Integer Holdings Corp
For the period ended Apr 6, 2026. Filed Apr 6, 2026.
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Apr 6, 2026 · Filed Apr 6, 2026
Contents
Performance-Based Incentives
Short-Term Performance-Based Incentives
The objective of our annual STI program is to provide a competitive level of performance-based annual compensation at the target achievement level, with the opportunity for upside based on outperformance. The primary funding of STI is based on achievement of STI AOI goals. The target for 100% funding is deemed to be a realistic but challenging goal, and any amount greater than the target is considered a stretch goal. Accordingly, performance achievement at target would result in 100% payout of the target STI bonus amount, whereas better performance would result in a higher than target payout, up to 200%, and lower performance would result in a lower than target payout, and no payout if performance fails to reach at least a threshold level. The Compensation Committee believes that the design of the funding and performance metrics are aligned with the Company’s strategic objective of growing revenue and profitability and is therefore directly aligned with the interests of stockholders.
The STI program is based on key measures of success that the executive team strives to achieve over an annual timeframe. By assigning relative weightings of target STI, the metrics are intended to provide a balanced view of executive performance on the following dimensions:
| 2025 Measures | PaymanKhales(as CEO)(1) | PaymanKhales(as COO)(1) | DironSmith | Lindsay K.Blackwood | AndrewSenn | JimStephens | Joseph W.Dziedzic |
|---|---|---|---|---|---|---|---|
| STI AOI | 80% | — | 40% | 40% | — | — | 80% |
| ELT Team Goal | 20% | 20% | 20% | 20% | 20% | 20% | 20% |
| Product Category Performance | — | 80% | — | — | 80% | 80% | — |
| Function Performance | — | — | 40% | 40% | — | — | — |
(1)Mr. Khales was promoted from COO to CEO, effective October 24, 2025. His total 2025 STI opportunity was an aggregate of the STI opportunity he had for each role during the time of that role and based on the performance measures of that role.
STI AOI
STI AOI (as defined below) is the primary STI metric:
Integer must achieve the threshold STI AOI metric for any STI payments to be made; and
STI AOI is used as a payout multiplier for all other metrics.
For 2025, the Compensation Committee established a range of performance and payout levels consistent with what had been in place for the 2024 STI program year. The threshold and maximum payouts under the 2025 STI plan for STI AOI can be summarized as follows:
| 2025 STI AOI Performance % of Target · Payout% of Target | |||
|---|---|---|---|
| Maximum | 113% | 200% | |
| Target | 100% | 100% | |
| 90% | 50% | ||
| Threshold | 85% | * | 25% |
- No payout for performance below the threshold level of 85% performance. Payout for performance achieved between two performance levels will be linearly interpolated.
Consistent with prior practice, the Compensation Committee established the target STI AOI performance in February 2025 and at the same time determined that it would continue to review analysis and consider developments related to the implementation of tariffs and the impact on the Company’s business and profitability. As a result of this continued review and analysis, in April 2025, the Committee adjusted the STI AOI performance target downward by $15 million, with the understanding that if the impact of tariffs impacted AOI by less than $15 million, the 2025 STI payout factor would be reduced. If the effect of the tariffs affected AOI by more than $15 million, there would be no adjustment to the calculated payout factor. In February 2026, the Compensation Committee determined that the tariffs had not materially impacted the company and, therefore, used negative discretion to reduce the payout factor to the amount that would have been achieved had the goals not been adjusted for any tariff impact.
Actual achievement for the 2025 STI AOI was $321.4 million, compared to a target goal of $330.8 million (which was the original, higher goal), resulting in a payout factor of 85.75% of target.
