Envista (NVST) PRE 14APreliminary proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

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.    )

 

 

 

 

*Due to concerns regarding the ongoing novel coronavirus (“COVID-19”) pandemic and to protect the health and safety of our employees and stockholders, the 2021 Annual Meeting will be a virtual meeting conducted solely online and can be attended by visiting www.virtualshareholdermeeting.com/NVST2021.

Items of Business:

1. To elect each of Ms. Wendy Carruthers, Mr. Scott Huennekens, and Ms. Christine Tsingos to serve as a Class II Director, for a three-year term expiring at the 2024 annual meeting of stockholders and until his or her successor is elected and qualified.

2. To approve amendments to Envista’s amended and restated certificate of incorporation (“Certificate of Incorporation”) to (a) phase out the classification of the Board of Directors and (b) eliminate the supermajority voting requirements and remove certain provisions that are no longer applicable to Envista.

3. To ratify the selection of Ernst & Young LLP as Envista’s independent registered public accounting firm for the year ending December 31, 2021.

4. To approve on an advisory basis Envista’s named executive officer compensation.

5. To consider and act upon such other business as may properly come before the meeting or any adjournment thereof.

YOUR VOTE IS IMPORTANT. PLEASE SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.

Most stockholders have a choice of voting over the Internet, by telephone or by using a traditional proxy card or voting instruction form. Please refer to the attached proxy materials or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 25, 2021:

April 12, 2021

To assist you in reviewing the proposals to be acted upon at our 2021 Annual Meeting, below is summary information regarding the meeting. For more information about these topics, please review the complete Proxy Statement. This Proxy Statement and proxy card are first being sent to our stockholders on or about April 12, 2021.

2021 Annual Meeting of Stockholders

Items of Business

Company Overview

On September 20, 2019, we completed our initial public offering and separated from Danaher Corporation (the “Separation”). The disposition of our shares owned by Danaher (the “Split-Off”) was completed on December 18, 2019 and resulted in the full separation of us and disposal of Danaher’s entire ownership and voting interest in us.

thrive both personally and professionally. As part of these efforts, we strive to embody our core values, offer a competitive

compensation and benefits program, foster a community where everyone feels included and respected, and provide ample

professional development opportunities.

Our compensation programs and practices are designed to attract employees, motivate and reward performance, drive growth,

and support retention. We offer competitive compensation packages based on market data, which include base salary and may also include annual cash performance incentives, commissions, overtime opportunities, allowances and, in some countries where these are customary, additional monthly payments. In addition, employees in select senior management roles may receive long-term compensation in the form of equity awards. We regularly review our compensation structure to ensure that we remain competitive, reward top performance, as well as to ensure internal equity. We offer robust benefits in each of our locations. In the U.S., our benefits package includes health (medical, dental & vision) insurance, paid time off, paid parental leave, a retirement plan, and life and disability coverage.

Diversity, inclusion, and equality are at the core of what make our culture and our teams so successful and are embodied by our value of Respect. We know that when our employees show up every day as their authentic selves, there is greater teamwork, more thoughtful debate, and more reasons to celebrate. We are committed to a culture where diversity, respect, belonging, and authenticity are valued. We drive diversity and inclusion by way of diverse candidate slates for executive level, professional level, and sales roles and we ensure succession plan talent is diverse in representation and receives promotional advocacy. We have a Diversity and Inclusion Council, consisting of leaders within the Company to drive accountability and results for our diversity and inclusion strategic efforts and initiatives. We have four standing Diversity and Inclusion Committees in the areas of talent acquisition and engagement, education and learning, events and celebrations, and global communication. We have two Employee Resource Groups: Women + Friends and Multicultural + Friends, as well as learning events during each historical heritage month throughout the year to celebrate our workforce. Additionally, we have strategically partnered with the Consortium for early career diverse talent and with historically Black colleges and universities (HBCUs) and Hispanic Serving Institutions (HSIs) to further advance our workforce diversity efforts.

We empower our employees to thrive in their current roles as well as support employees’ aspiration to move into different

roles. We have a promote-from-within culture with opportunities across our operating companies. We support our employees through a multitude of training and development programs, including training on our Envista Business System (“EBS”) tools through our Envista Business System University, individual development plans (which encourages our employees to take charge of their learning and growth opportunities and provides access to hundreds of online courses), and various management trainings. We also have several programs focused on early career development, including internship programs and our six-year General Management Development Program. This commitment to our employees’ professional development reflects both our

Continuous Improvement and Leadership core values.

Sustainability

From the start, establishing Envista as a company that sets a high standard of performance on environmental, social, and governance measures has been a priority. We have spent considerable time and effort over the past year examining what is most important to our stakeholders and our business. We will be launching our Inaugural Sustainability Report in May and we are excited to share our environmental, social, and governance commitments with our stakeholders at that time.

Corporate Governance Highlights

Our Board of Directors recognizes that enhancing and protecting long-term value for our stockholders requires a robust framework of corporate governance that serves the best interests of all our stockholders.

 

Executive Compensation Highlights

The components of our executive compensation program are intended to support our human capital strategy and to further stockholder interests as follows:

Compensation Governance Highlights

Our approach to executive compensation reflects a range of practices that promote alignment between the interests of executives and those of stockholders, as illustrated below.

