Envista (NVST) DEF 14ADefinitive 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.    )

 

 

2023

Notice of Annual Meeting

of Stockholders

and Proxy Statement

 

 

*The 2023 Annual Meeting will be a virtual meeting conducted solely online and can be attended by visiting www.virtualshareholdermeeting.com/NVST2023. A list of stockholders entitled to vote at the 2023 Annual Meeting will be accessible to stockholders during the meeting on the meeting website.

Items of Business:

2. To ratify the selection of Ernst & Young LLP as Envista’s independent registered public accounting firm for the year ending December 31, 2023.

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

4. 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 23, 2023:

April 10, 2023

To assist you in reviewing the proposals to be acted upon at our 2023 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 10, 2023.

* See Appendix A for a reconciliation of GAAP to non-GAAP measures. All financial metrics relate to our continuing operations only, except for cash flows measures.

Compensation and Benefits Program

Diversity and Inclusion

Learning and Development Opportunities

We aim to empower our employees to thrive in their current roles, as well as to support employees’ aspirations to move into different roles. We have a promote-from-within culture with opportunities across our operating companies. We periodically assess succession planning for certain key positions and review our workforce to identify high potential employees for future growth and development. We support our employees through a multitude of training and development programs, including training on our EBS and 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), job rotations, 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.

Employee Engagement

Community

Our employees have a long history of providing support and care in our communities, including by donating time, resources, and funds to local causes. In March 2021, we leveraged our expertise in oral health and founded the Envista Smile Project, a 501(c)(3) philanthropic foundation designed to improve the smiles and oral health of disadvantaged communities by supporting increased access to oral care and oral health education. The Envista Smile Project’s mission is to collaborate with dental professionals and Envista employee volunteers to donate products, treatment, and oral health education to communities in need around the world. The Envista Smile Project’s giving strategy focuses on three areas: mission trips, education, and monetary donations to oral health-focused, non-profit organizations.

Safe Work Environment

We value the safety of our employees and, in 2022, have further enhanced our safety program for remote and field-based employees. Environmental health and safety (“EHS”) significant sites, such as manufacturing, distribution, research and development sites and large offices, are supported through a combination of on-site and remote EHS professionals. Incident reporting and investigation, auditing, and corporate oversight provide for a collaborative and transparent environment to address and minimize potential gaps.

From the start, Envista has sought to set a high standard of performance on environmental, social, and governance (“ESG”) measures. Our sustainability efforts are led by our senior management and overseen by our Nominating and Governance Committee, along with our Board of Directors. We released our second annual Sustainability Report in October 2022 (the “2022 Sustainability Report”). It is designed to provide better transparency regarding our ESG efforts, and it can be found on our website at https://www.envistaco.com/sustainability. We encourage you to read the 2022 Sustainability Report for information regarding our ESG initiatives, including our five areas of sustainability priorities:

Highlights from the 2022 Sustainability Report include:

To manage the reporting process, we formed a cross-functional ESG steering committee consisting of senior leaders from across Envista. The ESG steering committee held meetings and reviewed sustainability frameworks, including those published by the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI) and the TCFD which helped us develop our framework for the report and identify relevant topics for disclosure and for future action. We are committed to incorporating these issues into our business operations, and to continually evaluate our sustainability issues for future reporting. We look forward to sharing our efforts and progress through subsequent Sustainability Reports.

In addition to our Sustainability Report, additional information regarding our sustainability initiatives can be found on our website at https://www.envistaco.com/sustainability.

Although we encourage our stockholders to review the information in our Sustainability Report and on our website, the contents of the report and website are not deemed filed with the SEC and are not incorporated by reference into any filing by Envista under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including this Proxy Statement.

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.

Highlights of Our Corporate Governance Framework:

Overview of Executive Compensation Program

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

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 2023 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 the Annual Meeting will be a virtual meeting conducted solely online and can be attended by visiting www.virtualshareholdermeeting.com/NVST2023. 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 10, 2023.

The purpose of the Annual Meeting is to:

If a stockholder would like to virtually attend the Annual Meeting in person, he or she must access www.virtualshareholdermeeting.com/NVST2023 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.

