Orthofix Medical Inc DEFR14A, filed Apr 30, 2020

Orthofix Medical Inc. (OFIX)

DEFR14A 2020-04-30

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☐		Preliminary Proxy Statement

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☒		Definitive Proxy Statement

☐		Definitive Additional Materials

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Sincerely,

Ronald A. Matricaria
Chairman of the Board

April 29, 2020



Meeting Date:	June 8, 2020 At 11:00 a.m. CDT
Meeting Place:	Orthofix Corporate Headquarters 3451 Plano Parkway Lewisville, Texas 75056

Name	Age	Director Since	Independent	Audit & Finance Committee¹	Compensation Committee¹	Compliance & Ethics Committee¹	Nominating & Governance Committee¹
Ronald A. Matricaria	77	2014	✓				✓
Jason M. Hannon	48	New	✓
James F. Hinrichs	52	2014	✓	Chair			✓
Alexis V. Lukianov	64	2016	✓	✓	✓
Lilly Marks	72	2015	✓			✓	Chair
Michael E. Paolucci	60	2016	✓		Chair	✓
Maria Sainz	54	2012	✓		✓	Chair
Jon Serbousek	59	2019
John Sicard	57	2018	✓	✓

About Voting		1

Security Ownership of Certain Beneficial Owners and Management and Related Stockholders	4

Executive Officers	7

Information about Directors	9

Certain Relationships and Related Transactions	15

Compensation Discussion and Analysis	16

Report of the Compensation Committee	31

Summary Compensation Table	32

Grants of Plan-Based Awards	34

Outstanding Equity Awards at Fiscal Year-End	36

Option Exercises and Stock Vested	39

Potential Payments upon Termination or Change in Control	40

Pay Ratio Disclosure	45

Director Compensation	46

Equity Compensation Plan Information	49

Proposal 1: Election of Directors	50

Proposal 2: Advisory and Non-Binding Resolution to Approve Executive Compensation	56

Proposal 3: Approval of Amendment No. 1 to the Amended and Restated 2012 LTIP	57

Proposal 4: Ratification of the Selection of EY as Independent Registered Public Accounting Firm for 2020	67

Report of the Audit and Finance Committee	69

Information About Shareholder Proposals	71

Multiple Shareholders Sharing One Address	72

Appendix A – Amended and Restated 2012 Long-Term Incentive Plan and Proposed Amendment No. 1 Thereto	73

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percent of Class
Ronald A. Matricaria		179,355	⁽¹⁾	*
Jason M. Hannon		—		*
James F. Hinrichs		67,549	⁽²⁾	*
Alexis V. Lukianov		33,705	⁽³⁾	*
Lilly Marks		51,007	⁽⁴⁾	*
Michael E. Paolucci		44,860	⁽⁵⁾	*
Maria Sainz		36,084	⁽⁶⁾	*
John Sicard		21,331	⁽⁷⁾	*
Jon C. Serbousek		2,900	⁽⁸⁾	*
Davide Bianchi		89,488	⁽⁹⁾	*
Kimberley A. Elting		41,970	⁽¹⁰⁾	*
Michael M. Finegan		137,786	⁽¹¹⁾	*
Douglas C. Rice		92,030	⁽¹²⁾	*
Bradley R. Mason		541,405	⁽¹³⁾	2.8%
All directors and executive officers as a group (12 persons)		708,577		3.5%

Name	Age	Position
Jon C. Serbousek	59	President and Chief Executive Officer and Director
Kimberley A. Elting	55	Chief Legal and Administrative Officer
Michael M. Finegan	56	Chief Strategy Officer
Kevin Kenny	55	President of Global Spine
Douglas C. Rice	54	Chief Financial Officer
Davide Bianchi	55	Former President of Global Extremities
Bradley R. Mason	66	Former President and Chief Executive Officer and Director



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ICU Medical Inc.	RTI Surgical Inc.

Integer Holdings Corporation	Wright Medical Group N.V.