 

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (“Board”) of Envista Holdings Corporation, a Delaware corporation (“Envista”), of proxies for use at the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at 7:00 a.m., PT, and at any and all postponements or adjournments thereof. Please note that, due to concerns regarding the ongoing novel coronavirus (“COVID-19”) pandemic and to protect the health and safety of our employees and stockholders, the Annual Meeting will be a virtual meeting conducted solely online and can be attended by visiting www.virtualshareholdermeeting.com/NVST2021. Envista’s principal address is 200 S. Kraemer Boulevard, Building E, Brea, CA 92821. The date of mailing of this Proxy Statement is on or about April 12, 2021.

Purpose of the Annual Meeting

The purpose of the Annual Meeting is to:

Annual Meeting Admission

If a stockholder would like to virtually attend the Annual Meeting in person, he or she must access www.virtualshareholdermeeting.com/NVST2021 using the control number located on the Notice of Internet Availability of Proxy Materials, or on each proxy card or by following the instructions that accompanied his or her proxy materials.

Outstanding Stock and Voting Rights

In accordance with Envista’s Amended and Restated Bylaws, the Board has fixed the close of business on March 31, 2021, as the record date for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting. Only stockholders of record at the close of business on that date will be entitled to vote. The only outstanding securities of Envista entitled to vote at the Annual Meeting are shares of Common Stock, $.01 par value (“Common Stock”). Each outstanding share of Common Stock entitles the holder to one vote on each directorship and other matter brought before the Annual Meeting. As of the close of business on March 31, 2021, 160,645,564 shares of Common Stock were outstanding, excluding shares held by or for the account of Envista.

Solicitation of Proxies

The proxies being solicited hereby are being solicited by the Board. The total expense of the solicitation will be borne by us, including reimbursement paid to banks, brokerage firms and nominees for their reasonable expenses in forwarding material regarding the Annual Meeting to beneficial owners. Solicitation of proxies may be made personally or by mail, telephone, internet, e-mail or facsimile by officers and other of our management employees, who will receive no additional compensation for their services. We have hired D.F. King & Co., Inc. to help us send out the proxy materials and to solicit proxies for the Annual Meeting at an estimated cost of $12,500 plus reimbursement of certain additional out of pocket expenses.

Proxy Instructions

Proxies will be voted as specified in the stockholder’s proxy.

Notice of Internet Availability of Proxy Materials

As permitted by SEC rules, we are making the proxy materials available to our stockholders primarily via the Internet. By doing so, we can reduce the printing and delivery costs and the environmental impact of the Annual Meeting. On April 12, 2021, we mailed a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders. The Notice contains instructions on how to access our proxy materials and how to vote online or by telephone. If you would like to receive a paper copy of the proxy materials, please follow the instructions in the Notice.

Voting Requirements With Respect to Each of the Proposals Described in this Proxy Statement

Voting Methods

Detailed instructions for Internet voting are set forth on the Notice, proxy card or voting instruction form.

If you participate in the Envista Stock Fund through the Envista Holdings Corporation Savings Plan ( the “Savings Plan” and a “401(k) Plan”), your proxy will also serve as a voting instruction for Fidelity Management Trust Company (“Fidelity”), the trustee of the Savings Plan, with respect to shares of Common Stock attributable to your Savings Plan account as of the record date. Fidelity will vote your Savings Plan shares as of the record date in the manner directed by you. If Fidelity does not receive voting instructions from you by May 20, 2021, Fidelity will not vote your Savings Plan shares on any of the proposals brought at the Annual Meeting.

Changing Your Vote

Any person giving a proxy pursuant to this solicitation has the power to revoke it at any time before it is voted. It may be revoked by filing with the Secretary of Envista a written notice of revocation or a duly executed proxy bearing a later date, or it may be revoked by virtually attending the meeting and voting in person. Please note, however, that if your shares are held of record by a broker, bank or nominee and you wish to revoke your proxy or vote at the meeting, you must follow the instructions provided to you by the record holder and/or obtain from the record holder a proxy issued in your name. Virtual attendance at the meeting will not, by itself, revoke a proxy.

Householding

Directors and Executive Officers

The following table sets forth as of March 31, 2021 (unless otherwise indicated) the number of shares and percentage of Common Stock beneficially owned by each of our directors, nominees for director and each of the executive officers named in the Summary Compensation Table (the “Named Executive Officers”), and all current executive officers and directors as a group. Except as otherwise indicated and subject to community property laws where applicable, each person or entity included in the table below has sole voting and investment power with respect to the shares beneficially owned by that person or entity. Under applicable SEC rules, the definition of beneficial ownership for purposes of this table includes shares over which a person or entity has sole or shared voting or investment power, whether or not the person or entity has any economic interest in the shares, and also includes shares as to which the person has the right to acquire beneficial ownership within 60 days of March 31, 2021. Except as indicated, the address of each director and executive officer shown in the table below is c/o Envista Holdings Corporation, 200 S. Kraemer Boulevard, Building E, Brea, CA 92821.

Principal Stockholders

Pursuant to the Company’s Amended and Restated Certificate of Incorporation adopted prior to the Separation, the Board is constituted into three classes as follows:

At the Annual Meeting, stockholders will be asked to elect each of the current Class II director nominees identified below (who have been recommended by the Nominating and Governance Committee, nominated by the Board and currently serve as Class II Directors of Envista) to serve until the 2024 Annual Meeting of Stockholders and until his or her successor is duly elected and qualified.

