DEFA14A 1 e19211_avns-defa14a.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No. 1)

 

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Avanos Medical, Inc.

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Explanatory Note

This Amendment No. 1 is being filed to supplement and correct certain disclosures (as summarized below) in Avanos Medical, Inc.’s 2019 Proxy Statement on Schedule 14A, which was filed with the Securities and Exchange Commission on March 15, 2019 (the “2019 Proxy Statement”). Except as specifically discussed in this Explanatory Note, this Amendment No. 1 does not otherwise modify or update any other disclosures presented in the 2019 Proxy Statement. In addition, this Amendment No. 1 does not reflect events occurring after the date of the 2019 Proxy Statement or modify or update disclosures that may have been affected by subsequent events.

If you are a stockholder and you have already voted, you do not need to vote again unless you desire to change or revoke your prior vote on any proposal. If you are a stockholder of record and you desire to change or revoke your vote, please refer to the 2019 Proxy Statement for instructions on how to do so.

Summary of Corrections

There are three items in the 2019 Proxy Statement related to executive compensation that need to be corrected, as follows:

A.The stock option awards in 2018 described in the 2019 Proxy Statement were overstated for four of our Named Executive Officer (Messrs. Woody, Voskuil, Tushar and Wesley). As described on pages 32 - 33 of our 2019 Proxy Statement, the Compensation Committee approved a target grant value for these awards and awarded 60% of that target grant value in the form of Performance Restricted Share Units (“PRSUs”) and 40% of the target grant value in the form of stock options (“Options”). The Company incorrectly granted those four Named Executive Officers both PRSUs and Options equal to 60% of the target grant value. As a result, the Options disclosed in the 2019 Proxy Statement exceed the number of Options approved by the Compensation Committee. The Company is in the process of rescinding the excess options incorrectly issued to the Named Executive Officers in 2018.

B.The Stock Award and Option Award numbers in the Summary Compensation Table on page 39 of the 2019 Proxy Statement are reversed. The numbers under the Stock Award column should be under the Option Award column, and the numbers under the Option Award column should be under the Stock Award column. The numbers under the corrected Option Award column also need to be adjusted to reflect the correct number of options approved in 2018 as described above. The numbers under the Total column on the Summary Compensation Table also need to be corrected for the same issue.

C.Footnote 8 to the Grants of Plan-Based Awards in 2018 table on page 41 of the 2019 Proxy Statement incorrectly indicated that Mr. Woody received 155,150 time-vested stock options as a result of the successful closing of the sale of our S&IP business to Owens & Minor in 2018 (the “Closing Bonus Grant”). The actual number of time-vested stock options that Mr. Woody received for the Closing Bonus Grant was 25,566, with a grant date value of $350,000.

Correcting the matters referenced above also impacts the Grants of Plan-Based Awards in 2018 table (page 41), the Outstanding Equity Awards as of December 31, 2018 table (page 42), the Ratio of CEO Compensation to Median Employee Compensation table (page 50), and the Security Ownership table (page 55).

 

 

Amended Disclosures

The corrected tables and other corrected information for the 2019 Proxy Statement is set forth below. Footnotes have been excluded, except for footnote 8 to the Grants of Plan-Based Awards in 2018 table and footnote 5 of the Security Ownership table, because they continue to be correct as written in the 2019 Proxy Statement.

Corrections to Compensation Discussion and Analysis:

1.The table setting forth the annual long-term equity incentive awards granted in 2018 to our Named Executive Officers (page 33 of the 2019 Proxy Statement), is amended to reflect the correct number of Target Stock Options Awarded to Messrs. Woody, Voskuil, Tushar and Wesley, as follows:

 

NAME 

TARGET GRANT

VALUE OF

AWARDS ($)

 

TARGET

PRSUs AWARDED (#)

 

TARGET STOCK

OPTIONS

AWARDED (#)

Joseph F. Woody   3,540,000    43,436    103,433 
Steven E. Voskuil   775,000    9,509    22,644 
John R. Tushar   350,000    4,268    10,226 
John W. Wesley   450,000    5,521    13,148 

 

2.A new subsection to “Long-Term Equity Incentive Compensation” is added to page 34 of the 2019 Proxy Statement, immediately before “Benefits and Other Compensation”, as follows:

 

Special Bonus Grant to Mr. Woody

The Committee granted to Mr. Woody a special grant of 25,566 time-vested stock options with a grant day value of $350,000. This special award was made in recognition of the closing of a complicated and challenging divestiture of our S&IP business for a favorable price, as well as to incent Mr. Woody to achieve the on-going transformation of the Company to a pure-play medical device company.