Name	Title	2018 Annual Base Salary		2019 Annual Base Salary		Percentage Increase
Jon C. Serbousek	President and Chief Executive Officer⁽¹⁾		—	$750,000⁽¹⁾			—
Davide Bianchi	President of Global Extremities⁽²⁾	CHF 379,911⁽²⁾		CHF 412,000⁽²⁾		8.4%
Kimberley A. Elting	Chief Legal and Administrative Officer	$	410,000	$	426,400	4.0%
Michael M. Finegan	Chief Strategy Officer	$	418,000	$	424,270	1.5%
Douglas C. Rice	Chief Financial Officer	$	420,000	$	432,600	3.0%
Bradley R. Mason	Former President and Chief Executive Officer⁽³⁾	$	740,000	⁽³⁾			—

							Performance Goals/Actual Results (in millions)											Weighted Achievement
	Weighting						Threshold		Target		Maximum				Achievement			% of Target
2019 Financial Metrics⁽¹⁾	Other NEOs			Mr. Bianchi			50%		100%		150%		Actual		% of Target			Other NEOs			Mr. Bianchi
Company-wide Net Sales		50.0	%		12.5	%	$	460.5	$	484.8	$	499.3	$	462.5		54.0	%	+27.0			+6.7
Company-wide Adjusted EBITDA		50.0	%		12.5	%	$	88.0	$	98.9	$	110.8	$	74.0		0.0	%	+0.0			+0.0
Global Extremities Net Sales	N/A				37.5	%	$	106.1	$	110.5	$	113.8	$	104.9		0.0	%	N/A			+0.0
Global Extremities Adjusted EBITDA	N/A				37.5	%	$	16.5	$	18.7	$	20.6	$	13.1		0.0	%	N/A			+0.0
Total		100.0	%		100.0	%													27.0	%		6.7	%

Name	2019 Base Salary Amount	Target Bonus Percentage of Salary	Weighted Percent Achievement	Total Annual Incentive Plan Bonus
Davide Bianchi ⁽¹⁾	CHF 412,000	70%	6.7%	CHF 19,323
Kimberley A. Elting	$ 426,400	60%	27.0%	$69,077
Michael M. Finegan	$ 424,270	60%	27.0%	$68,732
Douglas C. Rice	$ 432,600	60%	27.0%	$70,081
Bradley R. Mason	$ 432,600⁽²⁾	100%	27.0%	$165,861



	Stock Options	RSUs	Performance Stock Units
Value Weighting	25%	25%	50%

Performance Conditions	Stock price appreciation	N/A	Total shareholder return (“TSR”) relative to the S&P Healthcare Equipment Select Industry Index

Term/Length	Ten years	Four years, or two years, depending on the grant	Three-year performance period with additional one-year holding period

Vesting	Vest in four equal installments on the first, second, third, and fourth anniversaries of the grant date	Vest in four equal installments on the first, second, third, and fourth anniversaries of the grant date, or cliff vests on second anniversary, depending on the grant	Cliff vest after three years upon certification of results; subject to additional one-year holding period following vesting

Company's TSR Percentile Rank	Vesting Percentage
Below 25th Percentile	0%
25th Percentile	50% (threshold)
50th Percentile	100% (target)
75th Percentile	200% (maximum)

Name and Principal Position (a)	Year (b)	Salary ($) (c)			Bonus ($) (d)			Stock Awards ($)⁽¹⁾ (e)		Option Awards ($)⁽¹⁾ (f)		Non-Equity Incentive Plan Compensation ($)⁽²⁾ (g)		All Other Compensation ($) (h)			Total ($) (i)
Jon C. Serbousek - President and	2019		241,346	⁽³⁾		304,110	⁽³⁾		1,749,865		1,750,005		—		30,876	⁽⁴⁾		4,076,202
Chief Executive Officer
Davide Bianchi - President of	2019		414,618			—			995,478		175,007		23,335		89,364	⁽⁶⁾		1,697,802
Global Extremities ⁽⁵⁾	2018		398,598			—			489,428		143,652		150,552		81,764			1,263,994
	2017		364,984			—			462,549		138,675		281,867		69,314			1,317,389
Kimberley A. Elting - Chief Legal	2019		426,400			—			1,099,214		202,500		69,077		12,570	⁽⁷⁾		1,809,761
and Administrative Officer	2018		410,000			—			859,696		193,634		162,360		12,297			1,637,987
	2017		382,000			—			546,657		163,882		296,814		10,861			1,400,214
Michael M. Finegan - Chief	2019		424,270			—			1,047,284		187,506		68,732		13,342	⁽⁹⁾		1,741,134
Strategy Officer⁽⁸⁾	2018		418,000			—			553,269		162,402		165,528		13,142			1,312,341
	2017		412,000			—			504,630		151,279		320,124		11,902			1,399,935
Douglas C. Rice - Chief Financial	2019		432,600			—			1,163,649		220,004		70,081		12,502	⁽¹⁰⁾		1,898,836
Officer	2018		420,000			—			715,007		209,868		166,320		12,299			1,523,494
	2017		390,000			—			588,684		176,501		303,030		11,859			1,470,074
Bradley R. Mason - Former	2019		623,308			—			1,999,989		—		165,861		95,788	⁽¹¹⁾	2,884,946⁽¹²⁾
President and Chief	2018		740,000			—			3,592,030		1,054,348		488,400		16,670			5,891,448
Executive Officer	2017		710,800			—			2,354,789		705,975		920,486		13,708			4,705,758

