reviewing a related-party transaction, the standard applied in reviewing such transaction is whether the transaction is on terms no less favorable to the Company than terms generally available from an unaffiliated third party under the same or similar circumstances. The Board generally considers related-party transactions to be electedthose transactions that are required to be disclosed pursuant to Item 404 of Regulation S-K.
www.hologic.com | 31 |
Proposal No. 1 - Election of Directors
The Board of Directors has a compensation structure consisting of a cash retainer, an annual equity award and, for some positions, a supplemental cash retainer, as directors. However, in accordancedescribed below. As with our Bylaws, in an uncontested election of directors any nominee forexecutive compensation program, the director who receives a greater number of votes “withheld” than votes “for” in such election must promptly tender his or her resignationcompensation program emphasizes equity incentives. This reflects our belief that equity awards serve to our Board, which will consider whether to acceptalign the resignation. This is an uncontested election of directors because the number of nominees for director does not exceed the number of directors to be elected. If any nominee for director in this election receives a greater number of votes “withheld” than votes “for”, then within 90 days after the certification of the election results, the remaining membersinterests of our Board shall, through a process managed by the Nominating and Corporate Governance Committee and excluding the director nominee in question, determine whether to accept such resignation. We will then publicly disclose the determinationdirectors with those of the Board.our stockholders.
Hologic, Inc. 2017 Proxy Statement 16
Benchmarking
The Compensation Committee, in conjunction with the Board of Directors, annually reviews compensation paid to non-employee directors and makes recommendations for adjustments, as appropriate. In December 2018, the Compensation Committee recommended, and the Board approved, the following changes that took effect in the second quarter of fiscal 2019:
●$15,000 increase in Board equity compensation (from $185,000 to $200,000); ●$2,500 increase in the supplemental cash retainer for the Chair of the Audit and Finance Committee (from $20,000 to $22,500); and ●change in the compensation for the Lead Independent Director from a $60,000 equity grant to a $40,000 supplemental cash retainer. These compensation changes, which were recommended by and reviewed with the Compensation Committee’s independent compensation consultant, place the Board’s compensation solidly in the market median. In December 2019, the Compensation Committee reviewed the current compensation structure for non-employee directors, considered advice from its independent compensation consultant and recommended increasing the annual cash retainer of the Nominating and Corporate Governance Chair by $3,000 (to $15,000) and the annual equity grant to all directors by $10,000 (to $210,000.) The Board approved the recommendation. |
RecommendationThe Company reimburses all directors for reasonable travel expenses incurred in connection with Board and committee meetings and offers private air travel for meetings on the west coast of the Board
Our Board unanimously recommends that you vote “FOR” the nominees listed below. Management proxy holders will vote all duly submitted proxies FOR the nominees listed below unless instructed otherwise.
Set forth below is certain biographical information regarding the nominees asUnited States. We also extend coverage under our directors’ and officers’ indemnity insurance policies and have entered into our standard form of January 1, 2017, as well as the experiences, qualifications, attributesIndemnification Agreement with each director. We do not provide any other benefits, including retirement benefits or skills that caused the Nominating and Corporate Governance Committee and the Board to determine that the person should serve as a director.
Christopher J. Coughlin
Director Since: 2016
Age: 64
Mr. Coughlin was electedperquisites, to our Board in 2016. From 2012 to 2016, Mr. Coughlin served as a senior advisor to McKinsey & Co. Mr. Coughlin served as an advisor to Tyco International from 2010 until September 2012. He was Executive Vice President and Chief Financial Officernon-employee directors.
32 | 2020 Proxy Statement |
Proposal No. 1 - Election of Tyco into five independent, public companies and provided financial leadership surrounding major transactions, including the $2 billion acquisition of Broadview Security, among many other responsibilities and accomplishments. Prior to joining Tyco, he worked as the Chief Operating Officer of the Interpublic Group of Companies from June 2003 to December 2004, as Chief Financial Officer from August 2003 to June 2004 and as a director from July 2003 to July 2004. Previously, Mr. Coughlin was Executive Vice President and Chief Financial Officer of Pharmacia Corporation from 1998 until its acquisition by Pfizer in 2003. Prior to that, he was Executive Vice President of Nabisco Holdings and President of Nabisco International. Mr. Coughlin currently serves on the board of Dun & Bradstreet, where he is a former member of the Audit Committee, chairs the Nominating and Governance Committee, and is a member of the Compensation and Benefits Committee. He also serves on the board of Alexion Pharmaceuticals, where he is Chairman of the Audit Committee and a member of the Pharmaceutical Compliance and Quality Committee, and on the board of Allergan plc (formerly Actavis plc), where he is Lead Director as well as a member of the Compensation Committee and the Nominating and Corporate Governance Committee. In addition, Mr. Coughlin previously served on the boards of Covidien plc, Dipexium Pharmaceuticals, Inc., Forest Laboratories, Inc., The Interpublic Group of Companies, Monsanto Company and Perrigo Company. Mr. Coughlin has a B.S. in accounting from Boston College. Mr. Coughlin’s depth of experience in executive leadership roles within complex corporate organizations, his financial background and his audit committee service on public company boards contribute critical risk oversight and management insight to our Board.Directors
Sally W. Crawford
Director Since: 2007
Age: 63
Ms. Crawford became one of our directors effective upon our merger with Cytyc Corporation (“Cytyc”) in October 2007, having previously served as a director of Cytyc since January 1998. From April 1985 until January 1997, Ms. Crawford served as Chief Operating Officer of Healthsource, Inc., a publicly held managed care organization headquartered in New Hampshire. During her tenure at Healthsource, Inc., Ms. Crawford held a variety of positions and responsibilities, including leading that company’s Northern Region operations and marketing efforts. Since January 1997, she has been a healthcare consultant in New Hampshire. Ms. Crawford serves as a director of Universal American Corporation, where she is Chair of the Compliance Committee and Chair of the Nominating Committee, and Insulet Corporation, where she is Chair of the Compensation Committee and a member of the Nominating and Governance Committee. Ms. Crawford served as a director of Exact Sciences Corporation from 1998 to 2015, Chittenden Corporation from 1998 to 2008 and Zalicus Inc. (now EPIRUS Biopharmaceuticals, Inc.) from 2007 to 2014. Ms. Crawford earned a Bachelor’s Degree from Smith College and a Master’s Degree in Communications from Boston University. Ms. Crawford’s service in various senior executive positions in the managed care sector and her continuing healthcare consulting practice contribute to her significant management and leadership experience and expertise in operational, regulatory and related disciplines applicable to our business and operations.
Hologic, Inc. 2017 Proxy Statement 17
Cash Retainers | |||||
Board Members Cash retainers are paid quarterly at the beginning of each quarter. In fiscal 2019, the non-employee director annual cash retainer was $70,000 during the first fiscal quarter and $80,000 during each subsequent fiscal quarter, resulting in an effective annual cash retainer of $77,500. | Committee Members Effective in the second quarter of fiscal 2019, supplemental cash retainers for committee membership were eliminated. For the first quarter of fiscal 2019: ●Each member of the Audit and Finance Committee and the Compensation Committee received a supplemental cash retainer of $2,500, which is one-fourth of the $10,000 annual supplemental cash retainer then in effect, and ●Each member of the Nominating and Corporate Governance Committee received a supplemental cash retainer of $1,500, which is one-fourth of the $6,000 annual supplemental cash retainer then in effect. | ||||
Lead Independent Director In fiscal 2019, the Lead Independent Director received a $40,000 supplemental cash retainer rather than the $60,000 supplemental equity grant she received in 2018. | Committee Chairs Audit and Finance Committee In the first fiscal quarter of 2019, the Chair of the Audit and Finance Committee received a supplemental cash retainer of $5,000, which is one-fourth of the supplemental annual cash retainer of $20,000 then in effect. Beginning in the second fiscal quarter of 2019, the supplemental annual cash retainer was increased to Compensation Committee The Chair of the Compensation Committee received a supplemental annual cash retainer of $20,000, one-fourth of which was paid each quarter. Nominating and Corporate Governance Committee The Chair of the Nominating and Corporate Governance Committee received a supplemental annual cash retainer of $12,000, one-fourth of which was paid each quarter. | ||||
Equity Awards In fiscal 2019, each non-employee director received an annual equity grant having a value of $200,000 on the date of the grant, with the number of shares determined under U.S. generally accepted accounting principles (GAAP). Of this award, $100,000 consisted of restricted stock units (RSUs) and $100,000 consisted of options to purchase common stock of the Company. The RSUs and options are granted on the date of each Annual Meeting and vest on the date of the next year’s Annual Meeting; options have a term of 10 years. A non-employee director who joins the Board after the date of an Annual Meeting receives a pro-rated grant based on the number of days served through the next Annual Meeting. Each of our non-employee directors elected at our Annual Meeting in March 2019 received an annual equity grant. |
www.hologic.com | 33 |
Proposal No. 1 - Election of Directors
Stock Ownership Guidelines We believe that stock ownership by our non-employee directors aligns the interests of our directors with the long-term interests of our stockholders. Accordingly, the Company has significant stock ownership guidelines in place. In June 2015, the Board of Directors strengthened these ownership guidelines by increasing them for non-employee directors from three times annual base cash retainer to five times annual base cash retainer. Each non-employee director is expected to meet this ownership guideline within five years of his or her election to the Board or by June 2020, whichever is later. For purposes of meeting these guidelines, only the value of shares which are issued and outstanding, or restricted stock units which have vested but as to which settlement has been deferred, will be counted. All of our non-employee directors who have been subject to the guidelines for five years have met or exceeded the guidelines. |
Scott T. Garrett
Director Since: 2013
Age: 67
Mr. Garrett joinedThe following table sets forth the compensation paid to our non-employee directors for service on our Board in May 2013. Mr. Garrett is currently a Senior Operating Partner at Water Street Healthcare Partners. He joined Water Street in 2011 after approximately 35 years induring the global healthcare industry. Prior to joining Water Street, Mr. Garrett served as Chairman, President and Chief Executive Officer of Beckman Coulter, a leading biomedical company, from 2008 to 2011. Mr. Garrett joined Beckman Coulter in 2002 as President, Clinical Diagnostics Division and was promoted in 2003 to President and Chief Operating Officer. In January 2005, he became Chief Executive Officer, adding the position of Chairman in 2008. Prior to that, Mr. Garrett served as Vice Chairman and Interim Chief Executive Officer of Kendro Laboratory Products from 1999 to 2001. From 1994 to 1998, he served as Chairman, President and Chief Executive Officer of Dade Behring, a leading diagnostics company. He began his career at American Hospital Supply Corporation and continued there after that company was acquired by Baxter International, ultimately serving as Chief Executive of Baxter’s global laboratory business, Baxter Diagnostics. Mr. Garrett received a B.S. in Mechanical Engineering from Valparaiso University and an M.B.A. from Lake Forest Graduate School of Management. Mr. Garrett currently serves on the boards of companies in which Water Street has an ownership interest, including MarketLab Inc. and Orgentec Diagnostics. He also serves as a director of Immucor, Inc. Mr. Garrett’s experience as a Chief Executive Officer and in other senior leadership positions with biomedical and diagnostics companies enables him to bring an operational perspective as well as valuable insights and experience to the Board.
Lawrence M. Levy
Director Since: 2005
Age: 78
Mr. Levy has been a director since December 2005. Mr. Levy retired from the position of Senior Counsel at Brown Rudnick LLP, an international law firm, in January 2011. He had been Senior Counsel at Brown Rudnick since February 2005, andfiscal year ended September 28, 2019. Compensation for more than 30 years before that had been a Partner at the firm, specializing in Corporate and Securities Law. Mr. Levy served as our Secretary from our formation in 1985 until December 2005. Mr. Levy is a director of the Facing History and Ourselves, Inc. and previously served as a director of Scivanta Medical Corporation. Mr. Levy received a B.A. from Yale University and an LLB from Harvard Law School. Mr. Levy is a seasoned corporate attorney with extensive experience in representing public and private companies in the United States and abroad. Mr. Levy chaired Brown Rudnick’s International Practice Group and, in 1997, opened Brown Rudnick’s London office, dividing his time between the firm’s London and Boston offices for more than 13 years. Mr. Levy’s broad legal and cross-border transactional experience enables him to provide valuable insights and perspectives to the Board.
Stephen P. MacMillan,
Director Since: 2013
Age: 53
Mr. MacMillan was appointed as President, Chief Executive Officer and a director in December 2013 and was elected Chairman of the Board in June 2015. From October 2012 to December 2013, Mr. MacMillan was the Chief Executive Officer of sBioMed, LLC, a biomedical research company. From 2003 to 2012, he served in various roles at Stryker Corporation, including Chief Operating Officer from 2003 to 2005, Chief Executive Officer from 2005 to 2012 and Chairman from 2010 to 2012. Prior to 2003, Mr. MacMillan was a senior executive with Pharmacia Corporation, where he oversaw five global businesses. Prior to joining Pharmacia, Mr. MacMillan spent 11 years with Johnson & Johnson in a variety of senior roles in both the U.S. and Europe, including as President of its consumer pharmaceuticals joint venture with Merck. Mr. MacMillan began his career with Procter & Gamble in 1985. Mr. MacMillan currently serves on the board of directors of Boston Scientific Corporation, where he is a member of the Executive Compensation and Human Resources Committee and the Nominating and Governance Committee. Mr. MacMillan previously served on the board of directors of Alere, Inc. from 2013 to 2015 and Texas Instruments Incorporated from 2008 to 2012. Mr. MacMillan holds a Bachelor of Arts degree in economics from Davidson College, and is a graduate of the Harvard Business School’s Advanced Management Program. As our Chairman, President and Chief Executive Officer, is set forth in the Summary Compensation Table on page 65. Mr. MacMillan has direct responsibilitydoes not receive any additional compensation for the Company’s strategy and operations. During his tenure at Hologic, Mr. MacMillan has led the company through a period of dramatic transformation and revitalization, continued market share gains and sustained revenue growth. Through his leadership, he has positioned Hologic to drive sustainable growth. His performance as CEO, together with his many years of experience in the healthcare industry, make him an invaluable contributor to the Board and uniquely qualified to serve as Chairman.