In accordance with Envista’s Second Amended and Restated Bylaws, the Board has fixed the close of business on March 27, 2023, 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 27, 2023, 163,687,018 shares of Common Stock were outstanding, excluding shares held by or for the account of Envista.

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.

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

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 10, 2023, 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.

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 18, 2023, Fidelity will not vote your Savings Plan shares on any of the proposals brought at the Annual Meeting.

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.

The following table sets forth as of March 27, 2023 (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 27, 2023. 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.

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

At the 2021 Annual Meeting of Stockholders, the stockholders approved a proposal from our Board to amend our Certificate of Incorporation to declassify the Board and to provide, starting with the 2022 Annual Meeting of Stockholders, for the election of directors to one-year terms. As a result, our Board will be declassified in the following manner:

At the Annual Meeting, stockholders will be asked to elect each of the current Class I and Class III director nominees identified below (who have been recommended by the Nominating and Governance Committee, nominated by the Board and currently serve as 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 27, 2023 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.

 

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.

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.

Wendy Carruthers has served as Executive Vice President of Human Resources at Boston Scientific Corporation, a medical device manufacturer, since February 2022 and as Senior Vice President of Human Resources from December 2012 until February 2022 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.

Scott Huennekens served as President, Chief Executive Officer and Chairman of the Board of Directors of Verb Surgical, Inc., a medical equipment manufacturer, from August 2015 to January 2019. Prior to this role, Mr. Huennekens served as President and Chief Executive Officer of Volcano Corporation, a medical device company, from 2002 to February 2015, and as President and Chief Executive Officer of Digirad Corporation, a diagnostic imaging centers company, from 1999 to 2002. Mr. Huennekens is currently a member of the Board of Directors of NuVasive, Inc., Hyperfine, Inc. and Acutus Medical, Inc., and previously served as a director of ViewRay, Inc., Reva Medical Inc., EndoChoice Holdings, Volcano Corporation and Bellerophon Therapeutics Inc.

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), Varex Imaging Corporation and Telesis Bio Inc. (formerly Codex DNA, Inc).

The below charts reflect information for all nominees and continuing directors (8 directors). The Skills and Experience graph reflects the number of directors with substantial experience in each of the listed categories.

Skills and Experience

Independence and Diversity

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.

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.

The Board has separated the positions of Chairperson and CEO because it believes that the separation of the positions best enables the Board to ensure that our businesses, risks, opportunities and affairs are managed effectively and in the best interests of our stockholders.

The entire Board selects its Chairperson, and our Board has selected Scott Huennekens, an independent director, as its Chairperson 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 Chairperson of the Board, Mr. Huennekens leads the activities of the Board, including:

In the event that the Chairperson 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 independent directors meet in executive session following the Board’s regularly-scheduled meetings, with the executive sessions chaired by the independent Chairperson.

Our management has day-to-day responsibility for assessing and managing our risk exposure and the Board and its committees oversee those efforts, with particular emphasis on the most significant risks facing us. Each committee reports to the full Board on a regular basis, including as appropriate with respect to the committee’s risk oversight activities. Since risk issues often overlap, committees from time to time request that the full Board discuss particular risks.

In determining to separate the position of the CEO and the Chairperson, and in determining the appointment of the Chairperson 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.

The Board oversees the Company’s risk management processes directly and through its committees. In general, the Board oversees the management of risks inherent in the operation of the Company’s businesses, the implementation of its strategic plan, its acquisition and capital allocation program, its capital structure and liquidity and its organizational structure, and also oversees the Company’s risk assessment and risk management policies. In addition, at least on an annual basis or more frequently as deemed appropriate by the Board, the Board reviews with senior leaders of the Company, the Company’s enterprise risk management, with particular focus on the enterprise risks and opportunities with the greatest impact and highest probability. Furthermore, at least on an annual basis or more frequently as deemed appropriate by the Board, the Board reviews with the General Counsel our insurance policies, including our D&O insurance policy, general liability policy, and our cyber liability insurance policy.

At each Board meeting, the Board oversees the Company’s performance and execution against the strategic goals for the Company’s operating segments, overall portfolio, and innovation, including overseeing the corresponding management of risks and opportunities.