			Estimated Future Payouts Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards
Name	Grant Date		Threshold ($)(1)		Target ($)(1)		Maximum ($)(1)		Threshold (#)(2)		Target (#)(3)		Maximum (#)(2)		All Other Stock Awards (#)			All Other Option Awards (#)(7)		Equity Exercise or Base Price of Option Awards ($/Sh)(8)		Grant Date Fair Value of Stock and Option Awards ($)(9)
Jon C.	08/05/2019	⁽¹⁰⁾		—		—		—		—		—		—		14,743	⁽⁴⁾		—		—		749,976
Serbousek	11/01/2019	⁽¹¹⁾		—		—		—		—		—		—		24,085	⁽⁴⁾		—		—		999,889
	08/05/2019	⁽¹⁰⁾		—		—		—		—		—		—		—			50,711		50.87		750,003
	11/01/2019	⁽¹¹⁾		—		—		—		—		—		—		—			81,449		41.52		1,000,002
Davide				145,116		290,232		435,348		—		—		—		—			—		—		—
Bianchi	04/01/2019			—		—		—		3,114		6,228		12,456		—			—		—		406,502
	04/01/2019			—		—		—		—		—		—		3,114	⁽⁴⁾		—		—		175,007
	04/01/2019			—		—		—		—		—		—		7,366	⁽⁵⁾		—		—		413,969
	04/01/2019			—		—		—		—		—		—		—			10,318		56.20		175,007
Kimberley				127,920		255,840		383,760		—		—		—		—			—		—		—
A. Elting	04/01/2019			—		—		—		3,603		7,206		14,412		—			—		—		470,336
	04/01/2019			—		—		—		—		—		—		3,603	⁽⁴⁾		—		—		202,489
	04/01/2019			—		—		—		—		—		—		7,587	⁽⁵⁾		—		—		426,389
	04/01/2019			—		—		—		—		—		—		—			11,939		56.20		202,500
Michael M.				127,281		254,562		381,843		—		—		—		—			—		—		—
Finegan	04/01/2019			—		—		—		3,336		6,673		13,346		—			—		—		435,547
	04/01/2019			—		—		—		—		—		—		3,336	⁽⁴⁾		—		—		187,483
	04/01/2019			—		—		—		—		—		—		7,549	⁽⁵⁾		—		—		424,254
	04/01/2019			—		—		—		—		—		—		—			11,055		56.20		187,506
Douglas C.				129,780		259,560		389,340		—		—		—		—			—		—		—
Rice	04/01/2019			—		—		—		3,914		7,829		15,658		—			—		—		510,999
	04/01/2019			—		—		—		—		—		—		3,915	⁽⁴⁾		—		—		220,023
	04/01/2019			—		—		—		—		—		—		7,698	⁽⁵⁾		—				432,628
	04/01/2019			—		—		—		—		—		—		—			12,971		56.20		220,004
Bradley R.				370,000		740,000		1,110,000		—		—		—		—			—				—
Mason	04/01/2019			—		—		—		—		—		—		35,587	⁽⁶⁾		—		—		1,999,989