Hologic, Inc. 2017 Proxy Statement 18
Christiana Stamoulis
Director Since: 2011
Age: 46
Ms. Stamoulis has been a director since November 2011. In January 2015, Ms. Stamoulis was appointed Chief Financial Officer and Head of Corporate Development at Unum Therapeutics. Prior to Unum, she was an independent advisor to biopharmaceutical companies from January 2014 to December 2014. Prior to that, Ms. Stamoulis served as Senior Vice President of Corporate Strategy and Business Development at Vertex Pharmaceuticals Incorporated from 2009 until December 2013. Ms. Stamoulis joined Vertex in 2009 with approximately 15 years of experience in the investment banking and management consulting industries where she advised global pharmaceutical and biotechnology companies on strategic and corporate finance decisions. Prior to joining Vertex, she was a Managing Director in the Investment Banking division of Citigroup from 2006 to 2009 where she led the building of the firm’s U.S. Life Sciences investment banking practice. Prior to her role at Citigroup, she was at Goldman, Sachs & Co. where she spent the majority of her investment banking career. Ms. Stamoulis started her careerservice as a strategy consultant at The Boston Consulting Group. Ms. Stamoulis holds a Bachelor of Science degree in Economics and a Bachelor of Science degree in Architecture from the Massachusetts Institute of Technology (MIT).director. Additionally, she holds a Master of Business Administration from the MIT Sloan School of Management where she focused on Applied Economics and Finance. Ms. Stamoulis’ solid foundation in strategic development, coupled with her extensive experience in executing initiatives for growth in the medical products field and related industries, enable her to provide valuable insights to the Board.
Elaine S. Ullian
Director Since: 2007
Age: 69
Ms. Ullian has been a director since October 2007 and our Lead Independent Director since June 2015. Ms. Ullian served as President and Chief Executive Officer of Boston Medical Center, the successor of Boston University Medical Center Hospital, from 1996 until her retirement in January 2010. In April 1994, Ms. UllianLudwig N. Hantson was appointed President and Chief Executive Officer of Boston University Medical Center Hospital. From January 1987 to March 1994, Ms. Ullian held the position of President and Chief Executive Officer of Faulkner Corporation/Faulkner Hospital. She holds two academic appointments: Associate Professor at Boston University School of Medicine and lecturer at Harvard University School of Public Health. Ms. Ullian also serves as a director of Vertex Pharmaceuticals Incorporated, where she is Co-Lead Director, Chair of the Corporate Governance and Nominating Committee and a member of the Management Development and Compensation Committee, and Thermo Fisher Scientific Inc., where she is a member of the Compensation Committee. Ms. Ullian previously served as one of our directors from 1996 to 2003 and served as a director of Valeant Pharmaceuticals International, Inc. from 2004 to 2008. As former Chief Executive Officer of three hospitals, including two major academic medical centers, Ms. Ullian brings knowledge and understanding of Hologic’s customer base, as well as their priorities and challenges. All three institutions led by Ms. Ullian over a 25-year period had a strong commitment to accessible health care, and a particular focus on women’s health services. As a person whose career had been dedicated to the provision of clinical care services to patients, she brings an important perspective to the Board.
Amy M. Wendell
Director Since: 2016
Age: 56
Ms. Wendell was appointedelected to our Board in December 2016. Since January 2016, Ms. Wendell has been a Senior Advisornear the end of the first quarter of fiscal 2019 and did not receive compensation for Perella Weinberg Partner’s Healthcare Investment Banking Practice. Her scopethat quarter.
2019 Director Compensation Table
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Total ($) | ||||||
Sally W. Crawford | 122,000 | 99,986 | 99,998 | 321,984 | ||||||
Charles J. Dockendorff | 99,375 | 99,986 | 99,998 | 299,359 | ||||||
Scott T. Garrett | 99,000 | 99,986 | 99,998 | 298,984 | ||||||
Ludwig N. Hantson | 60,000 | 127,361 | (2) | 127,381 | (2) | 314,742 | ||||
Namal Nawana | 81,500 | 99,986 | 99,998 | 281,484 | ||||||
Christiana Stamoulis | 80,000 | 99,986 | 99,998 | 279,984 | ||||||
Amy M. Wendell | 80,000 | 99,986 | 99,998 | 279,984 |
(1) | The value of Stock Awards and Option Awards represents the grant date fair value of such award. The fair value of Stock Awards, which are RSUs, is based on the closing price of our common stock on the grant date. The fair value of Option Awards, which are stock options, is determined by use of a binomial lattice model. For a detailed description of the assumptions used to calculate the grant date fair value of stock options, see Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended September 28, 2019. |
(2) | Includes the 2019 annual equity award as well as a pro-rated equity award granted when Dr. Hantson joined the Board in November 2018. |
The following table sets forth the aggregate number of responsibilities involves providing guidanceStock Awards and advice with respect to mergersOption Awards (representing unexercised option awards, both exercisable and acquisitionsunexercisable, and divestures for clients and assisting the firm in connection with firm-level transactions. Since 2015, Ms. Wendell has been a Senior Advisor for McKinsey’s Strategy and Corporate Finance Practice and also servesunvested RSUs) held at September 28, 2019 by each person (other than Mr. MacMillan) then serving as a memberdirector.
Name | Number of Units of Stock that have not Vested (#) | Number of Shares Subject to Option Awards Held (#) | ||
Sally W. Crawford | 2,136 | 51,587 | ||
Charles J. Dockendorff | 2,136 | 19,470 | ||
Scott T. Garrett | 2,136 | 72,681 | ||
Ludwig N. Hantson | 2,136 | 8,535 | ||
Namal Nawana | 2,136 | 15,187 | ||
Christiana Stamoulis | 2,136 | 60,783 | ||
Amy S. Wendell | 2,136 | 22,390 |
34 | 2020 Proxy Statement |
Hologic, Inc. 2017 Proxy Statement 19
Executive officers are chosen by and serve at the discretion of the Board. Set forth below are the names and ages of our executive officers, as of January 1, 2017,2020, along with certain biographical information for all but Stephen P. MacMillan, our Chairman, President and Chief Executive Officer. For Mr. MacMillan’s biographical information, please see page 18.
Name | Age | Title | ||
Stephen P. MacMillan | 56 | Chairman, President and Chief Executive Officer | ||
Chief Financial Officer | ||||
John M. Griffin | 59 | General Counsel | ||
Allison P. Bebo | 51 | Senior Vice President, Human Resources | ||
Kevin R. Thornal | 46 | Division President, Diagnostics | ||
Peter J. Valenti, III | 56 | Division President, Breast and Skeletal Health |
Ms. Oberton
Chief Financial Officer Ms. Oberton became our Chief Financial Officer in August 2018. She joined Hologic in 2006 as corporate controller and was promoted to Chief Accounting Officer in 2015. Before joining Hologic, Ms. Oberton served as senior corporate controller of Immunogen from 2004 to 2006. Prior to that, she was an Audit Senior Manager in Ernst & Young’s Life Science practice and in Arthur Andersen’s High Technology practice. Ms. Oberton was an active Certified Public Accountant for more than 18 years and holds a Bachelor of Science in Business Administration from Merrimack College. She is a member of Merrimack College’s Leadership Council. | |||
Mr. Griffin
General Counsel Mr. Griffin joined us in February 2015 as General Counsel with nearly 30 years of experience across a broad spectrum of legal matters. Mr. Griffin worked at Covidien from 2000 to 2015 where he most recently served as Vice President, Deputy General Counsel. Previously, from 1994 to 2000, Mr. Griffin served as Assistant United States Attorney in Boston, Massachusetts, and prosecuted complex criminal cases. He began his career at Nutter, McClennen & Fish in Boston. Mr. Griffin currently serves on the board of directors for Por Cristo in Boston and New England Legal Foundation. He also serves as Treasurer and on the Board of Directors for Health Care Volunteers International. He has a Juris Doctor degree from Harvard Law School and a Bachelor of Arts in political science from Columbia University. | |||
Ms. Bebo
Senior Vice President, Human Resources Ms. Bebo joined us in February 2015 as Senior Vice President, Human Resources with 15 years of human resources experience. From 2000 to 2015, Ms. Bebo held various human resources leadership positions within ANN INC., primarily focused on talent acquisition, associate relations, and talent management. She most recently served as Vice President, Talent Management. From 2007 to 2012, she served as the Vice President, Human Resources for the Ann Taylor and LOFT field organization. She served as Director of Organizational Effectiveness from 2004 to 2007 and as Director of Talent Resources from 2000 to 2004. She holds a Bachelor of Arts in political science from the University of California, Los Angeles. | |||
www.hologic.com | 35 |
Executive Officers
Mr. Thornal
Division President, Diagnostics Mr. Thornal became the President of our Diagnostics Division in July 2019. He joined Hologic in 2014 as Vice President, Customer Experience, Field Service and Clinical Applications for the Breast and Skeletal Health division. He transitioned to Vice President, Breast and Skeletal Health for the Europe, Middle East and Africa region in early 2016, and was promoted to President of Hologic’s Medical Aesthetics Division in July 2017. Prior to joining Hologic, Mr. Thornal worked at Stryker from 2004 to 2014 in positions of increasing responsibility in sales, marketing, and mergers and acquisitions. Throughout his career, he has established a track record of leading businesses that deliver strong growth and commercial excellence. Mr. Thornal previously played professional football, including a short stint with the Atlanta Falcons. He holds a Bachelor of Arts in History, with minors in English and Secondary Education, from Southern Methodist University. | |||
Mr. Valenti
Division President, Breast and Skeletal Health Mr. Valenti joined us in May 2014 as Division President, Breast and Skeletal Health, with approximately 30 years of sales, brand and product management experience, including 20 years focused on healthcare products. Prior to joining the Company, Mr. Valenti was a Principal at The New England Consulting Group where he served as a consultant to numerous healthcare companies, including Johnson & Johnson, Alcon, Cardinal Health, Align Technology, Inc. and Bausch + Lomb Inc. Mr. Valenti assumed his consulting role following his four-year tenure in the North American and Global President roles of Bausch + Lomb’s Vision Care business from 2009 to 2013. From 2007 to 2009, Mr. Valenti was the General Manager, U.S. Region for Covidien’s Surgical Devices business. From 1995 to 2007, Mr. Valenti was with Johnson & Johnson and held positions of increasing responsibility including Vice President, Global Franchise for the Vistakon business and Executive Director, Women’s Health for Johnson & Johnson’s Personal Products business. Mr. Valenti began his career at Procter & Gamble. He received a Master of Business Administration from Cornell University and a Bachelor of Science in business administration from the University of Connecticut. | |||
36 | 2020 Proxy Statement |
Mr. Compton joined usPROPOSAL NO. 2 - NON-BINDING ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as the provisions of Section 14A of the Exchange Act, require that we provide our stockholders with the opportunity to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in Aprilthis proxy statement in accordance with the compensation disclosure rules of the SEC. Our Board has determined to provide our stockholders this opportunity on an annual basis.
As described in the Compensation Discussion and Analysis (the CD&A), our executive compensation philosophy is to provide appropriate competitive compensation opportunities to our executives with actual pay outcomes heavily influenced by the achievement of Company performance targets and individual performance objectives (in other words, “pay for performance”) in support of our business strategy and creation of long-term stockholder value. The Company’s management team has been embracing a performance culture and driving growth of the business. Over the last five years, our stock price and our revenue, as well as the engagement of our employees, has increased significantly.
Each year, we take into account the result of the “say-on-pay” vote cast by our stockholders. During the tenure of our current management team, we have seen our say-on-pay vote approval increase from 34% at our 2014 Annual Meeting of Stockholders to 95% at our 2017 Annual Meeting of Stockholders. While we saw declines in 2018 (74% approval) and 2019 (66% approval), the only significant changes to our annual compensation program from fiscal 2016 to fiscal 2017/2018 were two stockholder-friendly changes. We added relative TSR as Chief Operating Officer. From 1995a PSU performance measure and amended our CEO’s Employment Agreement to 2014, Mr. Compton workedadd adjusted net income as a check on adjusted EPS for determination of the value of his annual long-term incentive grant. We believe the decrease in say-on-pay approval was related to the special CEO retention equity grant made in December 2017 (which was disclosed in the proxy statements for the 2018 and 2019 Annual Meetings), including the negative say-on-pay vote recommendations from proxy advisory firms, who did not appear to take into account the unique nature of the situation leading to the special retention grant. We have discussed this legacy grant in detail during direct outreach with our largest stockholders as well as in our public filings.
Our Compensation Committee continually evaluates the design and direction of our compensation structure. Previously, in response to stockholder feedback, we introduced performance stock units (PSUs) tied to return on invested capital (ROIC) as a significant component of long-term equity awards. After careful consideration, effective for fiscal 2017 long-term equity awards, the Compensation Committee determined to add relative total shareholder return (TSR) as an additional performance metric applicable to the PSUs. In our discussions with stockholders, there continues to be strong support for the TSR and ROIC metrics, as well as our TSR construct, which sets target at Johnson & Johnsonmedian and does not have an absolute component. Stockholders expressed appreciation for the considered, balanced approach in roles of increasing responsibility.utilizing a consistent absolute metric (ROIC) and a relative metric (TSR) for PSUs. Most recently, Mr. Compton servedeffective for fiscal 2020 long-term equity awards, the Compensation Committee determined to add free cash flow as an additional performance metric applicable to the Worldwide President, Ortho Clinical DiagnosticsPSUs. We previewed this approach during our fall 2019 outreach and stockholders were generally supportive of the addition, which they thought makes sense for Johnson & Johnson. Inthe Company, although some did comment on emerging views regarding simplification of compensation design and movement away from performance measures.