We have set forth below information as of March 31, 2021 relating to each nominee for election as director and each director continuing in office, including: his or her principal occupation and any board memberships at other public companies during the past five years; the other experience, qualifications, attributes or skills that led the Board to conclude that he or she should continue to serve as a director of Envista; the year in which he or she became a director; and age. Please see “Corporate Governance – Director Nomination Process” for a further discussion of the Board’s process for nominating Board candidates. Each of the nominees has consented to serve if elected. In the event a nominee declines or is unable to serve, the proxies may be voted in the discretion of the proxy holders for a substitute nominee designated by the Board, or the Board may reduce the number of directors to be elected. We know of no reason why this will occur.

Class II Director Nominees – Three Year Term That Will Expire in 2024

Wendy Carruthers has served as Senior Vice President of Human Resources at Boston Scientific Corporation, a medical device manufacturer, since December 2012 after serving in a series of progressively more responsible human resources roles since joining Boston Scientific in 2004, including as Vice President of Human Resources for Europe, Middle East and Africa from January 2006 to December 2010. A native of the United Kingdom, Ms. Carruthers’ international background and broad experience in the areas of executive compensation and talent management are particularly valuable to our Board as international expansion and talent acquisition, development, compensation and retention are critical strategic objectives for Envista.

Christine Tsingos served as Executive Vice President and Chief Financial Officer at Bio-Rad Laboratories, Inc., a manufacturer of life science research and clinical diagnostics products, from 2002 to May 2019. Ms. Tsingos is also currently a member of the Board of Directors of each of Onto Innovation Inc. (formerly Nanometrics Incorporated) and Varex Imaging Corporation. Ms. Tsingos brings to Envista deep finance and accounting leadership as well as substantial audit committee experience, which are areas of critical importance for us as a large, global and complex public company.

Current Class I Directors – Directors with Terms That Will Expire in 2023

 

Gayle Sheppard has served as Corporate Vice President, Azure Data, Microsoft Corporation since April 2019, where she leads the vision & strategy for Microsoft’s data and analytics products and services. Prior to joining Microsoft, Ms. Sheppard served as Vice President and General Manager of the AI/ML Division, Intel Corporation, from October 2015 through October 2018. Prior to joining Intel, Ms. Sheppard held various leadership positions at Saffron Technology, Inc., Peoplesoft, Inc., Ketera Technologies, Inc. and J.D. Edwards, Inc. Ms. Sheppard has founded, created, or contributed to start-up and Fortune 100 companies focused on Artificial Intelligence platforms, solutions in business and consumer markets, and digitization of business in a wide variety of industries. Ms. Sheppard brings to Envista extensive global business experience and deep technology expertise, which are areas of critical importance for us as a large, international company.

 

Amir Aghdaei has served as our President and Chief Executive Officer and as a director on our Board since May 2019. Prior to that, Mr. Aghdaei served in multiple leadership roles since joining Danaher Corporation in 2008, including as Vice President - Group Executive since 2011 and with responsibility for Danaher’s Dental business since July 2015. Before joining Danaher, Mr. Aghdaei served in a variety of international leadership roles with Hewlett-Packard Company, Agilent Technologies Inc. and Credence Systems Corporation. Mr. Aghdaei brings to Envista an in-depth knowledge of our Dental business and extensive international experience, which is particularly important given our global footprint.

Daniel A. Raskas has served as Senior Vice President - Corporate Development of Danaher Corporation since 2010 after serving as Vice President - Corporate Development from 2004, when he joined Danaher. Prior to joining Danaher, Mr. Raskas was a Managing Director for Thayer Capital Partners, a private equity investment firm. Mr. Raskas’ corporate development and private equity experience give him particular insight into acquisition strategy, which represents a key strategic opportunity for us.

Board Composition and Diversity

Corporate Governance Overview

Our Board of Directors recognizes that enhancing and protecting long-term value for our stockholders requires a robust framework of corporate governance that serves the best interests of all our stockholders.

Corporate Governance Guidelines, Committee Charters and Code of Conduct

As part of its ongoing commitment to good corporate governance, our Board of Directors has codified its corporate governance practices into a set of Corporate Governance Guidelines and adopted written charters for each of the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee of the Board. The Board of Directors has also adopted for the Company our Code of Conduct that includes, among others, a code of business conduct and ethics for directors, officers (including our principal executive officer, principal financial officer and principal accounting officer) and employees. The Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, Nominating and Governance Committee Charter, and Code of Conduct referenced above are each available in the “Investors – Governance” section of our website at http://www.envistaco.com.

Board Leadership Structure and Risk Oversight

The entire Board selects its Chairman, and our Board has selected Scott Huennekens, an independent director, as its Chairman, in light of Mr. Huennekens’ independence and his deep experience and knowledge with corporate governance, board management, stockholder engagement, risk management and extensive background in the medical device field.

As the independent Chairman of the Board, Mr. Huennekens leads the activities of the Board, including:

In the event that the Chairman of the Board is not an independent director, the Corporate Governance Guidelines provide that the independent directors, upon recommendation from the Nominating and Governance Committee, will select by majority vote an independent director to serve as the Lead Independent Director with the authority to:

The Board’s non-management directors meet in executive session following the Board’s regularly-scheduled meetings, with the executive sessions chaired by the independent Chairman. In addition, the independent directors meet as a group in executive session at least once a year.

Since risk issues often overlap, committees from time to time request that the full Board discuss particular risks. On an annual basis, the Company’s Enterprise Risk Management Committee (consisting of members of senior management) inventory, assess and prioritize the most significant risks facing the Company as well as related mitigation efforts, and provide a report to the Board.