The Board is actively engaged in overseeing the Company’s people and culture strategy and reviews human capital matters at each quarterly meeting, including periodic updates on succession planning, leadership development, talent acquisition and retention, diversity and inclusion, employee engagement, total rewards, and culture of the Company, among other topics. The Compensation Committee oversees our executive and equity compensation programs. We evaluate and manage risks relating to our human capital strategy as part of our enterprise risk management program. See page 4 for more information on our human capital resources and culture.

The Board has delegated to the Audit Committee the responsibility of exercising oversight with respect to the Company’s cybersecurity risk management and risk controls. Consistent with such delegation, our Vice President, Information Technology provides periodic reports to the Audit Committee regarding the Company’s cybersecurity program, including the Company’s information risk management and oversight, security education and training, and cyber threat detection and response processes. The Board also receives a report out on cybersecurity issues and governance at least annually, with periodic updates as needed. We evaluate and manage risks relating to cybersecurity as part of our enterprise risk management program.

We also conduct information security and privacy awareness training to ensure that employees are aware of information security risks and to enable them to take steps to mitigate those risks. As part of this program, we also take steps designed to provide appropriate guidance regarding security to our employees.

To date, no attempted cyber-attack or other attempted intrusion on our information technology networks has resulted in a material adverse impact on our operations or financial results, or in any penalties or settlements. In the event an attack or other intrusion were to be successful, we have a response team of internal and external resources engaged and prepared to respond. We also maintain cyber liability insurance to help mitigate potential liabilities resulting from cyber issues.

The Board has delegated to the Audit Committee the responsibility of exercising oversight with respect to the Company’s compliance program and Code of Conduct. Consistent with such delegation, our Chief Compliance Officer provides periodic reports to the Audit Committee regarding the Company’s compliance program, including updates on complaints and questions received through the Company’s Speak Up! hotline and progress on the Company’s annual compliance training. Our Chief Compliance Officer reports directly to our General Counsel. In administering our Code of Conduct, our Chief Compliance Officer and compliance team work closely with other corporate functions, including legal, human resources, internal audit and finance, to ensure and monitor compliance. We evaluate and manage risks relating to compliance as part of our enterprise risk management program.

The Board has delegated to the Nominating and Governance Committee the responsibility of exercising oversight with respect to the Company’s sustainability strategy and reporting. Consistent with such delegation, management provides quarterly reports and updates to the Nominating and Governance Committee regarding the Company’s sustainability program and strategies, including the corresponding risks and opportunities, goals, progress, stockholder engagement and disclosure. Additionally, the Audit Committee oversees the internal controls for the Company’s sustainability reporting. We evaluate and manage risks relating to sustainability issues, including climate-related risks, as part of our enterprise risk management program. See page 6 for further discussion on our Sustainability program.

The Company’s Enterprise Risk Management (“ERM”) Committee (consisting of members of senior management) leads the Company’s enterprise risk management program. The ERM Committee inventories, assesses and prioritizes the most significant risks facing the Company as well as related mitigation efforts. The ERM Committee periodically updates the Audit Committee on its processes and reports its findings to the Board at least once a year.

Our disclosure controls and procedures are part of, and therefore are uniformly aligned with, our risk oversight process. The Company’s Disclosure Committee (consisting of members of senior management) is responsible for maintaining and monitoring our disclosure controls and procedures. In compliance with Rule 13a-15(b) of the Exchange Act and Item 307 of Regulation S-K, each quarter our Disclosure Committee evaluates, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures as of the end of the period and discloses in our periodic reports management's conclusions regarding the effectiveness of our disclosure controls and procedures. Prior to such public disclosure, those evaluations and conclusions are discussed with the Audit Committee in connection with its review of our annual and quarterly reports, including our financial and risk disclosures contained in those reports, enabling the Board and its committees to provide effective risk oversight.

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

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.

At the May 2021 Board meeting, the Board made a determination that the service of Ms. Tsingos on the audit committee of a fourth public company (including the Company) would not impair her ability to effectively serve on the Company’s Audit Committee. The Board has reviewed this service on an annual basis thereafter and determined that it does not impair Ms. Tsingos’ ability to serve on the Company’s Audit Committee.

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.

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

 vacancies. With the exception of Messrs. Gallahue and Jain and Ms. Hulit, all of the current directors were originally identified, nominated and elected by Danaher Corporation (“Danaher”) prior to our initial public offering and separation from Danaher (the “Separation”).