Stockholders are urged to read our CD&A, beginning on page 39, and the section entitled “Executive Compensation Tables” beginning on page 65 for additional details about our executive compensation programs, including information about the fiscal 2019 compensation of our NEOs.
www.hologic.com | 37 |
Proposal No. 2 - Non-Binding Advisory Vote to Approve Executive Compensation
We are asking our stockholders to indicate their support for our NEO compensation as described in this position, he was accountable for over $2 billion in global sales across multiple disciplines and held direct responsibility for a workforce of more than 2,800 individuals. From 2011 to August 2012, Mr. Compton served as General Manager, Ortho Clinical Diagnostics and from 2009 to 2011, he served as Worldwide Vice President, Franchise Strategic Marketing, Diabetes Care. Mr. Compton served in various sales and marketing leadership roles at Johnson & Johnson earlier in his career. Prior to joining Johnson & Johnson, Mr. Compton was a Business Development Manager at Procter & Gamble. He began his career in 1986 at Procter & Gambleproxy statement. This proposal, commonly known as a Sales Representative. Mr. Compton“say-on-pay” proposal, gives you as a stockholder the opportunity to express your views on our NEOs’ compensation. This vote is not intended to address any specific element of our compensation programs, but rather to address our overall approach to the compensation of our NEOs described in this proxy statement. To that end, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
RESOLVED, that stockholders of Hologic, Inc., hereby approve the compensation paid to the Company’s named executive officers, as described in this proxy statement under the “Compensation Discussion and Analysis” section, the “Executive Compensation Tables” section and other narrative disclosure contained therein, pursuant to the SEC’s compensation disclosure rules.
Because your vote is advisory, it will not be binding upon the Company, the Compensation Committee or our Board. However, the Company values the opinions expressed by stockholders in their vote on this proposal and the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding our executive compensation programs.
Vote Required
Approval of this proposal requires the affirmative vote of a membermajority of shares present, in person or represented by proxy, and voting on this proposal at the Annual Meeting. Abstentions and broker “non-votes” will not have any effect on the proposal to approve executive compensation as disclosed in this proxy statement.
Recommendation of the Board
Our Board of Directors unanimously recommends that you vote“FOR” the approval of this resolution. Management proxy holders will vote all duly submitted proxies FOR approval unless instructed otherwise. |
We, the Compensation Committee of the Board of AdvaMed DXDirectors of Hologic, Inc., have reviewed and holds a Mastersdiscussed the Compensation Discussion and Analysis (CD&A) set forth below with management of Business Administration from Kennesaw State Universitythe Company, and a Bachelor of Arts from the University of Richmond.
Mr. Griffin joined us in February 2015 as General Counsel with nearly 30 years of experience across a broad spectrum of legal matters. Mr. Griffin worked at Covidien from 2000based on such review and discussion, recommended to 2015 where he most recently served as Vice President, Deputy General Counsel. Previously, from 1994 to 2000, Mr. Griffin served as Assistant United States Attorney in Boston, Massachusetts, and prosecuted complex criminal cases. He began his career at Nutter, McClennen & Fish in Boston. Mr. Griffin currently serves on the board of directors for Por Cristo in Boston and New England Legal Foundation. He also serves as Treasurer and on the Board of Directors for Health Care Volunteers International. He has a Juris Doctorate from Harvard Law School and a Bachelor of Artsthat the CD&A be included in Political Science from Columbia University.
Mr. McMahon joined us in May 2014 as Chief Financial Officer with more than 20 years of healthcare finance experience. From 1993 to 2014, Mr. McMahon worked at Johnson & Johnson in executive finance roles of increasing responsibility. Most recently, Mr. McMahon served as the Worldwide Vice President, Finance and Business Development, Ortho Clinical Diagnostics for Johnson & Johnson. From 2006 to 2011, Mr. McMahon served as Vice President, Finance, Consumer Group and from 2004 to 2006 he served as Vice President, Finance, Networking & Computing Services. Earlier in his career at Johnson & Johnson, Mr. McMahon worked in various financial roles at the divisional and corporate headquarters levels. Mr. McMahon began his career in 1991 at Harris Corporation in Florida. Mr. McMahon is a Certified Management Accountant and holds a Masters of Business Administration from the University of Central Florida and a Bachelor of Science in Business Administration from the University of Florida.
Mr. Valenti joined us in May 2014 as Division President, Breast and Skeletal Health Solutions with nearly 30 years of sales, brand and product management experience, including 20 years focused on healthcare products. Prior to joining the Company, Mr. Valenti was a Principal at The New England Consulting Group where he served as a consultant to numerous healthcare companies, including Johnson & Johnson, Alcon, Cardinal Health, Align Technology, Inc. and Bausch + Lomb Inc. Mr. Valenti assumed his consulting role following his four-year tenure in the North American and Global President roles of Bausch + Lomb’s Vision Care business from 2009 to 2013. From 2007 to 2009, Mr. Valenti was the General Manager, U.S. Region for Covidien’s Surgical Devices business. From 1995 to 2007, Mr. Valenti was with Johnson & Johnson and held positions of increasing responsibility including Vice President, Global Franchise for the Vistakon business and Executive Director, Women’s Health for Johnson & Johnson’s Personal Products business. Mr. Valenti began his career at Procter & Gamble. He received a Masters of Business Administration from Cornell University and a Bachelor of Science in Business Administration from the University of Connecticut.
Mr. West joined us in October 2014 as Division President, Diagnostics Solutions with more than 20 years of healthcare experience. From 1992 to 2014, Mr. West worked at Johnson & Johnson in various roles of increasing responsibility across the globe. Most recently, he served as the Worldwide Vice President – Strategy and Business Development for Johnson & Johnson’s Diabetes Solutions Companies. Previously, he served as President of LifeScan North America and as President of LifeScan EMEA. Mr. West has a proven track record in formulating and implementing growth strategies in the life sciences and consumer healthcare industries in the U.S., Canada, Europe, the Middle East, Africa and Latin America. He has a bachelor’s degree in Politics and Economics from Princeton University and a Masters of Business Administration in Marketing and Strategic Management from the University of Pennsylvania, Wharton School.
this report.
Hologic, Inc.Compensation Committee 2017 Proxy Statement 20Scott T. Garrett,Chair
Sally W. Crawford
Ludwig N. Hantson
Namal Nawana
38 | 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”)
In this Compensation Discussion and Analysis section (CD&A), we describe the executive compensation program for our CEO, CFO and our three other most highly compensated executive officers serving as of September 28, 2019 (collectively, our named executive officers, (“NEOs”)or NEOs). We also explain how the Compensation Committee of the Board of Directors (the “Committee”) determined the pay of our NEOs and its rationale for specific decisions related to fiscal 2016 (September 27, 2015 –2019 compensation. As a reminder, our fiscal year ends on the last Saturday in September. Fiscal 2019 began on September 24, 2016) compensation.30, 2018 and ended on September 28, 2019.
Our Named Executive Officers (NEOs) for Fiscal 2016
2019
Name | Title |
Stephen P. MacMillan | Chairman, President and Chief Executive Officer |
Chief Financial Officer | |
John M. Griffin | General Counsel |
Kevin R. Thornal | Division President, Diagnostics |
Peter J. Valenti, III | Division President, Breast and Skeletal Health |
20162019 Business Strategy & Performance Highlights
Fiscal 2016 was another strongBuilding on our success in the second half of fiscal 2018, Hologic had a very good year for Hologic, asin fiscal 2019. Each of our divisions and geographies are stronger today than they were a year ago, other than our Medical Aesthetics business, which we continued our evolution torecently divested. We accelerated growth in the United States, built a sustainable growth company. The Company’s Genius 3D MAMMOGRAPHY™ technologyengine internationally, launched many innovative new products, and expanded through acquisitions. We exceeded our financial goals overall, as revenues grew by more than 4.6% or 5.7% in constant currency. While GAAP earnings per share decreased by 90%, adjusted earnings per share increased by 9%(1). We remain committed to fueling growth through tuck-in acquisitions and continuing to enhance the product pipeline in each of our businesses, and we believe we are well-positioned for continued to lead the waysuccess in breast cancer screening and diagnosis, while our Diagnostics and GYN Surgical businesses also grew on a consistent basis. The rapid cohesion and effectiveness of the management team, all of whom joined the Company during fiscal 2014 and 2015, was a key factor in driving performance throughout the Company, with improved execution generating broad and deep growth.
2020.
Breast Health | Diagnostics | ||||
Growth was solid in our | We generated solid growth by placing more of our | ||||
leader in the U.S. liquid cytology market. | |||||
Medical Aesthetics | |||||
A revamped and more competitive sales force helped quarterly revenue growth increase sequentially in each quarter of | During fiscal 2019, we began considering divesting our Medical Aesthetics business, which continued to have revenue and other operating challenges in 2019. In early fiscal 2020, we completed the divestiture of Medical Aesthetics, allowing us to focus on our core businesses and long-term strategies. | ||||
International | |||||
We continued to build a solid infrastructure for sustainable growth with new leadership, new products, and new capabilities across our divisions internationally. Total international revenue of $831 million grew 3.9%, or 8.2% in constant currency. Our Diagnostics and Breast Health businesses provided most of the revenue growth in dollar terms, while our Surgical division posted the fastest growth rate. Our businesses remain very under-penetrated outside the United States, so we see tremendous runway still ahead for future growth and | |||||
www.hologic.com | 39 |
The threeCompensation Discussion and Analysis
All four financial performance metrics we utilizeuse in our compensation plans, adjusted revenueEPS2(1), adjusted EPSrevenue3(2), return on invested capital (ROIC)(3)and ROIC, allrelative total shareholder return improved significantly from fiscal 20152018 to fiscal 2016.2019.
Overall, we continued to execute on strategies to accelerate growth in fiscal 2019 and posted very good results. We believe that we are entering 2020 with strong momentum both strategically and operationally.
The definition of non-GAAP adjusted EPS as used as a performance measure in our Short-Term Incentive Plan and a reconciliation of non-GAAP adjusted EPS to GAAP EPS is provided inAnnex A to this proxy statement. | |
(2) | The definition of non-GAAP adjusted revenue as used as a performance measure in our Short-Term Incentive Plan and a reconciliation of non-GAAP adjusted revenue to GAAP revenue is provided inAnnex A to this proxy statement. |
(3) | As used in our Long-Term Incentive Plan, ROIC means adjusted net operating profit after tax divided by the sum of average net debt and average stockholders’ equity. See “Why |
Hologic, Inc. 2017 Proxy Statement 21
Our Journey to Sustainable Growth Since Mr. MacMillan joined the Company early in fiscal 2014, the Company has strengthened its commercial leadership positions in the United States, created a sustainable growth engine internationally, revitalized its research and development pipelines, and built business development capabilities to supplement internal growth. These activities, driven by a talented and engaged workforce, have led to consistent growth in annual revenue and we believe have had a direct result on our stock performance and total shareholder return (“TSR”). |
Total Shareholder Return (“TSR”) |
Our Journey to Sustainable Growth
Financial results for one year are a snapshot of short-term performance. Our focus is long-term. Since Mr. MacMillan joined the Company in December 2013, the Company has invested significantly in its people and its products. The power of focused, motivated people is evident and has driven strong growth in annual revenue and profits, among other things.
+21.1% FY19 TSR | |||
9/28/2018 | 9/27/2019 | ||
TSR since Mr. MacMillan’s appointment as CEO | |||
12/6/2013 | $49.61 9/27/2019 |
Fiscal 2019 Executive Compensation Highlights
In establishing the executive compensation program for fiscal 2019, the Committee continued to focus on pay for performance and competitive pay, with an emphasis on total direct compensation.
40 | 2020 Proxy Statement |
Compensation Discussion and Analysis
Emphasis on Performance-Based Total Direct Compensation
The components of Total Direct Compensation (TDC) are Base Salary, Short-Term Incentives, Long-Term Incentives and Deferred Compensation Awards.
● | Short-Term Incentivestake the form of annual cash bonuses under our Short-Term Incentive Plan (STIP), which are paid only if the Company achieves adjusted revenue and adjusted earnings per share (EPS) performance above a pre-determined threshold. |
● |
November 2013: BeforeThe charts below, which show the current management team was in place, our sales and earnings were declining, we had $4.4 billion in debt, and we had no meaningful product pipeline. Our interest expense on our debt was higher than our expenditures on research and development (“R&D”).
September 2016: Under the stewardshipTDC of our newCEO and engaged management team, with significant contributions by our sales teams,other NEOs for fiscal 2019, illustrate that a majority of NEO TDC is performance based (91.2% for our sales have not only stopped declining, but have returnedCEO and an average of 78.6% for our other NEOs). These charts exclude the value of other benefits and perquisites.
Performance Measures Link to consistent growth, with GYN Surgical business recording double-digit growth in fiscal 2016. In addition, sales of two of our maturing products, ThinPrep®and NovaSure®, which were declining sharply in 2013, returned to solid growth in 2016. As ThinPrep®and NovaSure®stabilized, we also maximized growth drivers such as our Genius 3D MAMMOGRAPHY™ systems and the Panther®platform in molecular diagnostics. This stabilization and growth underscores the power of our people and the strong performance of our products.
Strategy
In addition to revenue growth,setting performance measures for the incentive compensation plans, the Committee first considers the Company’s disciplined approach to strengtheningstrategy, contemplating the balance sheetCompany’s long- and short-term goals and how those goals are measured.
As the Company has also paid off. From fiscal 2013 to fiscal 2016 our net debt, which is total debt minus cash, decreased from $4.0 billion to $2.8 billion and our ROIC improved significantly.
While decreasing our debt, we have also increased our R&D spending 17.5% since 2013. This investment is beginning to yield benefits as well, with several new product launches in 2016 and significantly more planned through 2020.
These improvements have helped drive our share price. Our share price has increased by 83.9% since 2013, basedbeen focused on a comparison of the closing price on the last trading day of fiscal 2013 to the closing price on the last trading day of fiscal 2016. We are committed to bringing value to our stockholders,growth as well as efficient use of capital and creating value for stockholders, the Committee determined that using the measures of adjusted revenue, adjusted EPS and ROIC were appropriate for the incentive compensation plans. These are all non-GAAP measures that are used by management to our employeesfacilitate its operational decision-making and customers, overprovide key insights into the long term.Company and management’s achievements. Additionally, the use of ROIC was specifically supported in discussions with stockholders. The Committee added the measure of relative TSR in fiscal 2017 to provide an external performance measure and also link executive compensation directly to the creation of stockholder value. In fiscal 2020, the Committee added the measure of free cash flow (FCF). FCF is an important metric for the Company as it seeks to continue to deploy capital efficiently with continued business development activity and share repurchases.