In determining to separate the position of the CEO and the Chairman, and in determining the appointment of the Chairman of the Board and the Chairs of the Committees, the Board and the Nominating and Governance Committee considered the implementation of a governance structure and appointment of chairpersons with appropriate and relevant risk management experience that would enable the Company to efficiently and effectively assess and oversee its risks.

Director Independence

The Board has determined that Mses. Carruthers, Sheppard and Tsingos and Messrs. Gallahue, Huennekens, and Jain are independent directors under the applicable rules of the NYSE. Mr. Huennekens serves as independent Chairman of the Board.

The Board assesses on a regular basis, and at least annually, the independence of directors and, based on the recommendation of the Nominating and Governance Committee, makes a determination as to which members are independent.

Board of Directors and Committees of the Board

The Audit Committee is governed by a charter that complies with the rules of the NYSE. A copy of the Audit Committee Charter is available on the “Investors – Governance” section of our website.

The Audit Committee relies on the expertise and knowledge of management, the internal auditor, and the independent auditor in carrying out its oversight responsibilities. Management is responsible for the preparation, presentation, and integrity of our financial statements, accounting and financial reporting principles, internal control over financial reporting, and disclosure controls and procedures designed to ensure compliance with accounting standards, applicable laws, and regulations. Management is also responsible for objectively reviewing and evaluating the adequacy, effectiveness, and quality of our system of internal control over financial reporting. Our independent auditor, Ernst & Young LLP, is responsible for performing an independent audit of our financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States.

The Audit Committee also prepares a report of the Audit Committee as required by the SEC to be included in this Proxy Statement. The Audit Committee typically meets in executive session, without the presence of management, at each regularly scheduled meeting, and reports to the Board on its actions and recommendations at each regularly scheduled Board meeting.

Furthermore, as of the date of this Proxy Statement, no Audit Committee member serves on the audit committee of more than three public companies.

The Compensation Committee is governed by a charter that complies with the rules of the NYSE. A copy of the Compensation Committee Charter is available on the “Investors – Governance” section of our website. Each member of the Compensation Committee is an “outside director” for purposes of Section 162(m) of the Internal Revenue Code (“Section 162(m)”), a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act and, based on the determination of the Board, independent under the NYSE listing standards and under Rule 10C-1 under the Exchange Act. The Committee typically meets in executive session, without the presence of management, at its regularly scheduled meetings. Under the terms of its charter, the Compensation Committee has the authority to form, and delegate authority to, such standing and ad-hoc subcommittees as it determines necessary or desirable. The Compensation Committee Charter also provides that, to the extent permitted by applicable law and the provisions of a given equity-based plan, and consistent with the requirements of applicable law and such equity-based plan, the Compensation Committee may delegate to one or more executive officers of the Company, or a sub-committee of the Compensation Committee formed for such purpose, the power to make grants and awards (other than grants and awards to any Company director or any officer subject to Section 16 of the Exchange Act) pursuant to such equity-based plan to employees of the Company or any subsidiary of the Company.

Our human resources and legal departments also assist the Committee Chair in scheduling and setting the agendas for the Committee’s meetings, prepare meeting materials and provide the Committee with data relating to executive compensation as requested by the Committee.

The Nominating and Governance Committee is governed by a charter that complies with the rules of the NYSE. A copy of the Nominating and Governance Committee Charter is available on the “Investors – Governance” section of our website.

The Board has determined that each member of the Nominating and Governance Committee is independent within the meaning of the NYSE listing standards. The Nominating and Governance Committee typically meets in executive session, without the presence of management, at each regularly scheduled meeting, and reports to the Board on its actions and recommendations at each regularly scheduled Board meeting.

Director Nomination Process

The Nominating and Governance Committee recommends to the Board director candidates for nomination and election at the annual meeting of stockholders and, in the event of vacancies between annual meetings, for appointment to fill such

The Nominating and Governance Committee annually reviews with the Board the skills, knowledge, experience, background and attributes required of Board nominees, considering current Board composition and the Company’s circumstances. In making its recommendations to our Board, the Nominating and Governance Committee considers the required standards and qualifications noted above, as well as, among others, the following skills, knowledge, experience, background and attributes:

The Nominating and Governance Committee takes into account a candidate’s ability to contribute to the diversity of perspective and analysis from the Board and, as such, believes it is important to consider attributes such as race, ethnicity, gender, age, education, cultural experience, and professional experience in evaluating candidates who may be able to contribute to the diverse perspective and practical insight of the Board as a whole. Although diversity is an important factor in assessing candidates as director nominees, neither the Board nor the Nominating and Governance Committee has a formal diversity policy. Furthermore, the Board does not make any particular weighting of diversity or any other characteristic in evaluating nominees and directors.

When we recruit a director candidate, either a search firm engaged by the Nominating and Governance Committee or a member

of the Board will contact the prospect to assess interest and availability. The candidate will interview with several members of the Board and at the same time, the Nominating and Governance Committee with the support of the search firm will conduct such further inquiries as the Nominating and Governance Committee deems appropriate, including a background check.  The Nominating and Governance Committee will make a recommendation to appoint a candidate to the Board and then the Board will vote on such recommendation.

Executive Officers of the Company

In addition to Mr. Aghdaei, our current executive officers include Curt W. Bludworth, Patrik Eriksson, Jeffrey S. Kappler, Jean-Claude “JC” Kyrillos, Mark E. Nance, Mischa M. Reis and Howard H. Yu. Information concerning our executive officers, other than Mr. Aghdaei, whose information can be found under “Proposal 1 — Election of Directors” above, follows.