	Option Awards									Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable⁽¹⁾		Number of Securities Underlying Unexercised Options (#) Unexercisable⁽²⁾			Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock that have not Vested (#)			Market Value of Shares or Units of Stock that have not Vested ($)		Number of Shares or Units of Stock that have not Vested (#)			Market Value of Shares or Units of Stock that have not Vested ($)
Jon C.		—		50,711	⁽³⁾	50.87		8/5/2029			—			—		—			—
Serbousek		—		81,449	⁽⁴⁾	41.52		11/1/2029			—			—		—			—
		—		—			—		—		14,743	⁽⁵⁾	$	680,832		—			—
		—		—			—		—		24,085	⁽⁶⁾	$	1,112,245		—			—
Davide		10,000		—			28.49	7/22/2023			—			—		—			—
Bianchi		6,250		—			21.78	9/26/2023			—			—		—			—
		11,100		—			36.25	6/30/2024			—			—		—			—
		12,150		—			33.12	6/30/2025			—			—		—			—
		8,742		2,913	⁽⁷⁾		44.39	7/01/2026			—			—		—			—
		5,205		5,204	⁽⁸⁾		46.10	7/03/2027			—			—		—			—
		2,244		6,729	⁽⁹⁾		56.87	4/02/2028			—			—		—			—
		—		10,318	⁽¹⁰⁾		56.20	4/01/2029			—			—		—			—
		—		—			—		—		812	⁽¹¹⁾		37,498		—			—
		—		—			—		—		1,491	⁽¹²⁾		68,854		—			—
		—		—			—		—		1,896	⁽¹³⁾		87,557		—			—
		—		—			—		—		3,114	⁽¹⁴⁾		143,805		—			—
		—		—			—		—		7,366	⁽¹⁵⁾		340,162		—			—
		—		—			—		—		—			—		3,330	⁽¹⁶⁾		153,779
		—		—			—		—		—			—		5,965	⁽¹⁷⁾		275,464
		—		—			—		—		—			—		5,055	⁽¹⁸⁾		233,440
		—		—			—		—		—			—		6,228	⁽¹⁹⁾		287,609
Kimberley		9,500		5,500	⁽²⁰⁾		42.89	9/26/2026			—			—		—			—
A. Elting		6,151		6,150	⁽⁸⁾		46.10	7/03/2027			—			—		—			—
		3,024		9,071	⁽⁹⁾		56.87	4/02/2028			—			—		—			—
		—		11,939	⁽¹⁰⁾		56.20	4/01/2029			—			—		—			—
		—		—			—		—		1,400	⁽²¹⁾		64,652		—			—
		—		—			—		—		1,762	⁽¹²⁾		81,369		—			—
		—		—			—		—		2,555	⁽¹³⁾		117,990		—			—
		—		—			—		—		2,786	⁽²²⁾		128,657		—			—
		—		—			—		—		3,603	⁽¹⁴⁾		166,387		—			—
		—		—			—		—		7,587	⁽¹⁵⁾		350,368		—			—
		—		—			—		—		—			—		7,050	⁽¹⁷⁾		325,569
		—		—			—		—		—			—		6,814	⁽¹⁸⁾		314,671
		—		—			—		—		—			—		7,206	⁽¹⁹⁾		332,773
Michael M.		13,000		—			29.23	2/15/2021			—			—		—			—
Finegan		12,500		—			41.37	2/15/2022			—			—		—			—
		23,000		—			39.66	6/25/2022			—			—		—			—
		8,750		—			21.78	9/26/2023			—			—		—			—

	Option Awards				Stock Awards or Units
Name (a)	Number of Shares Acquired on Exercise (#) (b)		Value Realized on Exercise ($)(1) (c)		Number of Shares Acquired on Vesting (#) (d)		Value Realized on Vesting ($)(2) (e)
Jon C. Serbousek		—		—		—		—
Davide Bianchi		—		—		11,302		631,804
Kimberley A. Elting		—		—		4,061		215,768
Michael M. Finegan		—		—		11,525		643,687
Douglas C. Rice		—		—		15,226		847,664
Bradley R. Mason		—		—		76,367		4,119,612

Name	Triggering Event	Lump Sum Severance Payment ($)		Value of Stock- Based Rights ($)			Value of Welfare Benefits ($)		Fees and Expenses of Out-placement Firm ($)		Total ($)
Jon C. Serbousek	Termination for death or disability		2,250,000		2,172,629	⁽¹⁾		35,124		18,750		4,476,503
	Termination for cause or voluntary termination		—		—			—		—		—
	Termination for good reason or without cause		2,250,000		—			35,124		18,750		2,303,874
	Termination for death, disability, good reason or without cause during a change in control period		3,000,000		2,172,629	⁽¹⁾		35,124		25,000		5,232,753
Davide Bianchi	Termination for death or disability		704,850		1,480,019	⁽¹⁾		—		12,500		2,197,370
	Termination for cause or voluntary termination		—		—			—		—		—
	Termination for good reason or without cause		704,850		437,371	⁽²⁾		—		12,500		1,154,721
	Termination for death, disability, good reason or without cause during a change in control period		1,057,275		1,480,019	⁽¹⁾		—		18,750		2,556,045
Kimberley A. Elting	Termination for death or disability		682,240		1,901,022	⁽¹⁾		—		12,500		2,595,762
	Termination for cause or voluntary termination		—		—			—		—		—
	Termination for good reason or without cause		682,240		537,766	⁽²⁾		—		12,500		1,232,506
	Termination for death, disability, good reason or without cause during a change in control period		1,023,360		1,901,022	⁽¹⁾		—		18,750		2,943,132
Michael M. Finegan	Termination for death or disability		1,018,248		1,596,248	⁽¹⁾		35,124		18,750		2,668,370
	Termination for cause or voluntary termination		—		—			—		—		—
	Termination for good reason or without cause		1,018,248		481,149	⁽²⁾		35,124		18,750		1,553,271