Balanced Approach to Long-Term Incentives
The Committee takes a balanced approach to long-term incentives, and, for fiscal 2019 annual grants:
Determined that long-term incentive awards for executive officers would continue to be allocated 50% to PSUs, 25% to RSUs and 25% to stock options, as in fiscal 2018. | |
● | Determined to utilize relative TSR as well as ROIC as performance measures for PSUs awarded as long-term incentive compensation to provide a more balanced approach with one consistent absolute metric (ROIC) and one relative metric (TSR), as in fiscal 2018. |
● | Approved grants of stock options, RSUs, PSUs and Deferred Compensation Program (DCP) contributions in alignment with our compensation philosophy and program. |
www.hologic.com | 41 |
Compensation Discussion and Analysis
Pay-For-Performance Alignment
Goal Rigor
2019 STIP
Target | Maximum | |
Adjusted Revenue | Represents approximately 3.9% growth over the prior year adjusted revenue. | Represents approximately 7.8% growth over prior year adjusted revenue. |
Adjusted EPS | Represents approximately 10.0% growth over prior year adjusted EPS. | Represents approximately 19.9% growth over prior year adjusted EPS. |
Threshold adjusted revenue and adjusted EPS are generally set at prior year actual results -if there is no growth in adjusted revenue or adjusted EPS as compared to the prior year actual results, there is no payout under the applicable target.
2019 PSU Awards
Target | Maximum | |
ROIC | Target was set at 13% in order to motivate management to grow the business and encourage meaningful business development investments. Actual ROIC for fiscal 2019 was 13%. | Three-year average ROIC goal of 15%. |
Relative TSR | Target requires relative TSR at 50thpercentile. | 95thpercentile is required for maximum payout. |
2019 Compensation Decisions
● | Increased base salaries for NEOs ranging from 3% to 5.6%. Mr. MacMillan’s base salary increase is 3% pursuant to the terms of his Employment Agreement. |
● | The |
● | The Company exercised negative discretion in setting the overall funding level at 114% of target rather than 129% of target, as revenue benefited from larger than expected revenue from the Company’s divested blood screening business. |
● | Based on fiscal 2019 performance against individual objectives, payout for certain NEOs, including Mr. MacMillan, |
Increased fiscal |
● | Mr. MacMillan’s LTIP grant value is |
● | Set challenging ROIC goals for PSU awards and continued use of relative TSR as a |
● | Awarded a cash bonus to Mr. Thornal as he assumed the role of Division President of our Diagnostics division, acknowledging his work on the divestiture of our former Medical Aesthetics division. |
42 | 2020 Proxy Statement |
Compensation Discussion and Analysis
The Committee has made several decisions relating to executive pay for fiscal 2020, including:
● | Increased base salaries for NEOs, ranging from 0% to 5.9%. Mr. MacMillan’s increase is 3% pursuant to the terms of his Employment Agreement. Mr. Thornal’s base salary did not increase given his compensation increases in fiscal 2019. |
● | Increased fiscal 2020 LTIP grant values for all NEOs based on fiscal 2019 performance, anticipated future performance and market competitiveness of compensation, continuing to reward for performance and drive NEO retention. Mr. MacMillan’s LTIP value is determined pursuant to the terms of his Employment Agreement and will increase due to the Company’s increase in both adjusted net income and adjusted EPS |
● | Determined that |
Determined that long-term incentive awards for executive officers will continue to be allocated 50% to PSUs, 25% to RSUs and 25% to stock options, as in fiscal 2019. | |
● | For PSUs awarded as long-term incentive compensation, added free cash flow (FCF) as a new performance measure and determined to continue to utilize relative TSR as well as ROIC as performance measures, with |
Hologic, Inc. 2017 Proxy Statement 22
“Say-On-Pay” and Stockholder Feedback
Each year, we take into account the result of the say-on-pay vote cast by our stockholders. As our journey to sustainable growth continues, so does the evolution of our compensation program. During the tenure of our current management team, we have seen our say-on-pay vote approval increase from 34% at our 2014 Annual Meeting of Stockholders to 80%95% at our 20162017 Annual Meeting of Stockholders. While we saw declines in 2018 (74% approval) and 2019 (66% approval), the only significant changes to the structure of our annual compensation program from fiscal 2016 to fiscal 2017/2018 were two stockholder-friendly changes. We are making tremendous progressadded relative TSR as a PSU performance measure and amended our CEO’s Employment Agreement to add adjusted net income as a check on adjusted EPS for determination of the value of his annual long-term incentive grant. We believe the decreases in say-on-pay approval were related to the special CEO retention equity grant made in December 2017 (which was disclosed in proxy statements for the 2018 and 2019 Annual Meetings), including the negative say-on-pay recommendations from proxy advisory firms, who did not appear to take into account the unique nature of the situation leading to the special retention equity grant.
Based on our continued discussions with our largest stockholders, we believe they continue to endorse our annual compensation design and viewprogram as it has evolved, as evidenced by the increasingly positivestrong improvement in support from stockholders as a continuing endorsement of our compensation program’s evolving design and direction. We expect2014 to continue to do better, as our2017. Our Compensation Committee regularly evaluates our executive compensation structure and assesses its effectiveness to ensure athe design that is incenting performance that is in the best interests of the Company as well as our stockholders.
While say-on-pay is a key indicator of stockholder feedback, we also are committed to maintaining an open dialogue with our institutional investors and stockholders throughout the year. WeAfter the CEO special retention equity grant, we reached out to our largest institutional investors to specifically discuss it. Overall, they understood the Board’s rationale for making the grant given the Company’s unique circumstances and most supported the decision. On a more regular basis, in the proxy “offseason”, we reach out to discuss business topics, seek feedback on our performance and address other matters of importance to our stockholders, such as executive compensation.stockholders. Since our 20162019 Annual Meeting, we have actively engaged with a number of our largest institutional investors specifically on governance issues, reaching out to holders of more than 50%66% of our outstanding shares. Through this dialogue, we received additional validation on the design of our executive compensation program as well as tremendousstrong support for our senior management team.team, particularly Mr. MacMillan. See below for additional information regardingabout our discussions with investors regarding performance metrics.
Performance Metrics and Use of Non-GAAP Measures
The Committee spent considerable time during 2016 reviewing incentive planon performance metrics and goal setting. We also discussed incentive plan performance metrics with our investors in the fall of 2016. We discussed our current use of ROIC as a performance metric as well as the potential addition of another performance metric, such as relative total shareholder return (TSR). Investors were generally supportive of the addition of relative TSR as a performance-based metric for long-term incentive awards for fiscal 2017 and were in favor of continuing to use ROIC as a performance-based metric for long-term incentive awards. We also received positive feedback on our use of adjusted revenue and adjusted earnings per share (“EPS”) as performance measures in our Short-Term Cash Incentive Plan (“STIP”). Several investors commented on the importance of focusing on organic growth, which is a metric in our STIP, as discussed in more detail below, and one investor commented on the potential impact of corporate actions such as share repurchases or mergers and acquisitions on EPS results, which the Committee continually assesses.
Non-GAAP. The Committee determined that using the measures of adjusted revenue, adjusted EPS and ROIC, which are all non-GAAP measures that are used by management to facilitate their operational decision-making, provided key insights into the Company and management’s achievements during the year and, thus, were appropriate to use in the incentive compensation plans. Additionally, the use of ROIC was specifically supported in discussions with stockholders.
Adjusted revenue, which is intended to reflect organic growth, is calculated on a constant currency basis and, pursuant to the terms of our STIP, is also adjusted (i) to remove the effect of acquisitions or dispositions (including the discontinuance of a product or product line other than in the ordinary course of business) that are completed during the reporting period that materially affect the Company’s consolidated revenue; and (ii) to exclude any acquisition-related accounting or other effects that are excluded in the calculation of adjusted EPS. Revenue that is adjusted to exclude the impact of these events is a non-GAAP measure. The Committee believes that organic growth, that is, revenue growth excluding the impact of changes in foreign exchange rates and acquisitions and other transactions, as noted above, is an important measure of management’s achievements in operating the Company’s core businesses during the year. Accordingly, the Committee utilizes adjusted revenue as a performance measure in the STIP. For fiscal 2016, adjusted revenue was calculated on a constant currency basis, using the fiscal 2016 budgeted foreign currency exchange rates, with no other adjustments, given the lack of acquisitions or dispositions during the year.
Adjusted EPS is calculated as set forth in footnote (3) on page 21. This financial measure adjusts for specified items that can be highly variable or difficult to predict, as well as certain effects of acquisitions and financings that may not necessarily be indicative of operational performance. This metric is used by management to evaluate our historical operating results and as a comparison to competitor’s operating results. The Committee agrees with this approach and uses this non-GAAP measure as a performance measure in the STIP.
ROIC is also a non-GAAP measure. The key building blocks of our ROIC metric are: (1) adjusted net operating profit after tax (“NOPAT”), (2) average net debt, and (3) average stockholders’ equity. ROIC is calculated as NOPAT/(average net debt + average stockholders’ equity). NOPAT is calculated in a manner similar to the calculation of adjusted net income, as used for the calculation of adjusted EPS under our STIP as described on page 21, except non-operating income and expenses are excluded, such as interest expense, etc. Average stockholders’ equity is the average of the beginning of the period and the end of the period stockholders’ equity; provided, however, that average stockholders’ equity is adjusted to exclude any charges for impairment of goodwill or other intangible assets that occur after September 28, 2013. Average net debt is the average of the beginning of the period and the end of the period net debt which is the total book value of all debt outstanding less cash, cash equivalents and restricted cash. The Committee introduced ROIC as a performance metric in fiscal 2014 to hold management accountable for generating greater returns on capital allocated. Investors have been supportive of the use of ROIC. Given the significant improvement in ROIC since its introduction as a performance metric, the Committee believes it is having the intended effect.
Hologic, Inc. 2017 Proxy Statement 23
Goal-setting. In setting the revenue and EPS goals for our 2016 STIP, the Committee considered the Company’s historical performance as well as planned growth. For the 2016 STIP, adjusted revenue at target represents approximately 5% growth over the prior year actual revenue, while adjusted revenue at maximum represents approximately 11% growth over prior year actual revenue. Adjusted EPS at target represents approximately 11% growth over prior year adjusted EPS, while adjusted EPS at maximum represents approximately 22% growth over prior year adjusted EPS. If there is no growth in adjusted revenue or adjusted EPS as compared to the prior year actual results, there is no payout under the applicable target.
In setting ROIC goals for performance share units (“PSUs), the Committee considered past performance as well as future opportunities for efficiencies. The ROIC target goal of 12% for PSUs granted as fiscal 2016 long-term incentive awards represents a 100 basis point increase from the ROIC target goal for PSUs granted as 2015 long-term incentive awards. In addition, the performance scale was widened for 2016 PSU grants to create a non-linear performance scale above target which only accelerates once ROIC of 13% is achieved. If we fail to achieve the minimum three-year average ROIC goal of 11% for the fiscal 2016-2018 performance period, none of the PSUs granted as fiscal 2016 long-term incentive awards will vest and all will be forfeited.
Changes for fiscal 2017. The Committee agreed to continue to use ROIC as a performance measure in our long-term incentive plan and discussed adding another measure. After consideration, the Committee determined to include relative TSR as a performance measure for fiscal 2017 long-term incentive grants. The Committee believes that relative TSR will provide a more balanced approach with one consistent absolute metric (ROIC) and one relative metric (TSR) and further align our compensation incentives with the interests of stockholders.
Finally, at the end of fiscal 2016, the Committee recommended, and the Board, other than Mr. MacMillan, approved, amending Mr. MacMillan’s Employment Agreement to include adjusted net income as another measure used in determining the value of his annual grants. Accordingly, the value of Mr. MacMillan’s annual long-term incentive grants will be increased or decreased from the prior year’s grant value based on the increase or decrease in adjusted net income and adjusted EPS. If either or both of adjusted net income or adjusted EPS declines from the prior year, then Mr. MacMillan’s grant value declines based on the larger decline. If both adjusted EPS and adjusted net income increase, then the grant value increases based on the lower of the two increases. Mr. MacMillan initially raised the use of net income as a tempering factor given the Company’s continued excellent EPS improvement. The Committee and Board, excluding Mr. MacMillan, determined that the addition of net income in this manner was a thoughtful and creative design in the best interests of the Company and its stockholders.
Fiscal 2016 Compensation Actions
The Committee continued to strengthen the foundation of the executive compensation program, taking the following actions for fiscal 2016:
special retention equity grant.
43 |
Compensation Discussion and Analysis
What We Heard The Compensation Committee spent time during 2019 reviewing incentive plan | |
Details of these actions are provided in the applicable sections of the CD&A.
Hologic, Inc. 2017 Proxy Statement 24
Looking Ahead to Fiscal 2017
During fiscal 2016, the Committee made additional decisions relating to executive pay for fiscal 2017, including:
What We Heard For the last two years, since disclosure of the December 2017 special performance-based retention equity grant to Mr. MacMillan, we have had continued dialogue with our largest stockholders, both through special governance-related calls as well as during our normal investor relations activities. Feedback from stockholders and investment analysts has been overwhelmingly positive, although we do note that one |
Executive Compensation Best Practices
We have in place a number of industry-leading best practices.
| What We Don’t Do | ||
●Double-trigger for accelerated equity vesting upon a change of control | |||
●Golden parachute policy | |||
●Compensation recoupment | |||
●Meaningful stock ownership guidelines for our CEO, non-employee directors and executive officers | |||
●Robust review of compensation program elements, each NEO’s role and responsibilities, performance metrics, practices of companies in our peer group and survey data ●Independent compensation consultant | |||
●Compensation Committee of all independent, non-employee directors ●Annual risk assessments | ●No tax gross-ups on severance or change of control payments ●No hedging/pledging of Hologic stock ●No option repricing without stockholder approval ●No excessive perquisites for executives ●No excessive risk-taking in our compensation programs |
44 | 2020 Proxy Statement |
What Guides Our Compensation ProgramDiscussion and Analysis
Compensation of Executive Officers
The ability to compete effectively in the markets within which we operate depends to a large extent on our success in identifying, recruiting, developing and retaining management talent. We also need to remain focused on creating sustainable long-term growth and stockholder value. To this end, the design of our executive compensation program and the decisions made by the Committee are guided by the following principles:
Pay for | |
● | |
Competitive | |
● | |
Focus on total direct |
The Principal Elements of Pay: Total Direct Compensation (“TDC”)
Our compensation philosophy is supported by the following principal elements in our annual executive compensation program:
Element | Form | Purpose | ||
Base Salary | Cash (fixed) | Provides a competitive level of pay that reflects the executive’s experience, role and responsibilities | ||
Short-Term | Cash (variable) | Rewards achievement of individual, business segment/function and/or overall corporate results for the most recently completed fiscal year | ||
Long-Term | Equity (variable) | Provides meaningful incentives for management to execute on longer-term financial and strategic growth goals that drive stockholder value creation and supports the Company’s retention strategy | ||
Deferred | Cash (variable) | Rewards achievement of corporate results and individual performance for the most recently completed fiscal year and also serves as a differentiating recruiting tool and retention |
www.hologic.com | 45 |
Hologic, Inc.Compensation Discussion and Analysis 2017 Proxy Statement 25
The charts below, which show the TDC of our CEO and our other NEOs for fiscal 2016, illustrate that a majority of NEO TDC is performance based (90.2% for our CEO and an average of 80.5% for our other NEOs). These charts exclude the value of other benefits and perquisites.