 

 

Corrections to Compensation Tables:

3.The Summary Compensation Table on page 39 of the 2019 Proxy Statement is amended to correct the Stock Award, Option Award, and Total columns with respect to Messrs. Woody, Voskuil, Tushar and Wesley, as follows:

 

Summary Compensation Table

 

 

 

 

 

 

 

NAME AND

PRINCIPAL POSITION

 

 

 

 

 

 

 

 

YEAR

 

 

 

 

 

 

 

SALARY

($)

 

 

 

 

 

 

 

BONUS

($)

 

 

 

 

 

 

STOCK

AWARD

($)

 

 

 

 

 

 

OPTION AWARDS

($)

 

 

 

 

 

NON-EQUITY INCENTIVE PLAN COMPENSATION

($)

 

CHANGE

IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS

($)

 

 

 

 

 

 

ALL OTHER COMPENSATION

($)

 

 

 

 

 

 

 

TOTAL

($)

Joseph F. Woody   2018    904,913         2,897,616    1,765,996    723,251         157,487    6,449,263 
Chief Executive Officer   2017    442,500         3,135,706    1,416,004    884,124    —      284,761    6,163,095 
Steven E. Voskuil   2018    459,659         634,345    309,996    223,624    —      58,956    1,686,580 
Senior Vice President and   2017    449,544         602,653    320,003    522,940    —      79,422    1,974,562 
Chief Financial Officer   2016    436,450         657,562    319,997    510,821    —      45,916    1,970,746 
John R. Tushar                                             
President, Global Franchises   2018    306,591    100,0002   450,248    139,994    127,848    —      183,173    1,307,854 
John W. Wesley   2018    393,750         368,306    179,996    164,194         47,354    1,153,600 
Senior Vice President   2017    393,750         376,627    200,003    395,482    —      51,263    1,417,125 
and General Counsel   2016    393,750         410,971    200,000    395,010    —      24,392    1,424,123 

 

 

 

 

4.The Grants of Plan-Based Awards in 2018 table on page 41 of the 2019 Proxy Statement (including footnote 8 to such table) is amended to correct the actual number of time-vested stock options awarded Messrs. Woody, Voskuil, Tushar and Wesley, and the grant date fair value of such awards, as follows:

 

            PAYOUTS UNDER NOW-EQUITY INCENTIVE PLAN AWARDS(1)  PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS(2)            
NAME  GRANT TYPE  DATE COMMITTEE TOOK ACTION  GRANT DATE   TARGET ($)    MAXIMUM ($)    TARGET ($)    MAXIMUM ($)   AWARDS: NUMBER SHARES OF STOCK OR UNITS (#)  AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#)  EXERCISE OR BASE OF PRICE OF OPTION AWARDS ($/SH)  OF STOCK AND OPTION AWARDS ($)(5)
Joseph F. Woody  Performance-based RSUs(4)  2/21/2018  2/21/2018             43,436    86,872            2,897,616
   Time-vested stock option(8)  2/21/2018  2/21/2018                         128,999  52.10  1,765,996
   Annual cash incentive award         1,048,283    2,096,565                     
Steven E. Voskuil  Performance-based RSUs(4)  2/21/2018  2/28/2018             9,509    19,018            634,345
   Time-vested stock option  2/21/2018  5/3/2018                         22,644  52.10  309,996
   Annual cash incentive award         324,121    648,242                     
John R. Tushar  Performance-based RSUs(4)  3/12/2018  3/12/2018             4,268    8,536            275,243
   Time-vested stock option  3/12/2018  5/3/2018                         10,226  52.10  139,994
   Annual cash incentive award         228,000    456,000                     
   Time-vested RSUs(6)  3/12/2018  3/12/2018                      3,557        175,004
John W. Wesley  Performance-based RSUs(4)  02/21/2018  2/28/2018             5,521    11,042            368,306
   Time-vested stock option  02/21/2018  5/3/2018                         13,148  52.10  179,996
   Annual cash incentive award         236,250    472,500                     

 

(8) Includes 25,566 time-vested stock options granted under the Equity Participation Plan to Mr. Woody on May 3, 2018 as a closing bonus related to successfully closing the sale of S&IP to Owens & Minors by April 30, 2018.