Name⁽¹⁾	Fees Earned or Paid in Cash ($)		Restricted Stock Awards (Number of Shares Granted)⁽¹⁾			Grant Date Fair Value of Restricted Stock Awards ($)⁽²⁾			Option Awards⁽¹⁾		Grant Date Fair Value of Option Awards ($)		All Other Compensation ($)		Total ($)
Ronald A. Matricaria		160,000		6,373	⁽³⁾		325,023	⁽³⁾		—		—		—		485,023
Luke Faulstick⁽⁴⁾		35,385		—			—			—		—		—		35,385
James F. Hinrichs		100,000		3,431	⁽⁵⁾		174,981	⁽⁵⁾		—		—		—		274,981
Alexis V. Lukianov		85,000		3,431	⁽⁵⁾		174,981	⁽⁵⁾		—		—		—		259,981
Lilly Marks		75,577		3,431	⁽⁵⁾		174,981	⁽⁵⁾		—		—		—		250,558
Michael E. Paolucci		105,000		3,431	⁽⁵⁾		174,981	⁽⁵⁾		—		—		—		279,981
Maria Sainz		80,000		3,431	⁽⁵⁾		174,981	⁽⁵⁾		—		—		—		254,981
John Sicard		70,000		3,431	⁽⁵⁾		174,981	⁽⁵⁾		—		—		—		244,981

Director	Number of Shares Subject to Outstanding Stock Options as of 12/31/19		Number of Shares Subject to Outstanding Deferred Stock Units as of 12/31/19
Ronald A. Matricaria		30,000		18,155
Luke Faulstick⁽¹⁾		—		—
James F. Hinrichs		30,000		9,910
Alexis V. Lukianov		30,000		9,910
Lilly Marks		30,000		9,910
Michael E. Paolucci		30,000		9,910
Maria Sainz		—		9,910
John Sicard		30,000		6,331

Plan Category	Number of Securities to Be Issued upon Exercise of Outstanding Options and Rights (#) (a)⁽¹⁾			Weighted- Average Exercise Price of Outstanding Options and Rights ($) (b) ⁽⁴⁾		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (#) (c)
Equity Compensation Plans Approved by Security Holders		1,654,291	⁽²⁾⁽³⁾	$	43.00		1,318,557	⁽⁵⁾
Equity Compensation Plans Not Approved by Security Holders		248,088	⁽⁶⁾	$	42.52		—
Total		1,902,379	⁽³⁾	$	42.92		1,318,557	⁽⁵⁾



	The Board unanimously recommends you vote “FOR” the “say-on-pay” proposal.


Name and Position	Dollar Value of Award Contingent Upon Approval of Amendment No. 1⁽¹⁾		Estimated Number of Performance Stock Units or Deferred Stock Units, as applicable, Granted Contingent Upon Approval of Amendment No. 1⁽²⁾
Jon Serbousek –President and Chief Executive Officer		$1,750,000		56,726
Douglas C. Rice – Chief Financial Officer		$460,000		14,911
Kimberley A. Elting – Chief Legal and Administrative Officer		$440,000		14,263
All Executive Officers as a Group		$3,050,000		98,865
All Non-Executive Directors as a Group		$1,550,000		50,243
All Non-Executive Officer Employees as a Group		$2,832,500		91,815

	2019		2018
Audit Fees	$	2,229,076	$	2,629,887
Audit-Related Fees		16,517		634,700
Tax Fees		564,400		1,942,636
All Other Fees		7,165		2,500
Total	$	2,817,158	$	5,209,723



		The Audit and Finance Committee
		James F. Hinrichs, Committee Chair
		Alexis V. Lukianov
		John Sicard