Our Decision-Making Process
The Compensation Committee oversees the compensation and benefits programs for our NEOs. The Committee is comprised solely of independent, non-employee members of the Board of Directors. The Committee works very closely with its independent compensation consultant and management to examine the effectiveness of the Company’s executive compensation program throughout the year. Details of the Committee’s authority and responsibilities are specified in the Committee’s charter, which may be accessed throughinvestors.hologic.com.
The Role of the Committee
The Committee seeks to ensure that the links between our executive compensation program and our business goals are responsible, appropriate and strongly aligned with stockholder interests. The Committee annually determines the compensation levels of our NEOs by considering several factors, including:
Mr. MacMillan’s Employment Agreement – Terms Impacting Total Direct Compensation Base Salary.A base salary at the STIP.A target bonus opportunity under the Company’s STIP ofno less than 150% of his annual base salary. DCP.Continued contribution by the Company to the DCP on behalf of Mr. MacMillan. LTIP.An annual equity grant under the Company’s 2008 Amended and Restated Equity Incentive Plan. ThisLTIP grant value adjusts each year as follows: (i) for every one percent (1%) that the Company exceeds the prior fiscal year’s adjusted earnings per share (EPS) or adjusted net income, whichever is | |
The 2016 amendment to the Employment Agreement addedadjusted net income as a check on adjusted EPS such that increases in annual equity grant values would be based on the lower growth of the | |
After the end of each fiscal year, Mr. MacMillan also receives a matchingrestricted stock unit (“Matching RSU”) grant with a value equal to the number of shares held by Mr. MacMillan as of the fiscal year end, up to a maximum annual grant value of $1,000,000. For purposes of the Matching RSU grant, shares held will include issued and outstanding shares held directly by Mr. MacMillan as well as vested equity, the settlement of which has been deferred pursuant to the Company’s DEP, but will not include shares issued upon the vesting of any Matching RSUs. At the end of fiscal 2019, Mr. MacMillan held (or had the right to receive upon settlement) 1,429,134 shares. Accordingly, in November 2019, Mr. MacMillan received a Matching RSU grant with a value of $1,000,000. |
The Role of Management
During fiscal 2016, Mr. MacMillan reviewed the performance and compensation of the NEOs, other than himself, and made recommendations as to their compensation to the Committee. No executive officer participatesFiscal 2019 Total Direct Compensation Elements in the deliberations of the Committee regarding his or her own compensation.
The Role of the Independent Consultant
The Committee retained Pearl Meyer & Partners (“Pearl Meyer”) to serve as its executive compensation consultant for fiscal 2016. Pearl Meyer did not perform any services for us other than as directed by the Committee.
During fiscal 2016, Pearl Meyer advised the Committee on a variety of subjects such as compensation plan design and trends, pay for performance analytics, benchmarking norms, and other such matters. Pearl Meyer also conducted a risk assessment of our executive compensation practices for fiscal 2016, as described in “Risk Oversight” on pages 10 and 11. Pearl Meyer reports directly to the Committee, participates in meetings as requested and communicates with the Committee Chair between meetings as necessary.
Prior to engaging Pearl Meyer, the Committee reviewed the firm’s qualifications as well as its independence and any potential conflicts of interest. The Committee has the sole authority to modify or approve Pearl Meyer’s compensation, determine the nature and scope of its services, evaluate its performance, and terminate the engagement and hire a replacement or additional consultant at any time.
Detail
Hologic, Inc. 2017 Proxy Statement 26
Peer Group
The Committee compares our executive compensation program to a group of companies that are comparable in terms of size and industry (the “Primary Peer Group”). The overall purpose of this peer group is to provide a market frame of reference for evaluating our compensation arrangements (current or proposed), understanding compensation trends among comparable companies, and reviewing other compensation and governance-related topics that may arise during the course of the year.
For setting target compensation levels for NEOs in fiscal 2016, the Company examined the practices of the following 12 companies (as well as other relevant data):
2016 Primary Peer Group Composition
PEER GROUP DATA*
Revenue ($M) | Enterprise Value ($M) | |||||||
50thPercentile |
| $2,640 |
| $9,075 | ||||
Hologic |
| $2,549 |
| $11,912 | ||||
Hologic Rank | 49th | 62nd |
With the exception of Mr. MacMillan, the fiscal 2016 target annual TDC opportunities, comprised of base salary, target annual STIP, annual long-term incentive awards and deferred compensation contributions, were determined to be, on average, competitive with the market median. The Committee recognizes that Mr. MacMillan is a seasoned, accomplished CEO whose market for prospective employment opportunities likely includes larger organizations. As such, Mr. MacMillan’s fiscal 2016 target annual TDC opportunity is well above the median of the Primary Peer Group.
Changes to the Primary Peer Group
Pearl Meyer reviews our Primary Peer Group annually for appropriateness based on a variety of factors including: similarities in revenue levels and size of market capitalization and enterprise value, similarities to the industries in which we operate, the overlapping labor market for top management talent, our status as a publicly traded, U.S.-based, non-subsidiary company, and various other characteristics. The Company uses enterprise value in addition to market capitalization for comparative purposes because of its capital structure.
2015 to 2016
As a result of this review in 2015, the Committee changed the Primary Peer Group used for purposes of fiscal 2016 compensation from that utilized for purposes of fiscal 2015 compensation by making the following changes:
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2016 to 2017
Following the 2016 review by Pearl Meyer of our Primary Peer Group, the Committee changed the Primary Peer Group utilized for purposes of fiscal 2017 compensation from that utilized for purposes of fiscal 2016 compensation by making the following changes:
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Supplemental Practices Peer Group
Pearl Meyer also developed a Supplemental Practices Peer Group of larger companies to serve as a reference point in understanding design characteristics of compensation programs at larger companies. The group was not used to set compensation levels for the NEOs. The group consists of both direct product competitors and recent sources of executive talent. Below is the Supplemental Practices Peer Group which the Company referenced while assessing compensation design for fiscal 2016 compensation.
Supplemental Practices Peer Group Composition
Hologic, Inc. 2017 Proxy Statement 27
The Fiscal 2016 Executive Compensation Program in Detail
Base Salary
Base salary represents annual fixed compensation and is a standard element of compensation necessary to attract and retain talent. It is the minimum payment for a satisfactory level of individual performance as long as the executive remains employed with us. Base salary is set at the Committee’s discretion after taking into account the competitive landscape including the compensation practices of the companies in our selected peer groups (and where appropriate, survey data from a broader index of comparable public companies), our business strategy, our short- and long-term performance goals and certain individual factors, such as position, salary history, individual performance and contribution, length of service with the Company and placement within the general base salary range offered to our NEOs. Mr. MacMillan’s base salary is set and adjusts in accordance with the termterms of his Employment Agreement. See pages 33Agreement, as noted above.
46 | 2020 Proxy Statement |
Compensation Discussion and 34 for details regarding his Employment Agreement.
Analysis
The base salaries for our NEOs for fiscal 20162019 were as follows:
Base Salaries of NEOs(1) | Percentage | |||||||||
NEO | FY2016 Salary | FY2015 Salary | Increase | |||||||
Stephen P. MacMillan | $ | 1,000,000 | $ | 1,000,000 | N/A | |||||
Robert W. McMahon | $ | 500,000 | (2) | $ | 450,000 | 11.1% | ||||
Eric B. Compton | $ | 485,000 | (3) | $ | 450,000 | 7.8% | ||||
John M. Griffin | $ | 450,000 | $ | 435,000 | (4) | 3.4% | ||||
Peter J. Valenti, III | $ | 457,500 | $ | 440,000 | 4.0% |
Base Salaries of NEOs(1) | ||||||||
NEO | FY2019 Salary ($) | FY2018 Salary ($) | Percentage Increase (%) | |||||
Stephen P. MacMillan | 1,060,900 | 1,030,000 | 3.0 | % | ||||
Karleen M. Oberton | 475,000 | 450,000 | (2) | 5.6 | % | |||
John M. Griffin | 495,000 | 470,000 | 5.3 | % | ||||
Kevin R. Thornal | 450,000 | — | (3) | N/A | ||||
Peter J. Valenti, III | 510,000 | 490,000 | 4.1 | % |
(1) | Reflects base salaries set at the beginning of the fiscal year indicated. |
(2) | Salary effective August 1, 2018 in connection with Ms. Oberton’s appointment as CFO. |
(3) | |
Based on the Company’s financial performance in fiscal 2018, base salary increases ranged from 3.0% to 5.6%. Mr. MacMillan’s base salary increase is determined pursuant to the terms of his Employment Agreement.
The Committee increased annual base salaries for Messrs. Compton and McMahon based primarily on market adjustments, potential salary compression issues and the ongoing contributions and performance of each. Messrs. Compton and McMahon received mid-year increases in their annual base salaries due to a concurrent increase in their responsibilities in connection with, respectively, the realignment of the international business under Mr. Compton and Mr. McMahon’s increased role in global operations and regulatory and quality assurance.
Short-Term Incentive Plan (the “STIP”)
How the STIP Works
The STIP provided our NEOs the opportunity to earn a performance-based cash bonus based on the achievement of a combination of financial and non-financial corporate, divisional, and/or individual goals. Targeted payout levels are expressed as a percentage of base salary and established for each participant. An individual’s bonus components are determined by such individual’s title and/or role. Bonus payouts could range from 0% to 200% of targeted payout levels (e.g., the maximum bonus payout for an individual with a targeted payout level of 50% of annual base salary would be 100% of annual base salary).
The goals under the 2016 STIP were primarily focused on the achievement of adjusted revenue (calculated on a constant currency basis using the fiscal 2016 budget foreign exchange rates) and adjusted EPS performance objectives (for definition of adjusted EPS, see the footnotes on page 21). The 2016 STIP also provides for the assessment of performance based upon the achievement of individual performance objectives, which for some NEOs included divisional performance objectives, all of which are approved by the Committee.
The overall funding level of the 2016 STIP was determined based upon the Company’s performance against the established targets. Funding of the STIP is contingent upon achieving the threshold level for at least one of the two corporate performance objectives. If neither corporate performance objective threshold is met, there is no payout under the STIP. Individual bonus awards for NEOs were calculated based upon the overall funding level, as well as the targeted payout levels and individual performance objectives for each NEO.
Hologic, Inc. 2017 Proxy Statement 28
Individual Bonus Opportunity Ranges
Bonus Opportunity Range(1) | ||||||
NEO | Threshold | Target | Maximum | |||
Stephen P. MacMillan | 0% | 150% | 300% | |||
Robert W. McMahon | 0% | 75% | 150% | |||
Eric B. Compton | 0% | 75% | 150% | |||
John M. Griffin | 0% | 75% | 150% | |||
Peter J. Valenti, III | 0% | 75% | 150% |
1. | Establish Payout Opportunities.Targeted payout levels are expressed as a percentage of base salary and established for each participant. An individual’s bonus components are determined by such individual’s title and/or role. Bonus payouts could range from 0% to 200% of targeted payout levels (e.g., the maximum bonus payout for an individual with a targeted payout level of 50% of annual base salary would be 100% of annual base salary). |
2. | Determine Financial Objectives.The corporate financial goals under the 2019 STIP were focused on the achievement of adjusted revenue and adjusted EPS performance objectives (for definition of adjusted revenue and adjusted EPS, seeAnnex A). |
3. | Set Individual Performance Objectives.The 2019 STIP also provides for the assessment of performance based upon the achievement of individual performance objectives, which for some NEOs included divisional performance objectives, all of which were approved by the Committee. |
4. | Calculate Funding Levels.The overall funding level of the STIP is generally determined based upon the Company’s performance against the established targets. Funding of the STIP is contingent upon achieving the threshold level for at least one of the two corporate performance objectives. If neither corporate performance objective threshold is met, there is no payout under the STIP. |
5. | Approve Individual Awards.Individual bonus awards for NEOs were calculated based the targeted payout levels and achievement of corporate financial and individual performance objectives. |
Individual Bonus Opportunity Ranges(1) | ||
CEO | Other NEOs | |
(1) | Expressed as a percentage of base |
www.hologic.com | 47 |
2016Compensation Discussion and Analysis
2019 Performance Objectives and Results
The Committee believed the financial performance components of the 20162019 STIP were achievable, but appropriately challenging, based on market climate and internal budgeting and forecasting. The following table outlines the threshold, target and maximum financial performance objectives for the 20162019 STIP, as well as the results achieved:
Actual Achieved | ||||||||
Performance Measures | Threshold | Target (100%) | Maximum | under 2016 STIP | ||||
Adjusted Revenue (60% weighting) | $2.705 billion | $2.840 billion | $2.992 billion | $2.845 billion | ||||
Adjusted EPS (40% weighting) | $1.67 | $1.85 | $2.04 | $1.96 |
Revenue at target represents approximately 5% growth over prior year actual revenue, while revenue at maximum represents approximately 11% growth over prior year actual revenue. Adjusted EPS at target represents approximately 11%
Performance Measures | Weighting | Threshold | Target (100%) | Maximum | ||||
Adjusted Revenue | ||||||||
Adjusted EPS |
(1) | Actual adjusted revenue was $3.381 billion which would have resulted in overall funding of 129%. However, upon management’s recommendation, the Committee exercised negative discretion and excluded approximately $30 million in revenue from the Company’s divested blood screening business, which resulted in overall funding of 114%. |
Why Adjusted Revenue and EPS? Adjusted revenue, which is intended to reflect organic growth, is calculated on a constant currency basis using budgeted foreign currency exchange rates and, pursuant to the terms of our STIP, is also adjusted (i) to remove the effect of acquisitions or dispositions (including the discontinuance of a product or product line other than in the ordinary course of business) that are completed during the reporting period that materially affect the Company’s consolidated revenue; and (ii) to exclude any acquisition-related accounting or other effects that are excluded in the calculation of adjusted EPS. Revenue that is adjusted to exclude the impact of these events is a non-GAAP measure. For fiscal 2019, adjusted revenue was calculated on a constant currency basis, using the fiscal 2019 budgeted foreign currency exchange rates, and excludes the impact of the Focal Therapeutics, Inc. and Grand X-Ray Supplies Co. acquisitions. Management also recommended, and the Committee approved, excluding approximately $30 million of revenue from the Company’s divested blood screening business, which has a very low profit margin. A reconciliation of our non-GAAP adjusted revenue to our GAAP revenue is provided inAnnex Ato this proxy statement. ADJUSTED EPS.This metric is used by management to evaluate our historical operating results and as a comparison to competitors’ operating results. The Committee agrees with this approach and uses this non-GAAP measure as a performance measure in the STIP. Adjusted EPS is calculated as set forth inAnnex A. This financial measure adjusts for specified items that can be highly variable or difficult to predict, as well as certain effects of acquisitions and dispositions that may not necessarily be indicative of operational performance. A reconciliation of our non-GAAP adjusted EPS to our GAAP EPS is provided inAnnex Ato this proxy statement. |
How We Establish Adjusted Revenue and Adjusted EPS Goals |
48 | 2020 Proxy Statement |
Compensation Discussion and Analysis
2019 STIP Awards
For fiscal 2019, the Company exceeded the STIP target for adjusted revenue as well as for adjusted EPS. Adjusted revenue was 145% of target and adjusted EPS while EPS at maximum represents approximately 22% growth over prior yearwas 105% of target. With adjusted EPS. If there is no growth in revenue orweighted 60% and adjusted EPS there is noweighted 40%, these performance results yield a payout underat 129% of target. However, given the applicable target.