Policy

Under our Related Person Transactions Policy adopted by the Board, the Nominating and Governance Committee of the Board is required to review and, if appropriate, approve all related person transactions prior to consummation whenever practicable. If advance approval of a related person transaction is not practicable under the circumstances or if our management becomes aware of a related person transaction that has not been previously approved or ratified, the transaction is submitted to the Nominating and Governance Committee at its next meeting. The Nominating and Governance Committee is required to review and consider all relevant information available to it about each related person transaction, and a transaction is considered approved or ratified under the policy if the Nominating and Governance Committee authorizes it according to the terms of the policy after full disclosure of the related person’s interests in the transaction. Related person transactions of an ongoing nature are reviewed annually by the Nominating and Governance Committee. The definition of “related person transactions” for purposes of the policy covers the transactions that are required to be disclosed under Item 404(a) of Regulation S-K promulgated under the Securities Act of 1933, as amended.

Relationships and Transactions

On September 20, 2019, we completed the Separation of Envista from Danaher and on December 18, 2019, the Split-Off was completed. In connection with the Separation, our subsidiaries that currently operate our businesses and the corresponding assets and liabilities were transferred to Envista, which, prior to such transfer, were held by Danaher. Following the Separation and Split-Off, Danaher and Envista operate as separate publicly-traded companies and neither entity has any ownership interest in the other. However, one of our directors, Daniel A. Raskas, is an executive officer of Danaher. In connection with the Separation, we entered into various agreements with Danaher to effect the Separation and provide a framework for our relationship after the Separation, including but not limited to, a separation agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property matters agreement, and a license agreement with respect to the Danaher Business System. Following the Split-Off, Danaher no longer owns any of our outstanding common stock and is no longer a related party to us, and we no longer consider our transactions with Danaher as related party transactions.

There were no transactions between the Company and any officer, director or nominee for director, or any affiliate of or person related to any of them, since January 1, 2020, of the type or amount required to be disclosed under the applicable SEC rules.

This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation philosophy and the pay programs provided to our Named Executive Officers (“NEOs”) for 2020.

Executive Summary

Our NEOs for 2020 include our Chief Executive Officer and Chief Financial Officer, as well as the next three most highly compensated executive officers serving as such at fiscal year-end, as follows:

We are a global family of more than 30 trusted dental brands, united by a shared purpose: to partner with professionals to improve lives. Our operating companies, including KaVo Kerr, Nobel Biocare Systems, and Ormco, partner with dental professionals to help them deliver the best possible patient care. Our distinctive brands and comprehensive portfolio, including dental implants and treatment options, orthodontics, and digital imaging technologies, covers an estimated 90% of dentists’ clinical needs for diagnosing, treating, and preventing dental conditions as well as improving the aesthetics of the human smile. Principal brands are set out below:

We are headquartered in Brea, California, and our commercial organization includes over 3,500 employees with deep clinical, product and workflow expertise who interact with customers on a daily basis. We endeavor to embody our core values in everything we do and in our various programs and initiatives:

We are now one of the largest global dental products companies, with significant market positions in some of the most attractive segments of the dental products industry.

With the goal of building long-term value for stockholders, our executive compensation program is designed to:

To achieve these objectives, our compensation program combines annual and long-term components, cash and equity, and fixed and variable elements, with a bias toward long-term equity awards which are subject to significant vesting periods. Our executive compensation program rewards executive officers when they build long-term stockholder value, achieve annual business goals and maintain long-term careers with us. The Compensation Committee exercises judgment in setting compensation levels, taking into account the following:

Our approach to executive compensation reflects a range of practices that promote alignment between the interests of executives and those of stockholders, as illustrated below.

2020 Executive Compensation Decision-Making and Oversight

Pursuant to its charter, the Compensation Committee engaged FW Cook as its independent compensation consultant. The Compensation Committee assessed the independence of FW Cook in accordance with the NYSE Listing Standards and applicable SEC regulations and concluded that FW Cook’s work does not raise any conflict of interest. FW Cook’s primary responsibilities in 2020 were to:

Our Chief Human Resources Officer, our Vice President, Total Rewards, and Assistant General Counsel generally attend meetings of the Compensation Committee along with our independent compensation consultant. Also, our Chief Executive Officer provides background and context regarding the relationship between strategic goals and priorities and executive compensation matters and provides recommendations to the Compensation Committee regarding performance and compensation paid to other executive officers. The Compensation Committee gives considerable weight to the evaluation and recommendations of our Chief Executive Officer with respect to the other executive officers. Our human resources and legal departments also assist the Compensation Committee Chair in scheduling and setting committee meeting agendas, preparing meeting materials and providing the Compensation Committee with data relating to executive compensation as requested by the Compensation Committee.

Analysis of 2020 Executive Compensation

The bulk of our senior executives’ direct compensation is performance based and variable in nature (approximately 85% of our CEO’s compensation and an average of approximately 70% for our other NEOs consisted of annual and long-term incentive compensation in 2020). In 2020, long-term incentives were awarded 50% in the form of stock options and 50% in the form of RSUs vesting over a five-year period - see “—Long-Term Incentive Compensation” for details. The following chart reflects components of compensation at target, as described in “Executive Compensation Tables — Employment Agreements.”