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.

In addition to Mr. Aghdaei, our current executive officers include Eric Conley, Patrik Eriksson, 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.

Under our written 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.

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, 2022, 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 2022.

Our NEOs for 2022 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, including Nobel Biocare, Ormco, DEXIS and Kerr, united by a shared purpose: to partner with professionals to improve lives by digitizing, personalizing and democratizing dental care. We help our customers deliver the best possible patient care through industry-leading solutions, technologies, and services. Our diversified portfolio of solutions covers a broad range 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 3,000 employees with deep clinical, product and workflow expertise who interact with customers on a daily basis. We are one of the largest global dental products companies, with significant market positions in some of the most attractive segments of the dental products industry.

We endeavor to embody our core values in everything we do and in our various programs and initiatives:

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

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

The Compensation Committee retains 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.

Our Chief Executive Officer, our Vice President of Total Rewards, and Assistant General Counsel generally attend meetings of the Compensation Committee along with our independent compensation consultant. 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.

Responsibilities for executive compensation decisions are summarized below:

The vast majority of our senior executives’ compensation is performance based and variable in nature (approximately 85% for our CEO and an average of approximately 72% for our other NEOs). In 2022, long-term incentives were awarded 60% in performance stock units (“PSUs”), 20% in time-based RSUs and 20% in stock options for Mr. Aghdaei and 50% in PSUs, 25% in time-based RSUs and 25% in stock options for our other NEOs. The PSUs will vest based on achievement of identified performance measures over a three-year performance period, and the time-based RSUs and stock options vest ratably over a three-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:

Our NEOs have entered into letter agreements with Envista, which among other things set forth base salary levels, which are subject to review and adjustment from time to time. Base salaries of our NEOs are informed by market data with respect to positions with similar roles and scope of responsibilities within our peer group, personal performance and experience. See “Executive Compensation Tables—Employment Agreements” below for additional information regarding the agreements with our NEOs.

As in prior years, our Compensation Committee has focused on ensuring that a significant percentage of total compensation is “at risk” and did not increase base salaries for our NEOs from 2021 levels, other than for Mr. Kyrillos, who was promoted at the beginning of 2022.

Base salaries for our NEOs in 2021 and 2022 were as follows:

Overview

We provide annual incentives to our NEOs under our Executive Incentive Compensation Plan (the “ICP”). The ICP provides cash bonuses to participants based on the achievement of annual performance metrics relating to our business and the participant’s personal performance. In 2022, the target bonus for each NEO was equal to the executive’s base salary as of December 31, 2022 multiplied by the relevant target award percentage. The 2022 actual bonus was equal to the target bonus multiplied by an overall weighted factor, which incorporated a Company Financial Factor (“CFF”) as well as a Personal Performance Factor (“PPF”), described in more detail below.

The diagram below illustrates the 2022 annual incentive award opportunities:

*As discussed in more detail under “Company Financial Factor” below, financial achievement for our operating company leaders is based on operating company financial performance and overall Envista financial performance, equally weighted.

Our approach to 2022 incentive design emphasizes company-wide financial results and teamwork while also rewarding business financial results and progress against personal objectives and strategic priorities.

In establishing annual incentive award opportunities for 2022, our Compensation Committee established the same metrics and weights used in 2021 for annual incentive compensation, which reflects the continued importance of core sales growth, earnings, and cash flow. Highlights of our approach to rewarding company-wide performance in the form of the Company Financial Factor, which constitutes 75% of the annual incentive opportunity, are as follows:

Company Financial Factor

Messrs. Aghdaei, Yu and Nance

The 2022 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. In 2022, there was no payout for core sales growth or adjusted free cash flow ratio, and earnings per share attainment was between threshold and target levels, resulting in a CFF for these executives of 37% of target, as shown in the table below.

Messrs. Kyrillos and Eriksson

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

The CFF for Imaging (applicable to Mr. Kyrillos) and Nobel Biocare (applicable to Mr. Eriksson) was 62% and 36%, 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, subject to the Compensation Committee’s need to establish attainable goals (with effort) during challenging economic conditions.