Based uponsignificant contribution to revenue from the Company’s divested blood screening business, which is an uncontrollable and minimal profit revenue stream, management recommended reducing adjusted revenue by $30 million, which resulted in adjusted revenue performance against the establishedat 121% of target and overall performance targets, theat 114% of target. The Committee agreed with this approach, exercised negative discretion, and set the overall funding level of the 20162019 STIP at 125%114% of target funding. Individual bonus awards for NEOs were then calculated based uponon this overall funding level as well as the targeted payout levels and individual performance objectives for each NEO, as discussed in more detail below.
Individual performance objectives for our NEOs reflected the top priorities for our NEOs and were aligned with the top three risks identified in our annual Enterprise Risk Management process.process, including driving global growth, strengthening the pipeline for 2020 and beyond and succession planning and talent development. Mr. Thornal’s and Mr. Valenti’s individual performance objectives also included revenue growth performance goals for the Breasttheir respective divisions.
Mr. MacMillan | ||
Fiscal 2019 STIP Awards Based on the Company’s financial performance as well as an assessment of Mr. MacMillan’s individual performance for fiscal 2019, Mr. MacMillan was awarded a total bonus amount of $1,814,139, which represents 114% of his overall target amount. | Target Payout Level | |
Performance Objectives and Skeletal Health divisions.Outcomes
2016 STIP Awards
Mr. MacMillan
Mr. MacMillan’s targeted payout level was 150% of base salary, with 80% of his bonus opportunity tied to corporate financial performance (60% of which is based on adjusted revenue and 40% of which is based on adjusted EPS) and 20% tied to individual performance objectives. Mr. MacMillan’s individual performance objectives were designed to reward the achievement of goals relating to strengthening the product pipeline, growing the business, building capabilities to achieve international growth, continued strengtheningfollowing goals:
Performance Goals | Fiscal 2019 Performance Outcomes | |
Driving global growth by realizing planned Cynosure and International growth, accelerating revenue growth in other businesses and improving supply chain and product reliability. | ●During the year, the Breast Health and Diagnostics divisions as well as the International business continued strong revenue growth, revenue growth in the Surgical division accelerated, while the Cynosure division missed its growth targets. ●Mr. MacMillan continued to lead quarterly business reviews with each division, resulting in more visibility and accountability. ●Product reliability increased during the year although there are still opportunities to optimize supply chain efficiency. | |
Strengthening the product pipeline for 2020 and beyond by driving for product launches in each division to impact 2020 revenue and identify and execute opportunities to impact 2020 revenue. | ●The Company continued to strengthen its product pipeline organically and through acquisitions, with new products driving a significant amount of growth in 2019 and new product launches across the divisions planned for fiscal 2020. ●The Company completed several acquisitions during fiscal 2019 and has significantly increased the number of potential acquisitions under review. | |
Focusing on succession planning and talent development by continuing to develop leaders as potential backfill for CEO and all senior positions. | ●With his direct oversight of all Division Presidents, Mr. MacMillan continued to strengthen his development of leadership and potential successors. A number of key leadership positions, including Division Presidents of the Diagnostics and Medical Aesthetics divisions were filled by internal candidates. |
www.hologic.com | 49 |
Compensation Discussion and development of the leadership teamAnalysis
Ms. Oberton | ||
Fiscal 2019 STIP Awards Based on the Company’s financial performance as well as an assessment of Ms. Oberton’s individual performance for fiscal 2019, Ms. Oberton was awarded a total bonus amount of $425,000, which represents 119% of her overall target amount. | Target Payout Level | |
Performance Objectives and succession planning. Based on the Company’s financial performance as well as an assessment of Mr. MacMillan’s performance for fiscal 2016, Mr. MacMillan was awarded a total bonus amount of $1,875,000, which represents 125% of his overall target amount.Outcomes
Mr. McMahon
Mr. McMahon’s targeted payout level was 75% of base salary, with 80% of his bonus opportunity tied to corporate financial performance (60% of which is based on adjusted revenue and 40% of which is based on adjusted EPS) and 20% tied to individual performance objectives. Mr. McMahon’sMs. Oberton’s individual performance objectives were designed to reward the achievement of goals relating to driving the Company’s capital allocation strategy to provide for acquisition capacity, including effective managementfollowing goals:
Performance Goals | Fiscal 2019 Performance Outcomes | |
Driving global growth through execution of Cynosure integration plans, including integration of financial systems, driving international growth plans, and optimize corporate solutions. | ●Cynosure financial integration continued. ●International and shared services structure realignment complete. ●Improved tax rate. ●Drove capital allocation strategy, with continued acquisitions and share repurchases while maintaining a net leverage ratio of 2-3x. | |
Strengthening the product pipeline for 2020 and beyond by delivering financial resources to support innovation and research and development and supporting business development opportunities. | ●Finance provided insights and solutions to support critical pipeline programs. ●Finance continued to drive analytics for successful new product launches. ●Divisional, Corporate Finance and Information Services provided leadership and support for all acquisitions and integrations. | |
Focusing on succession planning and talent development by increasing organizational talent and capabilities, with specific focus on Cynosure international functions, continuing to support key experiences for finance talent, and identifying and developing potential successors for key financial leadership positions. | ●Successors identified for key financial leadership positions and robust development plans in place for key successors. ●Increased talent pipeline as measured by increase in number of high potential employees for critical positions. ●Built plans for talent transition of key positions. ●Retained talent in critical roles. |
50 | 2020 Proxy Statement |
Contents
Hologic, Inc.Compensation Discussion and Analysis 2017 Proxy Statement 29
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Compensation Discussion and
Performance Objectives and Outcomes Mr.
Compensation Discussion and Analysis
Performance Objectives and Outcomes Mr. Valenti’s individual performance objectives were designed to reward the achievement of
Compensation Discussion and Long-Term Equity Incentives We believe
The following table outlines the threshold, minimum, target, 125% and maximum three-year average ROIC goals for the ROIC PSUs granted as fiscal
Compensation Discussion and Analysis Vesting of ROIC PSUs Granted in Fiscal 2016 The Vesting of ROIC PSUs Granted in Fiscal 2017 The PSU awards granted in November 2016 (fiscal 2017) vested in November 2019 (fiscal 2020). These ROIC PSUs were subject to a three-year cliff vesting period with vesting contingent on the Company achieving an average ROIC of 12% Performance Stock Units - TSR PSUs The other 50% of PSUs vest based on the Company’s total stockholder return as compared to the total stockholder return of companies in the TSR PSU Peer Group, measured over a three-year performance period (the TSR PSUs). This metric was introduced effective for PSU grants made in fiscal 2017. The TSR PSU awards vest at target and at 200% of target upon achievement of relative total stockholder return at the 50thand 95thpercentile, respectively. If the Company’s relative total stockholder return is below the 25thpercentile, then no TSR PSUs will vest. At the vesting date, earned PSU awards are settled in shares of common stock, unless settlement has been deferred pursuant to the Company’s Deferred Equity Plan. For details about our use of relative TSR as a performance measure, please see “Why ROIC and Relative TSR?” below. TSR PSUs also are subject to the terms and conditions set forth in the form of TSR Performance Stock Unit Award Agreement. Vesting of TSR PSUs Granted in Fiscal 2017 The PSU awards granted
Compensation Discussion and Analysis
Stock options vest in four equal annual installments, becoming fully vested on the fourth anniversary of the grant date. Stock options have a 10-year term and are subject to the terms and conditions set forth in the form of Stock Option Award Agreement. Restricted Stock Units RSUs vest in three equal annual installments, becoming fully vested on the third anniversary of the grant date. Only vested RSUs can be exchanged for shares of Hologic common stock. RSUs also are subject to the terms and conditions set forth in the form of Restricted Stock Unit Award Agreement. 2019 Long-Term Annual Incentive Award Grants The annual long-term incentive awards granted to our NEOs in November of
The 2.2% decrease in the value of The increase in value of Mr. Valenti’s fiscal 2019 long-term incentive award grant as compared to his fiscal 2018 grant was due in large part to the performance of the Breast Health division in fiscal 2018 as well as the key role 2020 Long-Term Annual Incentive Award Grants For the annual long-term incentive awards granted to our NEOs in November of 2019 (fiscal 2020), Mr. MacMillan’s grant increased 3.9% as compared to his With respect to the other NEOs, the fiscal 2020 grants increased by approximately 20% for Ms. Oberton and Messrs. Thornal and Valenti and by approximately 7% for Mr. Griffin. These grants align with performance as well as acknowledge the competitive position of the individual’s total direct compensation for the year. Deferred Compensation Deferred Compensation Program The compensation and as a retention mechanism. The DCP allows NEOs to contribute up to 75% of their base salary and 100% of their annual bonus to a supplemental retirement account. In addition, the Company has the ability to make annual
Compensation Discussion and Analysis The overall funding of the Company’s contributions to the DCP is based on the applicable STIP funding factor, with the amount of the Company DCP contribution to each individual Deferred Equity Plan The Hologic, Inc. Deferred Equity Plan, as amended (the DEP) is designed to allow executives and non-employee directors to accumulate Hologic stock in a tax-efficient manner and assist them in meeting their long-term equity accumulation goals and stock ownership guidelines. Participants may elect to defer the settlement of RSUs and PSUs granted under the Amended and Restated 2008 Equity Incentive Plan until separation from service or separation from service plus a fixed number of years. Participants may defer settlement by vesting tranche. Although the equity will vest on schedule, if deferral of settlement is elected, no shares will be issued until the settlement date. The settlement date will be the earlier of death, disability, change in control or separation from service/separation from service plus number of years elected. Retirement Benefits The Committee maintains retirement benefits to help the Company attract and retain the most highly talented senior executives. Over the years, the Committee has modified these programs to ensure competitive alignment with an evolving market. We believe the overall value of our retirement programs is consistent with our industry peers. 401(k) Savings and Investment Plan The Company sponsors a 401(k) Savings and Investment Plan, which is a qualified retirement plan offered to all eligible employees, including our NEOs. The Plan allows participants to elect to defer a portion of their compensation on a pre-tax basis, up to the limits imposed by the Internal Revenue Code of 1986, as amended. In 2019, which includes the first three months of the Company’s fiscal 2020, the Company matched 100% of the first 3% and 50% of the next 2% of each participant’s deferrals, up to an amount equal to 4% of the first $280,000 earned by a participant. Equity Retirement Provision After considering market trends in retirement program practices as well as the needs of the Company, during fiscal 2016, the Committee approved the addition of a retirement provision to its equity compensation program. The provision, which applies solely to U.S. employees, provides for the continued vesting of RSUs and stock options and pro-rata vesting of PSUs when a person retires, if the individual is either 65 years of age or older, or at least 55 years of age with 10 years of continuous service with the Company. While RSUs and stock options continue to vest on their original vesting schedule following retirement, PSUs vest on their original vesting date on a pro-rata basis (based on number of days employed during the applicable Other Benefits and Perquisites Our NEOs also generally participate in other benefit plans on the We also provide limited perquisites and personal benefits based on considerations unique to each NEO position. During fiscal 2019, we provided each of the
Compensation Discussion and Analysis The Compensation Committee oversees the compensation and benefits programs for our NEOs. The Committee is comprised solely of independent, non-employee members of the Board of Directors. The Committee works very closely with its independent compensation consultant and management to ensure that our Company’s executive compensation program is appropriately aligned with our business strategy and is achieving the desired objectives. Details of the Committee’s authority and responsibilities are specified in the Committee’s charter, which may be accessed throughinvestors.hologic.com. The Role of the Committee The Committee seeks to ensure that the links between our executive compensation program and our business goals are responsible, appropriate and strongly aligned with stockholder interests. The Committee annually determines the compensation levels of our NEOs by considering several factors, including:
The Role of Management During fiscal 2019, Mr. MacMillan reviewed the performance and compensation of the NEOs, other than himself, and made recommendations as to their compensation to the Committee. No executive officer participates in the deliberations of the Committee regarding his or her own compensation. The Role of the Independent Compensation Consultant The Committee retained Pearl Meyer & Partners, LLC (Pearl Meyer) to serve as its executive compensation consultant for fiscal During fiscal 2019, Pearl Meyer advised the Committee on a variety of subjects such as compensation plan design and trends, pay for performance analytics, benchmarking norms, and other such matters. Pearl Meyer also conducted a risk assessment of our executive compensation practices for fiscal 2019, as described in “Risk Oversight” on page 24. Pearl Meyer reports directly to the Committee, participates in meetings as requested and communicates with the Committee Chair between meetings as necessary. Prior to engaging Pearl Meyer, the Committee reviewed the firm’s qualifications as well as its independence and any potential conflicts of interest. The Committee has the sole authority to modify or approve Pearl Meyer’s compensation, determine the nature and scope of its services, evaluate its performance, and terminate the engagement and hire a replacement or additional consultant at any time. Peer Group The Committee compares our executive compensation program to a group of companies that are comparable in terms of size and industry (the Primary Peer Group). The
Compensation Discussion and Analysis For setting target compensation levels for NEOs in fiscal 2019, the Company examined the practices of the following 15 companies (as well as other relevant data): 2019 Primary Peer Group Composition
Peer Group Data(1)