The target performance levels and results of the STI AOI component under the 2025 STI program, as approved by the Compensation Committee, were as follows:
| STI AOI (in millions) | 2025 Performance versus Target | PayoutPercentage | |
|---|---|---|---|
| Performance Level | $373.8 | 113% (Maximum) | 200% |
| $330.8 | 100% (Target) | 100% | |
| $297.7 | 90% | 50% | |
| $281.2 | 85% (Threshold) | 25% | |
| Results | $321.371 | 97.16% | 85.75% |
STI AOI for purposes of the 2025 STI performance metric consists of consolidated operating income prepared in accordance with generally accepted accounting principles (“GAAP”), for the fiscal year ended December 31, 2025, adjusted for the following: to the extent occurring during the period: (i) acquisition and integration related charges and expenses, (ii) amortization of intangible assets, (iii) facility consolidation, optimization, manufacturing transfer and system integration charges, (iv) asset write-down and disposition charges, (v) charges in connection with corporate realignments or a reduction in force, (vi) certain legal expenses, and (vii) unusual or infrequently occurring items.
ELT Team Goal
The Compensation Committee assessed management’s performance against the 2025 ELT Team Goal, which included the following strategic objectives:
Accelerating the Company’s pipeline to deliver sales growth at least 200 bps above market in the near term;
Implementing the Integer Production System elements at our sites;
Enhancing our innovation processes to provide further differentiated solutions to sustain market outperformance in the long term; and
Growing leadership capability to improve the rate at which open positions are filled with internal candidates.
After assessing management’s performance against the strategic objectives, in February 2026, the Compensation Committee assigned a rating of 100% for the ELT Team Goal.
34 | 2026 PROXY STATEMENT
Product Category Performance
Product category performance metrics and associated goal setting applicable to Messrs. Senn, Stephens and Khales (for Mr. Khales, for the portion of the year he was in the COO role) are described below.
| Metric | Weighting(1) | Metric Definition | Goal Setting Description |
|---|---|---|---|
| Product Category Operating Profit | 31.25% | Operating profit at the product category level is defined as revenue less operating expenses (i.e. direct material, labor, overhead, etc.). | Target performance is determined as part of the annual budgeting process, with threshold and maximum levels of performance set at 25% below and 20% above the target level, respectively. |
| Quality CLA Rate | 18.75% | Our quality metric is based on product lot customer acceptance rates and the aging of corrective and preventative actions (CAPAs). CAPA is a core ISO13485 quality system element and also mandated by the regulations of the U.S. Food and Drug Administration, European Union and many other geographies, for the design and manufacture of medical devices. | Product lot customer acceptance rates at target are based on targeted improvement over the prior year. Threshold level of performance is generally based on attaining a minimum level of performance with maximum defined as approaching 100% customer acceptance. Various levels of achievement are defined at specific growth achievements in the measured lot acceptance rate. Payout is voided regardless of quality performance if any CAPAs are aged above the maximum acceptable number of days at year-end. |
| InventoryDays-On-Hand | 12.50% | The average value of all materials in inventory divided by the average value of materials used in a single day. | A lean manufacturing tool, a Plan For Every Part (“PFEP”), allows Integer to compute the right amount of inventory per item and provide an entitlement based on the recommended minimum and maximum targets. A combination of lean manufacturing tools, continuous improvement plans, and ERP projections are used to calculate targets by site, product category, and company. A Days-On-Hand threshold (50% payout) and target (100% payout) are set. Over-target payouts require achieving the Days-On-Hand target plus attaining a specified PFEP goal for a 150% payout and 100% PFEP attainment for maximum (200% payout). |
| On-Time Delivery | 12.50% | On-time delivery is measured as the percentage of orders shipped on time. | Targeted level of performance is based on an established percentage improvement over the prior year, threshold performance is based on attaining 50% of targeted improvement, and maximum level of performance is defined as approaching 100% on-time shipment. |
| Category Challenge Metric | 25.00% | Each production site has a challenge objective assigned, which could include additional weighting on the existing metrics above, and/or other operational metrics critical to that site.For the C&V category, the average of all site achievements was used for the category score. For the CRM&N category, the challenge metric was split 50% on category AOI and revenue. | If the Category Challenge Metric is computed by assigning additional weighting to the above referenced metrics, the same methodology described above is used herein.If the Category Challenge Metric is computed using operation metrics critical to a site, appropriate threshold, target and maximum level of performance are assigned. |
(1) Percentage of Product Category Performance measure.