 

 

 

 

5.The Outstanding Equity Awards as of December 31, 2018 table on page 42 and 43 of the 2019 Proxy Statement is amended to correct the actual number of time-vested stock options granted to Messrs. Woody, Voskuil, Tushar and Wesley on May 3, 2018, as follows:

 

OPTION AWARDS(2)        STOCK AWARDS   
NAME 

GRANT

DATE

  NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE  NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE  OPTION EXERCISE PRICE ($)(3)  OPTION EXPIRATION DATE  NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)  MARKET VALUE OF SHARES OR UNITS OF STOCK THAT
HAVE NOT VESTED ($)(5)		  EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#) 

EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE

OF UNEARNED SHARES, UNITS, OR OTHER RIGHTS THAT HAVE NOT VESTED ($)(8)

Joseph F. Woody  5/3/2018        25,566    52.10   5/3/2028             —        
   5/3/2018        103,433    52.10   5/3/2028             —        
   2/27/2018                               43,436      
   6/26/2017   44,715    104,338    39.93   6/26/2027                    
   6/26/2017                     16,696(4)   747,814           
   6/26/2017                               53,193(7)   2,456,453 
Steven E. Voskuil  5/3/2018        22,644    52.10   5/3/2028                    
   2/27/2018                               9,509    425,908 
   5/3/2017   10,774    25,141    36.74   5/3/2027                    
   2/28/2017                               12,289(7)   550,424 
   5/5/2016   24,934    16,624    29.48   5/5/2026                    
   3/1/2016                               17,493(6)   783,511 
   5/5/2015   24,840         45.53   5/5/2025                    
   3/18/2015   238    475    47.62   3/5/2025                    
   3/5/2015   7,135    14,269    45.47   3/5/2025                    
   11/7/2014   14,135         26.04   5/2/2022                    
   11/7/2014   20,443         34.24   5/1/2023                    
   11/7/2014   31,671         37.50   6/19/2024                    
   11/7/2014   6,000         37.88   11/7/2024                    
John R Tushar  5/3/2018        10,226    52.10   5/3/2028                    
   3/12/2018                     3,557(10)   159,318           
   3/12/2018                               4,268(10)   191,164 
John W. Wesley  5/3/2018        13,148    52.10   5/3/2028                    
   2/27/2018                               5,521    247,286 
   5/3/2017   6,734    15,713    36.74   5/3/2027                    
   2/28/2017                               7,680(7)   343,987 
   5/5/2016   15,584    10,390    29.48   5/5/2026                    
   3/1/2016                               10,933(6)   489,689 
   5/5/2015   12,821         45.53   5/5/2025                    
   3/5/2015   3,806    7,610    45.47   3/5/2025                    
   11/7/2014   2,200         37.88   11/7/2024                    

 

 

 

 

6.The Ratio of CEO Compensation to Median Employee Compensation on page 50 of the 2019 Proxy Statement is amended to reflect the actual ratio after correcting Mr. Woody’s 2018 compensation to reflect the correct number of time-vested stock options he received in 2018, as follows:

 

CATEGORY  2018 TOTAL COMPENSATION AND RATIO ($)
Annual total compensation of Mr. Woody (A)   6,449,263 
Median annual total compensation of all employees worldwide (excluding Mr. Woody) (B)   5,820 
Ratio of A to B   1,108:1 

 

7.The Security Ownership table on page 55 of the 2019 Proxy Statement (including footnote 5 to such table) is amended to reflect the corrected number of shares that could be acquired within 60 days of the date of the proxy statement by Messrs. Woody, Voskuil, Tushar and Wesley, after correcting for the number of options granted in 2018, as follows:

 

NAME  NUMBER OF
SHARES(1)(2)(3)(4)(5)		  PERCENT OF
CLASS
Gary D. Blackford   19,552    * 
John P. Byrnes   19,580    * 
Ronald W. Dollens   19,552    * 
William A. Hawkins, III   18,928    * 
Heidi Kunz   19,557    * 
Patrick J. O’Leary   19,602    * 
John R. Tushar   9,359    * 
Maria Sainz   18,744    * 
Arjun R. Sarker   8,241    * 
Dr. Julie Shimer   19,552    * 
Steven E. Voskuil   243,284    * 
John W. Wesley   97,654    * 
Joseph F. Woody   205,099    * 
All directors, nominees and executive officers as a group (13 persons)   718,704    1.51%

 

(5) Includes the following shares which could be acquired within 60 days of the date of this proxy statement:

 

NAME  NUMBER OF SHARES
Joseph F. Woody   38,699 
Steve E. Voskuil   41,563 
John R. Tushar   1,534 
John W. Wesley   24,873 
Arjun R. Sarker   984 
All directors, nominees and executive officers as a group (12 persons)   107,654