Each year, Pearl Meyer conducts and presents to the The Committee recognizes that Mr. MacMillan is a seasoned, accomplished CEO whose market for prospective employment opportunities includes larger organizations, as evidenced by the substantial offer he received from one such company in Changes to the Primary Peer Group Pearl Meyer and the Committee review our Primary Peer Group annually for appropriateness based on a variety of factors including: similarities in revenue levels and size of market capitalization and enterprise value, similarities to the
Compensation Discussion and Analysis Following each of the 2018 and the 2019 reviews of our Primary Peer Group, the Committee changed the Primary Peer Group utilized for purposes of fiscal 2019 compensation and for fiscal
2018 Peers | 2018 to 2019 Changes | 2019 Peers | 2019 to 2020 Changes | Agilent Technologies, Inc. | Boston Scientific Corporation C.R. Bard, Inc. DENTSPLY Sirona, Inc. Edwards Lifesciences Corp. IDEXX Laboratories, Inc. Illumina, Inc. Intuitive Surgical, Inc. PerkinElmer, Inc. ResMed, Inc. Varian Medical Systems, Inc. Waters Corporation Zimmer Biomet Holdings, Inc. ADDITIONS
Supplemental Practices Peer Group Composition
TSR Peer Group The Company uses a custom TSR Peer Group comprised of select companies from the Company investor relations performance benchmarking group and the executive compensation Peer Groups discussed above. The TSR Peer Group is approved by the Compensation Committee each year at the time the TSR PSU awards are granted. Companies which are acquired or otherwise delisted during the performance period are excluded from the final calculation. For the fiscal 2019 TSR PSU awards, the following companies were set as the TSR Peer Group:
Compensation Discussion and Analysis 2019 TSR Peer Group Composition
Additional Compensation Practices, Policies & Guidelines Our Position on Employment, Change of Control and Severance Agreements Our ability to build the exceptional leadership team in place today was due in large part to our having a full complement of compensation tools available to us and the flexibility to use them. This includes the ability to leverage employment, change of control and severance agreements. The Committee The Committee believes that providing change of control and severance benefits eliminates, or at least reduces, any reluctance of senior management to pursue potential change of control transactions that may be in the best interests of stockholders. We also understand the concern of our stockholders regarding severance arrangements, and in 2015, the Committee adopted a Policy on Executive Severance Agreements. This policy limits severance benefits under any new severance or employment agreements entered into with executive officers to 2.99 times the sum of the executive officer’s base salary and non-equity incentive plan payment or other annual non-equity bonus or award; any benefits in excess of this amount must be ratified by stockholders. For purposes of this policy “severance benefits” do not include the value of accelerated vesting of any outstanding equity awards or payments under the Company’s retirement and deferred compensation plans. Details about the specific arrangements made with our NEOs are set forth on pages 72-74.
Compensation Discussion and Analysis Executive Stock Ownership Guidelines Our Board believes that our directors and officers should hold a meaningful financial stake in the Company in order to further align their interests with those of our stockholders. Our CEO is expected to achieve equity ownership in the Company with a value of five times his then current base salary and each of our other NEOs and executive officers is expected to achieve equity ownership in the Company with a value of two times his or her then current base salary, within five years of becoming subject to the guidelines. Only shares of stock issued and outstanding (or vested and deferred under our deferred equity plan) are credited towards the ownership goals. All of our NEOs who have been subject to the guidelines for five years have achieved ownership in excess of the guideline. Information about ownership guidelines for our non-employee directors can be found in the “Director Compensation” section on page 34 of this proxy statement.
Compensation Recoupment Policy Under our compensation recoupment, or clawback, policy, if our Board determines that an officer engaged in fraud or willful misconduct that resulted in a restatement of the Company’s financial results, then the Board may review all performance-based compensation – both cash and equity – awarded to or earned by that officer on the basis of performance during the fiscal periods materially affected by the restatement. If, in the view of our Board, the performance-based compensation would have been lower if it had been based on the restated financial results, the Board may, to the extent permitted by applicable law, seek recoupment from that officer of any portion of such performance-based compensation as it deems appropriate after a review of all relevant facts and circumstances. Any recoupment under this policy may be in addition to, and shall not otherwise limit, any other remedies that may be available to the Company under applicable law, including disciplinary actions up to and including termination of employment. Hedging and Pledging Policy Our Insider Trading Policy prohibits employees and directors of the Company from engaging in hedging or similar arrangements with respect to the Company’s securities, including, without limitation, short sales and buying or selling puts, calls or other derivative securities (except for stock options granted by the Company). Pursuant to the Insider Trading Policy, employees and directors are also prohibited from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan. Tax and Accounting Considerations The Committee considers tax and accounting implications in determining all elements of our compensation plans, programs and arrangements, although they are not the only factors considered. In some cases, other important considerations may outweigh tax or accounting considerations, and the Committee maintains the flexibility to compensate its officers in accordance with the Company’s compensation philosophy. Section 162(m) of the Internal Revenue Code of 1986, as amended, generally limits the deductibility of compensation to $1 million per year for certain named executive officers of the Company, except that historically Section 162(m) provided for an exemption for compensation that qualified as “performance-based compensation.” In the past, several elements of our named executive officers’ compensation were intended to be deductible under Section 162(m) as performance-based compensation. The Tax Cuts and Jobs Act of 2017 repealed the exemption from the Section 162(m) deduction limit for performance-based compensation, effective for taxable years beginning after December 31, 2017, but provides a transition rule with respect to remuneration that is provided pursuant to a written binding contract which was in effect on November 2, 2017 and which was not materially modified after that date. As a result, we expect that, subject to certain exceptions for arrangements that were outstanding as of November 2, 2017, compensation paid to our named executive officers in excess of $1 million generally will not be deductible.
The following table presents information regarding compensation of each of the NEOs for services rendered during the fiscal years indicated. A description of our compensation policies and practices as well as a description of the components of compensation payable to our NEOs is included above under “Compensation Discussion and Analysis.”
Executive Compensation Tables
Executive Compensation Tables
Outstanding Equity Awards at Fiscal Year-End
Executive Compensation Tables
Executive Compensation Tables
Executive Compensation Tables Option Exercises and Stock Vested
Non-Qualified Deferred Compensation
Executive Compensation Tables Potential Payments upon Termination or Change of Control The following table shows potential payments upon termination or a change of control for our NEOs. The terms and conditions of our employment, change of control and severance agreements with all of our NEOs are discussed below.
Change of Control and Severance Agreements The Company has entered into change of control agreements and/or severance agreements with certain of its senior executive officers, including our NEOs. Mr. MacMillan
following a Notice of Non-Renewal by either Mr. MacMillan or the Company and at or after the expiration of the term, Mr. MacMillan’s employment is terminated by the Company without cause or if Mr. MacMillan terminates his employment for good reason, then he will be entitled to the compensation described above, except that the severance period and amount shall be for one year rather than two. In each case, receipt of any severance payments or benefits is conditioned upon Mr. MacMillan’s release of all claims against the Company and its officers and directors.
Change of Control
The term “highest annual bonus” is defined as the greater of (i) the average of annual bonuses paid to the executive over the three fiscal years preceding the fiscal year in which the change of control occurs; (ii) the annual bonus paid to the executive in the fiscal year preceding the fiscal year in which the change of control occurs; or (iii) the target bonus award opportunity associated with the Company achieving its 100 percent target payout level as determined in accordance with the Company’s bonus plan for the fiscal year preceding the fiscal year in which the change of control occurs. Mr. MacMillan will continue to receive health and dental benefits for the remaining term of the Employment Period. Mr. MacMillan’s Change of Control Agreement does not provide for any change of control benefits, including the acceleration of equity awards, if he remains employed by the Company, is terminated by the Company for cause or voluntarily terminates his employment (other than a resignation for good reason). If Mr. MacMillan dies or his employment is terminated by reason of disability during the Employment Period, then he, or his heirs or estate, is entitled to receive (i) a lump sum cash payment equal to all accrued and unpaid compensation through the date of termination (or death) plus a pro-rata highest annual bonus based on the number of days elapsed
Executive Compensation Tables during the fiscal year through the date of termination (or death); (ii) continuation of certain welfare benefits for the remaining term of the Employment Period; and (iii) a lump sum cash payment equal to the sum of his annual base salary and the highest annual bonus. In the event any payments and benefits provided under the Change of Control Agreement is subject to excise taxes under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), then the payment shall be reduced so that no payment to be made or benefit to be provided to the executive shall be subject to the excise tax.
Ms. Oberton The Company has entered into a Severance and Change of Control Agreement with each of Severance.Each agreement provides that if the executive is terminated by the Company without cause or resigns for good reason, then Change of Control.Terms relating to benefits payable In the event any payments and benefits provided under the Severance and Change of Control Agreements are subject to excise taxes under Section 280G of the Code, then the payment shall be reduced so that no payment to be made or benefit to be provided to the executive shall be subject to the excise tax. Mr. Thornal and Mr. Valenti The Company has entered into a Severance Agreement as well as a Change of Control Agreement with
The severance pay and benefits provided under Change of Control.
Executive Compensation Tables shall be entitled to receive (i) a lump sum cash payment equal to his accrued compensation through the termination date, which includes base salary, reimbursement for reasonable and necessary business expenses and vacation pay; (ii) a The amount of the estimated payments and benefits payable to NEOs, assuming a change of control of the Company as of the last day of fiscal
Our
high-quality, stable workforce. Under
For 2019, our last completed fiscal year:
Based on this information, for 2019, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees (other than our CEO) was estimated to be approximately 135 to 1. The pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. The SEC rules for identifying the “median employee” and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported by us, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their pay ratios. To identify the “median employee” from our employee population, we
The Audit and Finance Committee has appointed Ernst & Young LLP (“Ernst & Young”), an independent registered public accounting firm, to audit our consolidated financial statements for the fiscal year ending September Ernst & Young has continuously served as our independent registered public accounting firm since June 24, 2002. A representative of Ernst & Young will be available during the meeting to make a statement if such representative desires to do so and to respond to appropriate questions. Vote Required The affirmative vote of a majority of shares present, in person or represented by proxy, and voting on this proposal at the Annual Meeting is required to ratify the appointment of Ernst & Young. Abstentions and broker “non-votes” will not have any effect on the proposal to ratify the appointment of Ernst & Young. If the stockholders do not ratify the selection of Ernst & Young, the Audit and Finance Committee will review the Company’s relationship with Ernst & Young and take such action as it deems appropriate, which may include continuing to retain Ernst & Young as the Company’s independent registered public accounting firm. Recommendation of the Board
Proposal No. 3 - Ratification of Independent Registered Public Accounting Firm Independent Registered Public Accounting Firm Fees The following is a summary of the fees billed to us by Ernst & Young for professional services rendered for the fiscal years ended September
Audit Fees.Consists of aggregate fees billed for professional services rendered in connection with the audit of our consolidated financial statements, the audit of the effectiveness of our internal control over financial reporting, reviews of the interim consolidated financial statements included in our quarterly reports, international statutory audits and regulatory filings, consents and other services related to SEC filings, and accounting consultations that relate to the audited financial statements and are necessary to comply with Audit-Related Fees.Consists of aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” The fiscal 2019 audit-related fees primarily included amounts for auditing carve-out financial statements and due diligence services. The fees in fiscal 2018 related to due diligence services. Tax Fees.Consists of aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning. In fiscal All Other Fees. During fiscal The Audit and Finance Committee considers whether the provision of these services is compatible with maintaining the independence of the independent registered public accounting firm and has determined such services for fiscal Audit and Finance Committee Policy on Pre-Approval of Services The Audit and Finance Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The Audit and Finance Committee has delegated authority to the Chair of the Audit and Finance Committee to pre-approve services up to a designated amount. A summary of any new services pre-approved by the Chair is reported to the full Audit and Finance Committee in connection with its next scheduled meeting. The Audit and Finance Committee meets with representatives of Ernst & Young periodically, but no less than quarterly throughout the year. The Audit and Finance Committee reviews audit, non-audit and tax services rendered by and the performance of Ernst & Young, as well as fees charged by Ernst & Young for such services. In engaging Ernst & Young for the services described above, the Audit and Finance Committee considered whether the provision of such services is compatible with maintaining Ernst & Young’s independence.