Function Performance
Leaders of key functions are assigned Function Performance Ratings, generally reflecting the group’s successes and contributions to the business strategies over the performance year. For Mr. Smith and Ms. Blackwood, function performance ratings of 100% for the Finance and Legal functions were assigned. The Function Performance Rating is then subject to the STI AOI multiplier.
STI Results and Payouts for 2025
The chart below illustrates the weighting and achievement for each of the STI program components, for each of the NEOs:
| Company Performance (STI AOI) · Function Performance Rating · Product Category Performance(1)(2) · ELT Team Goal · Total Payout | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| NEO | Weighting | % of Target Earned | Weighting | % of Target Earned(3) | Weighting | % of Target Earned(3) | Weighting | % of Target Earned(3) | % of Target Earned |
| Payman Khales(4) | 23.5% | 85.75% | 56.5% | 58.80% | 20% | 85.75% | 70.52% | ||
| Diron Smith | 40% | 85.75% | 40% | 85.75% | 20% | 85.75% | 85.75% | ||
| Lindsay K. Blackwood | 40% | 85.75% | 40% | 85.75% | 20% | 85.75% | 85.75% | ||
| Andrew Senn | 80% | 65.03% | 20% | 85.75% | 69.17% | ||||
| Jim Stephens | 80% | 59.23% | 20% | 85.75% | 64.53% | ||||
| Joseph W. Dziedzic | 80% | 85.75% | 20% | 85.75% | 85.75% | ||||
(1)Targets for Product Category Performance measures are not disclosed due to their sensitive nature, as doing so could provide competitors with insights into our business strategy. The Compensation Committee believes that achievement of the target goals were challenging and required substantial performance.
(2)Definition and goal setting description of each of the metrics comprising Product Category Performance is provided on page 35 of this Proxy Statement.
(3)Shown reflecting 100% achievement times the multiplier of 85.75% for STI AOI.
(4)Weightings represent the weighted averages for the periods during which Mr. Khales served as COO (up to October 24, 2025), and CEO (October 24, 2025 through December 31, 2025).
The individual target STI bonuses for our NEOs were determined by the Compensation Committee to provide targeted total compensation at the median of our competitive market. The target and actual payouts for our NEOs for 2025 were as follows:
| NEO | Salary Earned(1) ($) | Bonus Target as % of Salary Earned(%) | Target STI ($) | % of Target Earned(%) | STI Earned ($) |
|---|---|---|---|---|---|
| Payman Khales(2) | 637,019 | 80.94 | 515,625 | 70.52 | 363,631 |
| Diron Smith | 499,135 | 75 | 374,351 | 85.75 | 321,007 |
| Lindsay K. Blackwood | 365,385 | 65 | 237,500 | 85.75 | 203,656 |
| Andrew Senn | 434,135 | 65 | 282,184 | 69.17 | 195,190 |
| Jim Stephens | 504,423 | 70 | 353,096 | 64.53 | 227,853 |
| Joseph W. Dziedzic | 1,235,000 | 125 | 1,543,750 | 85.75 | 1,323,766 |
(1)Amounts represent actual base salary earned by each NEO, which may vary from the annual base salary rate for such NEO.
(2)Bonus target as percentage of salary earned is a weighted average of a 75% bonus target for Mr. Khales’ salary earned prior to becoming CEO on October 24, 2025 and a 100% bonus target for his salary earned as CEO.
Special Cash Awards
In February 2025, the Compensation Committee awarded a special recognition cash bonus of $250,000 to Mr. Senn for his exemplary work in completing the acquisition of Precision Coating. The award was paid at the same time as the annual STI in March 2025.
As an inducement to join the Company, the Committee provided a cash sign-on bonus of $100,000 to Ms. Blackwood, with $50,000 paid on her hire date in March 2025 and $50,000 paid on the one-year anniversary of her hire date.
36 | 2026 PROXY STATEMENT
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