The components of our executive compensation program are intended to support our human capital strategy and to further stockholder interests as follows:

In connection with the Separation or upon their employment, as applicable, our NEOs entered into letter agreements with Envista, which among other things set forth base salary levels, which are reflective of base salary levels for positions with similar roles and scope of responsibilities within our peer group, as well as personal performance and experience. See “Executive Compensation Tables—Employment Agreements” below for additional information regarding the agreements with our NEOs.

For 2020, our Compensation Committee did not increase base salaries for our NEOs, other than Mr. Yu, at 2019 levels. Our Compensation Committee approved an increase in Mr. Yu’s base salary from $500,000 to $525,000 and to his target bonus from 70% to 75%, effective January 1, 2020 to more closely align Mr. Yu’s cash compensation with CFOs of peer organizations and to reflect the scope of responsibilities in his role.

Base salaries for our NEOs in 2019 and 2020 (outside of the temporary reductions in 2020 in response to COVID-19, as discussed below) were as follows:

As the COVID-19 pandemic evolved in 2020, the Company implemented a range of strategies to mitigate the effect of broad revenue declines, preserve cash and ensure our ongoing strength as a company. As part of these initiatives, the Board, following recommendations from management and the Compensation Committee, implemented salary reductions for senior executives which became effective on April 13, 2020, including reductions for the NEOs as follows:

Effective November 1, 2020, the Board reinstated the base salaries for our NEOs due to the recovery in the dental market as well as the Company’s progress on its strategic and cost-saving initiatives.

We provide annual incentives to our NEOs under our Executive Incentive Compensation Plan (the “Incentive Compensation Plan” or “ICP”). The Incentive Compensation Plan provides cash bonuses to participants based on the achievement of annual performance metrics relating to our business and the participant’s personal performance. In 2020, the target bonus for each NEO was equal to their base salary as of December 31, 2020 multiplied by the relevant target award percentage. The 2020 actual bonus was equal to target bonus multiplied by a Composite Payout Percentage, which incorporated a Company Financial Factor (“CFF”) as well as a Personal Performance Factor (“PPF”), described in more detail below.

Our approach to 2020 incentive design emphasizes company-wide financial results and teamwork while also rewarding business financial results and progress against personal objectives and strategic priorities. The diagram below illustrates the 2020 annual incentive award opportunities:

In establishing annual incentive award opportunities for 2020, our Compensation Committee adjusted the metrics and weights used in executive officer incentives to reflect the importance of core sales growth, earnings, and cash flow. Highlights of our approach to rewarding company-wide performance in the form of the Company Payout Percentage, which constitutes 75% of the annual incentive opportunity, are as follows:

Core sales growth, adjusted EPS and free cash flow are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and insight into how these non-GAAP measures are considered by management, please see Appendix A.

Individual performance in the form of Strategic Priorities/Personal Payout constitutes 25% of the annual incentive opportunity and reflects the executive’s execution against operational and personal goals for the year, overall leadership effectiveness, overall financial performance, and, for executives managing a business, operating performance for that business. Our Compensation Committee maintains discretion in determining incentive payouts for each executive officer. We believe that such discretion is set at a reasonable level, strengthens the effectiveness of our compensation programs by allowing performance differentiation among our leadership team and enables the Committee to incorporate risk mitigation and unanticipated developments in determining payouts.

Financial performance targets for incentive purposes are set at targets that are challenging and which generally constitute an improvement over the prior comparable period, in line with our core value of Continuous Improvement. The Compensation Committee established the performance goals prior to the global onset of the COVID-19 pandemic, and actual results were influenced heavily by the unprecedented effects of the pandemic.

The 2020 CFF for Messrs. Aghdaei, Yu and Nance was based on Envista’s performance against (i) core sales growth, (ii) earnings per share, and (iii) adjusted free cash flow to adjusted net income ratio and were set prior to the pandemic. In 2020, there was no payout for core sales growth or earnings per share, while weighted adjusted free cash flow ratio attainment was above maximum, giving rise to a CFF for these executives of 20% of target, as shown in the table below.

The CFF for our operating company presidents was calculated as follows:

The CFF for Nobel Biocare and Kavo Kerr was 10% and 60%, respectively, calculated as follows:

We do not disclose the specific targets for our operating companies’ performance metrics as they are highly confidential and would provide competitors and third parties with insight into the Company’s internal planning processes that may allow them to predict certain of our operating companies’ financial and/or operational strategies, which could cause us competitive harm. The performance metrics of core sales growth, adjusted operating profit, and working capital turnover were based on a range of factors, including growth outlooks for our respective product portfolios, the competitive environment, our internal budgets, external market economic conditions and market expectations. For example, growth rates implicit in targets for any one operating company may be above or below the growth rates targeted for the entire Company, due to faster or slower growth in relevant markets or smaller or larger market shares. These considerations result in operating company targets that are intended to coincide with Company-wide targets in their level of difficulty to achieve and probability for success. Like the performance targets set for Envista, the performance targets for our operating companies are set at levels that we believe are challenging and which generally constitute an improvement over the prior comparable period, in line with our core value of Continuous Improvement.

Following the end of 2020, the Compensation Committee used its judgment and determined for each executive a PPF between 0% and 150%. Without assigning any particular weight to any individual factor, the Compensation Committee took into account financial performance, the executive’s execution against operational and personal goals for the year, overall leadership effectiveness and, for executives managing a business, operating performance for that business. Based on such considerations, the Compensation Committee assigned a PPF of 100% for Mr. Aghdaei. With respect to the other NEOs, the average PPF assigned by the Compensation Committee was 92.5%. Our Compensation Committee has discretion in determining the PPF of each executive officer, which is an important risk-mitigating element to our compensation program.