Audit and Finance Committee Report Pursuant to authority delegated by the Board of Directors of Hologic, Inc., the Audit and Finance Committee is responsible for assisting the Board in its oversight of the integrity of the Company’s consolidated financial statements, the qualifications and independence of the Company’s independent registered public accounting firm, and the Company’s internal financial and accounting controls. Management is responsible for the Company’s financial reporting process, including the responsibility to maintain and evaluate the effectiveness of internal control over financial reporting, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s independent registered public accounting firm is responsible for auditing those financial statements and expressing an opinion as to their conformity with GAAP. The Audit and Finance Committee’s responsibility is to oversee and review these processes. The Audit and Finance Committee is not, however, engaged in the practice of accounting or auditing and does not provide any expert or other special assurance as to such financial statements concerning compliance with laws, regulations or GAAP or as to the independence of the independent registered public accounting firm. The Audit and Finance Committee relies, without independent verification, on the information provided to it and on the representations made by management and the independent registered public accounting firm. The Audit and Finance Committee’s responsibilities are described in a written charter. A copy of the Audit and Finance Committee’s current charter is publicly available on our website at
The Audit and Finance Committee reviewed and discussed with management and Ernst & Young the Company’s audited financial statements for the fiscal year ended September and the Securities and Exchange Commission. The Audit and Finance Committee also received and reviewed the written disclosure and the letter from Ernst & Young required by applicable requirements of the PCAOB regarding Ernst & Young’s communications with the Audit and Finance Committee concerning independence, including relevant considerations of non-audit services and fees, and the Audit and Finance Committee discussed with Ernst & Young its independence from the Company. Based on the review and discussions described above, and subject to the limitations on the Audit and Finance Committee’s role and responsibilities referred to above and in its charter, the Audit and Finance Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 26, 2020. Respectfully Submitted by the
Securities Ownership by Directors and Executive Officers The following table sets forth certain information regarding beneficial ownership of our common stock as January
Stock Ownership
Stock Ownership Security Ownership by Certain Beneficial Owners The following table sets forth certain information regarding beneficial ownership of our common stock as January 8, 2020 by each person who is known by us to own beneficially more than 5% of the outstanding shares of our common stock, based on public filings with the SEC.
Section 16(a) of the Exchange Act requires our officers and directors and holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Such persons are required by regulations of the SEC to furnish us with copies of all such filings. As a matter of practice, our administrative staff assists our officers and directors in preparing initial reports of ownership and reports of changes in ownership and files those reports on their behalf. Based on our review of the copies of such forms we have received, as well as information provided and representations made by the reporting persons, we believe that all required Section 16(a) filing requirements were met with respect to the period ended September
GENERAL INFORMATION ABOUT THE MEETING AND VOTING WHY AM I RECEIVING THESE MATERIALS?
WHAT IS THE PURPOSE OF THE ANNUAL MEETING? At the Annual Meeting, stockholders will vote upon matters that are summarized in the formal meeting notice. The proxy statement contains important information for you to consider when deciding how to vote on the matters before the meeting. Please read it carefully.
WHO CAN VOTE? Our Board of Directors has fixed the close of business on January
VOTING ON? Stockholders will vote on the following items at the Annual Meeting:
WHAT ARE THE VOTING RECOMMENDATIONS OF THE BOARD OF DIRECTORS? Our Board of Directors recommends that you vote your shares:
VOTE MY SHARES? You may vote in person or by proxy. Your execution of a proxy will not in any way affect your right to attend the Annual Meeting and vote in person. If you are a stockholder of record (that is, if you hold shares that are directly registered in your own name), there are four ways to vote:
If your shares are held in the name of a bank, broker or other holder of record, which is known as being held in “street name,” you will receive separate voting instructions with your proxy materials. If you hold your shares in street name, your ability to vote by internet or by telephone depends on the voting process of the bank, broker or other holder of record that holds your shares. Although most banks, brokers and other holders of record also offer internet and telephone voting, availability and specific procedures will depend on their voting arrangements. Please follow their directions carefully. If you want to vote shares that you hold in street name at the Annual Meeting, you must request a legal proxy from the bank, broker, or other holder of record that holds your shares and present that proxy, along with valid photo identification and sufficient proof of share ownership as of the record date, at the meeting. We reserve the right to deny admittance to anyone who cannot show valid identification or sufficient proof of share ownership as of the record date.
HAVE VOTED? You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting by: (1) filing with our Corporate Secretary a written notice of revocation, (2) executing a later dated proxy relating to the same shares and delivering it to our Corporate Secretary, or (3) attending the Annual Meeting and voting in person (although attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy).
HOW MANY SHARES MUST BE PRESENT TO HOLD THE ANNUAL MEETING? A majority of the outstanding shares of our common stock entitled to vote at the Annual Meeting must be present in person or by proxy to hold the Annual Meeting and conduct business. This is called a quorum. Votes withheld, abstentions and broker “non-votes” are counted as present or represented for purposes of determining the presence or absence of a quorum. A “non-vote” occurs when a broker holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because, in respect of such other proposal, the broker does not have discretionary voting power and has not received instructions from the beneficial owner. Shares voted in the manner described above will be counted as present at the Annual Meeting. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. If your shares are held in street name, you should contact your bank, broker or other nominee to revoke your proxy or, if you have obtained a legal proxy from your bank, broker or other nominee giving you the right to vote your shares at the Annual Meeting, you may change your vote by attending the Annual Meeting and voting in person. Any written notice of revocation or subsequent proxy should be sent to the attention of our Corporate Secretary, Hologic, Inc.
General Information About the Meeting and Voting WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AND HOW ARE VOTES COUNTED? A nominee will be elected to the Board of Directors if the votes cast “for” the nominee’s election exceed the votes cast “against” the nominee’s election. Abstentions and broker non-votes will not have any effect on this proposal. In accordance with our Bylaws, if any nominee for director in an uncontested election such determination. Approval of Proposals No. 2 Abstentions and broker “non-votes” are included in the number of shares present or represented for purposes of quorum but are disregarded for purposes of determining whether any of the proposals Banks, brokers, or other holders of record may vote shares held for a customer in street name on matters that are considered to be “routine” even if they have not received instructions from their customer. A broker “non-vote” occurs when a bank, broker, or other holder of record has not received voting instructions from a customer and cannot vote the customer’s shares because the matter is not considered routine. One of the proposals before the Annual Meeting this year is deemed a “routine” matter, namely the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for fiscal
ARE THERE OTHER MATTERS TO BE VOTED ON AT THE ANNUAL MEETING? We do not know of any other matters to be presented at the Annual Meeting. If any other matters are properly presented at the Annual Meeting, your proxy authorizes us to vote, or otherwise act in accordance with the best judgment and discretion of the persons named as proxies below.
HOW ARE PROXIES VOTED? The persons named as the proxies, Stephen P. MacMillan,
FIND THE VOTING RESULTS OF THE ANNUAL MEETING? The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the inspector of election and published in
RECEIVE A ONE-PAGE NOTICE IN THE MAIL REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS INSTEAD OF A FULL SET OF PROXY MATERIALS? Under rules adopted by the SEC, we are furnishing proxy materials to our stockholders primarily via the internet, instead of mailing printed copies of those materials to each stockholder. On or about January HOW CAN I RECEIVE PROXY MATERIALS ELECTRONICALLY? The Notice will provide you with instructions regarding the method of delivery for future proxy materials. Choosing to access our proxy materials via the Internet or to receive future proxy materials by email will reduce the impact of our Annual Meetings on the environment as well as decrease the cost of printing and mailing documents to you. If you If you hold your stock through a bank, broker or other holder of record and you would like to receive future proxy materials electronically, please refer to the information provided by that entity for instructions on how to elect
RECEIVE A PAPER COPY OF THE MATERIALS? If you prefer to receive paper copies of the proxy materials, you can still do so. You may request a paper copy by following the instructions provided in the Notice. The Notice also provides you with instructions on how to request paper copies of the proxy materials on an ongoing basis. There is no charge to receive the materials by mail. You may request printed copies of the materials until one year after the date of the Annual Meeting. If you have previously elected to receive printed proxy materials, you will continue to receive these materials in paper format until you elect otherwise.
WHO IS PAYING FOR THE COST OF THIS PROXY SOLICITATION? All costs of solicitation of proxies will be borne by us. In addition to solicitations by mail, certain of our directors, officers, employees and other agents, without additional remuneration, may solicit proxies in person or by telephone or email. We may elect to engage outside professionals to assist us in the distribution and solicitation of proxies at a fee to be borne by us. Brokers, custodians and fiduciaries will be requested to forward proxy soliciting material to the owners of shares held in their names, and we will reimburse them for their reasonable out-of-pocket costs. Solicitation may also be made of some stockholders in person or by mail, telephone or email following the original solicitation. Additionally, we have retained Trademark Notice Hologic, The Science of Sure, Genius, Genius 3D, 3D MAMMOGRAPHY, ThinPrep, NovaSure, MyoSure, Affirm, Aptima, Panther, Panther Fusion, BioZorb, SmartCurve, Intelligent 2D, Hologic Clarity HD, Faxitron, Fluent, Focal Therapeutics, SuperSonic Imagine and associated logos are trademarks and/or registered trademarks of Hologic, Inc. and/or its subsidiaries in the United States and/or other countries. All other trademarks are the property of their respective owners.
STOCKHOLDER PROPOSALS FOR THE
A stockholder or group of To be eligible for consideration at the 2021 Annual Meeting of Stockholders, any proposal that is a proper subject for consideration which has not been submitted by the deadline for inclusion in All submissions to, or requests of,
To the extent that this proxy statement has been or will be specifically incorporated by reference into any filing made by us under the Securities Act of 1933, as amended, or the Exchange Act, the sections of the proxy statement entitled “Compensation Committee Report” and “Audit and Finance Committee Report” shall not be deemed to be so incorporated, unless specifically provided in any such filing. FINANCIAL MATTERS AND FORM 10-K WE WILL PROVIDE EACH BENEFICIAL OWNER OF OUR SECURITIES WITH A COPY OF OUR ANNUAL REPORT ON FORM .
ANNEX A NON-GAAP RECONCILIATION Use of Non-GAAP Financial Measures: The Company has used non-GAAP financial measures in this proxy statement, including adjusted revenue and adjusted EPS. Adjusted revenue for fiscal 2019 means our consolidated revenue determined in accordance with GAAP, calculated on a constant currency basis using the foreign currency exchange rate applied in setting the Company’s fiscal 2019 budget set in the fourth quarter of fiscal 2018. For fiscal 2019, adjusted revenue excludes incremental revenue associated with the Company’s October 2018 acquisition of Focal Therapeutics, Inc. (“Focal”) and Grand X-Ray Imaging (“Grand X-Ray”). Adjusted EPS means our consolidated net income (loss) per share (on a fully-diluted basis) determined in accordance with GAAP, adjusted to exclude: (i) the amortization of intangible assets and impairment of goodwill, intangible assets and equipment; (ii) additional depreciation expense from acquired fixed assets and accelerated depreciation related to consolidation and closure of facilities; (iii) additional expenses resulting from the purchase accounting adjustment to record inventory at fair value; (iv) non-cash interest expense related to amortization of the debt discount from the equity conversion option of convertible notes; (v) restructuring and divestiture charges and facility closure and consolidation charges and costs incurred to integrate acquisitions (including retention, transaction bonuses, legal and professional consulting services) and separate divested businesses from existing operations; (vi) transaction related expenses for divestitures and acquisitions; (vii) debt extinguishment losses and related transaction costs; (viii) the unrealized gains and losses on the mark-to-market of forward foreign currency contracts and foreign currency option contracts for which the Company has not elected hedge accounting; (ix) litigation settlement charges and benefits, and non-income tax related charges and benefits; (x) other-than-temporary impairment losses on investments and realized gains and losses resulting from the sale of investments; (xi) the one-time discrete impact of tax reform primarily related to remeasuring net deferred tax liabilities; (xii) other one-time, non-recurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company’s core business results; (xiii) expenses in SuperSonic Imagine’s net loss that the Company would exclude from its non-GAAP net income and (xiv) income taxes related to such adjustments. This calculation further excludes the results of Focal and Grand X-Ray post-acquisition in order to level set the results for purposes of the 2019 STIP calculation. The non-GAAP financial measures used in this proxy statement adjust for specified items that can be highly variable or difficult to predict. The Company generally uses these non-GAAP financial measures to facilitate management’s financial and operational decision-making, including evaluation of Hologic’s historical operating results, comparison to competitors’ operating results and determination of management incentive compensation. These non-GAAP financial measures reflect an additional way of viewing aspects of the company’s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting Hologic’s business. Because non-GAAP financial measures exclude the effect of items that increase or decrease the company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. The Company’s definition of these non-GAAP measures may differ from similarly titled measures used by others. A reconciliation of the non-GAAP revenue and non-GAAP EPS to the most directly comparable GAAP financial measures is included in the following pages.
Annex A Non-GAAP Reconciliation Reconciliation of GAAP EPS to Non-GAAP Adjusted EPS (as calculated pursuant to the terms of the Short-Term Incentive Plan)
EXPLANATORY NOTES TO RECONCILIATIONS:
Annex A Non-GAAP Reconciliation
Reconciliation of GAAP Revenue to Adjusted Revenue
Reconciliation of GAAP International Revenue to Adjusted Constant Currency International Revenue
HOLOGIC, INC. VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on March 4, 2020 for shares held directly and by 11:59 P.M. Eastern Time on March 2, 2020 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. Electronic Delivery of Future PROXY MATERIALS
VOTE BY MAIL
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
HOLOGIC, INC. PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS March 5, 2020 The undersigned stockholder of HOLOGIC, INC., a Delaware corporation (the "Company"), hereby appoints Stephen P. MacMillan, Karleen M. Oberton and John M. Griffin, each of them acting singly, with full power of substitution, as proxies to represent the undersigned at the Annual Meeting of Stockholders of the Company to be held at 250 Campus Drive, Marlborough, Massachusetts 01752, on March 5, 2020 at 8:00 a.m., Eastern Time, and at any adjournment or postponement thereof, with all power which the undersigned would possess if personally present, and to vote all shares of stock which the undersigned may be entitled to vote at said meeting upon the matters set forth in the Notice of Annual Meeting of Stockholders and Proxy Statement. All previous proxies are hereby revoked. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED "FOR" ALL DIRECTOR NOMINEES, "FOR" PROPOSALS 2 AND 3, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF STOCKHOLDERS. Please mark, sign, date and return this proxy card promptly using the enclosed reply envelope.
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