Personal Performance Factor & Individual Payouts

Following the end of 2022, the Compensation Committee used its judgment and the recommendations of Mr. Aghdaei to determine for each executive a PPF between 0% and 150%. 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 105%. 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. Kyrillos, 70%; Mr. Eriksson, 70%; and Mr. Nance, 60%. The bonus target amounts, relevant CFF and PPF for each NEO resulted in the following non-equity Incentive Compensation Plan payouts for 2022:

In 2022, our Compensation Committee introduced performance-based equity awards in the form of PSUs comprising at least half of the NEOs’ total long-term incentive value, as shown below:

The annual equity awards granted to our NEOs are 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 and associated vesting periods reflect the increases in the value of the long-term incentive awards for certain of our NEOs based on Envista’s review of peer and market data, along with 2021 personal performance and the introduction of PSUs representing at least half of the target value of the awards to align with our peer companies and industry trends, which the Compensation Committee approved in February 2022. On February 25, 2022, our Compensation Committee granted equity awards to the NEOs as follows:

The PSUs can be earned and vest contingent on the achievement of three-year performance goals, which relate to core sales growth rate and adjusted EBITDA margin (which are interdependent goals for the 2022 PSU grants), and subject to further adjustment by the Company’s TSR performance over a three-year period compared to the Standard & Poor’s 400 health care sector index. The NEOs can earn between 37.5% to 200% of the target number of PSUs, depending on the level of performance achieved, subject to attaining at least the threshold level of performance with respect to both the core sales growth rate and adjusted EBITDA margin performance goals for any of the PSUs to be earned.

Core sales growth rate is determined on a currency neutral basis excluding the first-year impact of any acquisitions and the impact of any divestitures. Adjusted EBITDA margin is the Company’s adjusted EBITDA, calculated consistent with how the Company reports adjusted EBITDA to the public, divided by the Company’s total net sales.

Core sales growth and adjusted EBITDA margin were considered appropriate metrics given their importance to our growth strategy. TSR percentile rank acts as a modifier to core sales growth and adjusted EBITDA margin as a means to validate that the outcome is directionally aligned with our returns to stockholders during the same performance period.

Our Compensation Committee establishes separate performance goals for each annual equity award.

During 2022, Mr. Aghdaei benefited from a legacy tax equalization agreement entered into with Danaher in relation to a prior Danaher 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. Hypothetical taxes were also withheld in 2022 in anticipation of future tax obligations. In 2022, 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. While Envista honors these legacy tax equalization agreements entered into by our NEOs with Danaher before the Separation, Envista has endeavored to minimize the use of expatriate assignments and related tax equalization benefits. In addition, Envista is in the process of adopting robust policies and procedures for tax equalization benefits going forward. Details on perquisites made available to our NEOs in 2022 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 2022 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.

In the first quarter of 2023, we implemented the following pay practices:

Each year, the Compensation Committee works with FW Cook to determine appropriate peer companies for benchmarking our executive compensation program. FW Cook uses the following guidelines in recommending a peer group to the Compensation Committee:

In May 2022, FW Cook reviewed the Company’s peer group for purposes of evaluating our compensation decisions for our executive officers and non-employee directors and recommended the inclusion of Enovis Corporation. Former peer company Hill-Rom Holdings, Inc. was acquired in December 2021 necessitating its removal.

Based on the recommendations of FW Cook, our Compensation Committee adopted a compensation peer group consisting of the following companies:

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 an effort to ensure our compensation program is competitive. 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.

To further align management and stockholder interests and discourage inappropriate or excessive risk-taking, our stock ownership policy requires 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, 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 PSUs or shares subject to unexercised stock options. Each of our NEOs was in compliance with the stock ownership requirements as of December 31, 2022.

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). The recoupment policy is enforceable against all covered persons and their beneficiaries, heirs, executors, administrators and other legal representatives. 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, as amended (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.

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-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. FW Cook, the Compensation Committee’s independent compensation consultant, participates in identifying and assessing risk. 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:

This report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or to the liabilities of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference into any prior or subsequent filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent we specifically incorporate this report by reference therein.

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, 2022.

The Summary Compensation Table and notes show all compensation paid to or earned by each of our NEOs for 2022, 2021 and 2020.

The following table sets forth certain information regarding grants of plan-based awards to our NEOs in 2022 under our compensation programs and plans.