The target percentages for our NEOs as a percentage of base salary were as follows: Mr. Aghdaei, 125%; Mr. Yu, 75%; Mr. Eriksson, 70%; Mr. Nance, 60%; and Mr. Kyrillos, 70%. The bonus target amounts, relevant CFF and PPF for each NEO resulted in the following non-equity Incentive Compensation Plan payouts for 2020:

Because of the adverse impact of COVID-19 on our business in the first two quarters of 2020, the Compensation Committee believed that it was highly unlikely that any payments would be made under the annual Incentive Compensation Plan due to the fact that the performance goals were established prior to the onset of the COVID-19 pandemic. The Compensation Committee nevertheless believed it was critical to incentivize our employees for growth in the second half of 2020 through an alternative cash incentive program designed to reward second half growth. Accordingly, in June 2020, our Compensation Committee approved a one-time cash incentive compensation plan for all employees who participated in the annual Incentive Compensation Plan, including our NEOs, called the Envista Wins Together (“EWT”) Bonus Incentive Plan. The EWT bonus plan was designed to drive our business to new levels of growth for the remainder of 2020 by working together across each of our operating companies. The EWT bonus plan was in addition to the amounts earned by participants under the annual Incentive Compensation Plan. The EWT bonus was based on achievement of Company-wide performance metrics, regardless of our operating company results or personal performance. Incentive awards under EWT were based on the following calculation:

If actual performance was 100% to target, then the performance multiplier would be 0.50. If overall performance exceeded the target, then the performance multiplier would be increased in an incremental amount between 0.50 and 0.75, as determined in the sole discretion of the Compensation Committee. The maximum performance multiplier available was 0.75. A minimum performance multiplier of 0.25 had to be achieved to receive a payout. If performance was such that the performance multiplier was below 0.25, no payout would occur.

Taking into account performance for each of the four performance metrics, the Compensation Committee certified the Company’s achievement of the EWT performance goals on February 16, 2021 as follows:

Based on the achievement of a performance multiplier of 60%, the Compensation Committee approved paying out EWT bonuses to the NEOs as follows:

The total bonus payouts to our NEOs under both the annual Incentive Compensation Plan and the EWT bonus plan are as follows:

On February 25, 2020, our Compensation Committee granted equity awards to the NEOs, consisting of 50% stock options and 50% time-based RSUs. These equity awards were intended to align the NEOs’ compensation with market levels of compensation within our peer group and, also, provide enhanced performance and retention incentives. The target values, mix and associated vesting periods were in line with the letter agreements entered into with our NEOs, except for Mr. Yu. The Compensation Committee determined that an award of $1,000,000 (versus $800,000) better aligns Mr. Yu’s compensation with that of his CFO peers and more appropriately reflects his performance during 2019. The awards were as follows:

During 2020, Mr. Aghdaei benefited from a tax equalization agreement in relation to a prior assignment which was intended to ensure that he pays no more and no less tax than he would have paid had he remained in the United States. Benefits under this agreement consist of German income taxes paid by Envista on Mr. Aghdaei’s behalf, offset by the tax refund resulting from associated foreign tax credits which is repaid to the Company. Additionally, hypothetical taxes were withheld in 2020 in anticipation of future tax obligations. In 2020, Mr. Yu benefited from a tax preparation service as it related to his prior assignment in Switzerland. This benefit consisted of Swiss income taxes paid by Envista on Mr. Yu’s behalf, offset by the tax refund resulting from associated foreign tax credits which is repaid to the Company. Details on perquisites made available to our NEOs in 2020 are in the footnotes to the “Summary Compensation Table.”

Our US-based executive officers, including the NEOs, participate in broad-based employee benefit plans, which are generally available to all U.S. salaried employees and do not discriminate in favor of our NEOs. These include subsidized health and dental insurance, AD&D and life insurance coverage, participation in the Envista Savings Plan as well as participation in employee-paid benefits such as vision insurance and flexible spending accounts. Additionally, US-based executive officers are eligible to defer a portion of their salary and bonus in our Deferred Compensation Plan which also covers other senior employees. Messrs. Aghdaei and Eriksson also participate in our Executive Deferred Incentive Program (“EDIP”), a plan which is closed to new entrants, and received a contribution in Envista notional shares in 2020 with respect to their participation in this plan. Messrs. Yu, Kyrillos and Nance are eligible to participate in our Excess Contribution Program (“ECP”), which provides for excess matching and non-elective contributions in Envista notional shares. US-based executives also participate in the Envista Holdings Corporation Severance and Change in Control Plan. See “Executive Compensation Tables—Employee Benefit Plans” below for additional information on these benefits.

2021 Executive Compensation Developments

In the first quarter of 2021, we implemented the following pay practices:

In addition, the Compensation Committee discussed the implementation of performance-based RSUs comprising at minimum 50% of the executives’ long-term incentive compensation. Given the difficulty of setting three-year performance targets in the midst of the uncertainty surrounding the COVID-19 pandemic, and in conjunction with the foregoing, the limited operating history of the Company as a stand-alone public company, our Compensation Committee determined to wait until 2022 to put in place RSUs with performance-based vesting conditions.

