STAAR SURGICAL CO

The elements of compensation that may be earned by our named executive officers include base salary, annual cash bonus, and equity-based awards. All components of each named executive officer’s compensation are annually reviewed in the context of Company performance and individual performance. The Committee is responsible for reviewing and approving compensation for the Company’s executive leadership, except for the Chief Executive Officer. The Board is responsible for reviewing and approving compensation for the Chief Executive Officer, based on the recommendation of the Committee. The Chief Executive Officer does not participate in the determination of her/his own compensation.

Base Salaries. The Committee, with input from the Chief Executive Officer, reviews, considers and approves base salaries at a level intended to attract and retain the Company’s executives. The Committee generally reviews base salaries in the first quarter of each year and approves any changes based upon company performance, market data, executive performance, scope of responsibility, and past and potential contributions to our business. In March 2023, named executive officer salaries increased 6.0% over 2022 levels as follows, consistent with base salary increases company wide.

(1)

Mr. Frinzi became President and Chief Executive Officer on January 1, 2023.

(2)

Mr. Foust because Chief Operating Officer on April 24, 2023.

Annual Cash Bonuses. A material element of each named executive officer’s compensation is the opportunity to earn an annual performance-based cash bonus, with payout determined based on achievement of specific corporate financial objectives as well as personal performance. The Committee reviews, considers and approves bonus targets for named executive officers based on market data and also considers changes in the scope of responsibility and overall performance of individual named executive officers when establishing these targets. The Committee generally approves bonus targets for each named executive officer as a percentage of base salary in the first quarter of each year, and it establishes performance metrics and targets for funding of the overall bonus plan. For 2023, the Committee approved a bonus plan (the “2023 Bonus Plan”) that was designed to be funded based on STAAR meeting or exceeding specific targets for revenue and Adjusted EBITDA per share*.

The table below reflects base salary and target bonus amounts for each named executive officer in 2023:

(1)

Target Bonus Percentage represents the potential bonus payable to an executive as a percentage of base salary in the event the Company achieves pre-established target financial metrics and thereby funds the bonus plan at 100% and the executive has fully met the individual performance criteria. There is no minimum or maximum bonus potential for each executive, and the overall bonus pool is capped at 200% of target.

(2)

Mr. Foust became Chief Operating Officer on April 24, 2023. Amounts reflect his annual base salary rate and annual bonus opportunity. His actual bonus opportunity for 2023 was pro-rated for the portion of the year that he was employed by the Company.

The Committee is responsible for determining the level of funding for the bonus pool based on the Company’s financial results and performance against the pre-established financial metrics and targets for the annual bonus plan. Then, based on such bonus pool funding, the Committee approves the individual bonus payments to the named executive officers, taking into account individual performance. For the bonus payout to Chief Executive Officer, the Committee makes a recommendation to the Board, which is then subject to Board approval. The determination of annual bonuses for 2023 performance are described further below under the section entitled “2023 Bonus Awards.”

• Adjusted EBITDA per share is a non-GAAP financial measure. Information and reconciliations are provided in Appendix 3.

Long-Term Equity Compensation. The Committee believes that long-term equity incentive awards serve to align the interests of the executive officers with the interests of our shareholders. Long-term equity incentive awards may be granted in the form of stock options, restricted shares, restricted stock units (“RSUs”), performance stock units (“PSUs”), or other types of equity or equity-linked compensation. In determining the size of equity grants to our executives, the Committee considers recommendations of the Chief Executive Officer, peer group data, individual performance, and level of responsibility in the Company. For the Chief Executive Officer’s equity grant, the Committee and Board consider Company and individual performance as well as peer group data. The Committee generally approves long-term equity incentive awards for each named executive officer as a percentage of base salary in the first quarter of each year. The Committee also considers and approves the structure of our long-term equity compensation program, including the types of awards to be granted, the mix of awards, as well as award terms. For 2023, the Committee approved an equity award program for our executives comprised of stock options, RSUs and PSUs. The Committee used the Black-Scholes value for stock options and the grant date market value of RSUs and PSUs on the date of grant. The equity grants made in 2023 are described further below under the section entitled “2023 Equity Awards.”

Stock Options. The exercise price of a stock option is the closing price of the Company’s common stock on the NASDAQ Stock Market on the date of grant. Under the Company’s Amended and Restated Omnibus Equity Incentive Plan (“Plan”), STAAR may not grant stock options with an exercise price below the fair market value of its common stock on the date of grant. STAAR does not grant stock options with a so-called “reload” feature. To encourage retention by providing a long-term incentive, the options typically vest ratably over a three-year period, and have a ten-year life.

Restricted shares/Restricted stock units/Performance stock units. Restricted shares are shares of common stock that STAAR grants subject to restrictions that lapse over time as the award vests. RSUs and PSUs represent the right to receive shares of the Company’s common stock in the future, which vest based on service (RSUs) or following achievement of pre-established performance metrics (PSUs). Restricted shares and RSUs are time-based awards that typically vest ratably over a three-year period. PSUs are performance-based awards that only vest if the Company meets or exceeds the performance metrics established for such awards. Subject to such performance conditions, PSUs typically vest ratably over a three-year period.