Compensation Peer Group Analysis

Our Compensation Committee reviews the peer group on a periodic basis to determine whether any changes are appropriate based on its view of the competitive environment in which we operate. In May 2020, FW Cook reviewed and recommended changes to the Company’s peer group for purposes of evaluating our compensation decisions for our executive officers and non-employee directors. FW Cook used the following guidelines in recommending a peer group to the Compensation Committee: (1) the extent to which such companies compete with us in one or more lines of business and for executive talent, and (2) comparability of revenues, market capitalization, net income, total assets and number of employees. Based on the recommendations of FW Cook, our Compensation Committee adopted a compensation peer group consisting of the following companies:

The changes made to the peer group in 2020 include: exclusion of Edwards Lifesciences Corporation, Mettler-Toledo International Inc., ResMed Inc. and Zimmer Biomet Holdings, Inc. and the inclusion of Cantel Medical Corp., CONMED Corporation and NuVasive, Inc.

Our Compensation Committee generally targets the market median of our peer companies in determining the compensation of our executive officers. While our Compensation Committee considers the data from the peer group helpful in assessing our competitive position, our Compensation Committee refers to other resources, including published compensation data from other surveys and from public compensation data for competitors to one or more of our operating companies. In addition to compensation data, the Compensation Committee considers pay for performance and long-term value creation objectives in determining the compensation for our executive officers that best aligns management’s interests with those of our stockholders.

2020 Say on Pay Vote Results

Stock Ownership Policies

To further align management and stockholder interests and discourage inappropriate or excessive risk-taking, our stock ownership policy requires each of our executive officers to obtain a substantial equity stake in our common stock within five years of their appointment to an executive position. The multiples of base salary required by the guidelines are as follows:

Once an executive has acquired a number of shares that satisfies the ownership multiple then applicable to him or her, such number of shares then becomes his or her minimum ownership requirement (even if the executive’s salary increases or the fair market value of such shares subsequently changes) until he or she is promoted to a higher level. Under the policy, beneficial ownership includes shares in which the executive or his or her spouse or child has a direct or indirect interest, notional shares of our common stock in the DCP, EDIP or ECP, shares held in a 401(k) plan, and unvested RSUs, but does not include shares subject to unexercised stock options. Each of our NEOs was in compliance with the stock ownership requirements as of December 31, 2020, having acquired the required number of shares or having more time to do so.

Recoupment Policy

To further discourage inappropriate or excessive risk-taking, our Compensation Committee has adopted a recoupment (or clawback) policy applicable to our executive officers who are subject to the reporting requirements of Section 16 under the Exchange Act (the “covered persons”), including our NEOs. Under the policy, in the event of a material restatement of our consolidated financial statements (other than any restatement required pursuant to a change in applicable accounting rules), the Board may, to the extent permitted by law and to the extent it determines that it is in our best interests to do so, in addition to all other remedies available to us, require reimbursement or payment to us of the portion of any annual incentive compensation payment awarded to any covered person within the three-year period prior to the date such material restatement is first publicly disclosed that would not have been awarded had the consolidated financial statements that are the subject of such restatement been correctly stated (except that the Board has the right to require reimbursement of the entire amount of any such annual incentive compensation payment from any covered person whose fraud or other intentional misconduct in the Board’s judgment alone or with others caused such restatement). In addition, the stock plans in which our executive officers participate contain provisions for recovering awards upon certain circumstances. Under the terms of our 2019 Omnibus Incentive Plan (the “2019 Plan”), if an employee is terminated for gross misconduct, the administrator may cause the participant’s unexercised or unvested equity awards to be partially or completely forfeited. In addition, under the terms of our EDIP and ECP, if termination of an employee’s participation in the plan resulted from the employee’s gross misconduct, the administrator may determine that the employee’s vesting percentage is zero with respect to all balances that were contributed by us.

Tax Deductibility of Executive Compensation

Our Compensation Committee will periodically review the tax impact of executive compensation on the Company as well as on our executive officers in addition to taking into account other considerations such as accounting impact, stockholder alignment, market competitiveness, effectiveness and perceived value to employees. Because many different factors influence a well-rounded, comprehensive and effective executive compensation program, we expect that some of the compensation provided to our executive officers will not be deductible under Section 162(m).

Risk Considerations and Review of Executive Compensation Practices

Risk-taking is an essential part of growing a business, and prudent risk management is necessary to deliver long-term, sustainable stockholder value. Our management coordinates the risk assessment and oversight of the Company’s incentive compensation plans with a cross functional team and presents its conclusions to the Compensation Committee. Upon review and discussion, the Compensation Committee agreed that the Company’s executive compensation program supports the objectives described above without encouraging inappropriate or excessive risk-taking.

In reaching this conclusion, our Compensation Committee considered in particular the following attributes and risk-mitigation features of our executive compensation program:

Our Compensation Committee will periodically review the compensation programs and design and may make certain changes to align them with our compensation philosophy and view of our business needs and strategic priorities, taking into account risk and risk mitigation considerations.

The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis set forth above, as required by Item 402(b) of Regulation S-K, and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for incorporation by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Summary Compensation Table

The Summary Compensation Table and notes show all compensation paid to or earned by each of our NEOs for 2020, 2019 and 2018, under Danaher’s compensation programs and plans prior to the Separation and under our compensation programs and plans on and after the Separation.

Grants of Plan-Based Awards for Fiscal 2020

The following table sets forth certain information regarding grants of plan-based awards to our NEOs in 2020 under our compensation programs and plans.