MIMEDX GROUP INC
For the period ended Jun 5, 2024. Filed Apr 23, 2024.
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Jun 5, 2024 · Filed Apr 23, 2024
Contents
PAY VERSUS PERFORMANCE
The following table summarizes the total compensation paid to our NEOs versus the performance of the Company for the fiscal years ended December 31, 2023, 2022, 2021, and 2020.
| Year · · · SummaryCompensationTableTotal forJoseph Capper (1) · · · SummaryCompensationTableTotal forTodd Newton(2) · · · SummaryCompensationTableTotal forT. Wright(3) · · · CompensationActuallyPaid toJoseph Capper · · · CompensationActuallyPaid to K. Todd Newton · · · CompensationActuallyPaid to T. Wright. · · · AverageSummaryCompensationTableTotal forNon-PEONEOs(4) (5) · · · AverageCompensationActuallyPaid toNon-PEONEOs · · · Value of Initial Fixed $100Investment Based On: · · · Net Income (Loss)(Thousands) · · · Net Sales(Thousands) | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| · TSR · · · Comp PeerGroup TSR · | ||||||||||||||||||||||||||||||||||||
| (a) | | | (b) | | | (b) | | | (b) | | | (c) | | | (c) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) |
| 2023 | | | $20,828,461 | | | $295,288 | | | $— | | | $37,006,231 | | | $487,288 | | | $— | | | $1,811,433 | | | $3,163,908 | | | $115.70 | | | $20.67 | | | $58,228 | | | $321,477 |
| 2022 | | | $— | | | $1,172,121 | | | $4,810,234 | | | $— | | | $1,040,121 | | | $(2,292,965) | | | $1,773,574 | | | $796,402 | | | $36.68 | | | $33.14 | | | $(30,197) | | | $267,841 |
| 2021 | | | $— | | | $— | | | $4,817,299 | | | $— | | | $— | | | $2,226,051 | | | $1,798,504 | | | $1,220,083 | | | $79.68 | | | $56.95 | | | $(10,285) | | | $258,615 |
| 2020 | | | $— | | | $— | | | $4,730,002 | | | $— | | | $— | | | $6,303,611 | | | $1,540,754 | | | $1,966,280 | | | $119.79 | | | $76.37 | | | $(49,284) | | | $248,234 |
| 1. | Differences between the Summary Compensation Table and Compensation Actually Paid reflect increases in fair value of share-based payment awards of $16,177,770 for the year ended December 31, 2023. |
| 2. | Differences between the Summary Compensation Table and Compensation Actually Paid reflect increases (decreases) in fair value of share-based payment awards of $192,000 and ($132,000) for the years ended December 31, 2023 and 2022, respectively. |
| 3. | Differences between the Summary Compensation Table and the Compensation Actually Paid reflect decreases due to forfeitures of share-based payment awards of $6,213,747 for the year ended December 31, 2022. They also reflect (decreases) increases of fair value of share-based payment awards of ($889,452), ($2,591,248), and $1,573,609 for the years ended December 31, 2022, 2021, and 2020, respectively. |
| 4. | Mr. Wright served as our Chief Executive Officer from May 2019 until September 2022. Differences between the Summary Compensation Table and the Compensation Actually Paid reflect decreases due to forfeitures of share-based payment awards of $169,737 for the year ended December 31, 2023. They also reflect increases (decreases) in fair value of share-based payment awards of $1,522,212, ($977,172), ($578,422), and $425,526 for the years ended December 31, 2023, 2022, 2021, and 2020, respectively. |
| 5. | The names of the Non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Mr. Rice, Mr. Hulse, Ms. Whitlow, and Mr. Carlson; and (ii) for 2022, 2021 and 2020, Mr. Carlson, Mr. Hulse, Dr. Robert Stein (our former President, Regenerative Medicine), and Dr. Rohit Kashyap (our former President, Wound Care & Surgical). |
The table above shows the relationships between the executive compensation actually paid to the PEOs and our other non-PEO NEOs and our TSR, in general declining as the TSR declined and increasing as the TSR increased, with exceptions largely reflecting one-time sign-on grants of equity awards and lump sum severance payments, among other items. In line with our Compensation Peer Group TSR, our TSR declined from 2020 to 2022, reflecting the market’s reaction to the end of FDA enforcement discretion in May 2021, resulting in our inability to sell certain of our products in the United States, and our unsuccessful Phase 2b KOA clinical trial, as well as poor market conditions for our peers generally. However, in 2023, the Company’s TSR increased substantially, as the Company made a number of changes that strengthened and focused the business, beginning in the latter part of 2022 and continuing through 2023. These changes included:
| • | the appointment of several members of senior management, including a new CEO, CFO and COO; |
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| • | the strategic realignment of the business, resulting in the disbanding of our Regenerative Medicine business and the suspension of all activities related to our KOA program; |
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| • | strong commercial execution across all of our sites-of-service, with contributions across our Wound & Surgical product lines; and |
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| • | a focus on improving the financial profile of the business, with a particular focus on reducing general & administrative expenses and making additional changes that would enhance the profitability and free cash flow of the Company. |
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As a result of the accomplishments made during this period, our executive compensation increased in parallel. The Company also sets compensation goals and measures performance to determine compensation looking at TSR and three other primary measures:
Net Sales – Our net sales (the financial measure we believe has been most important to our compensation determinations for all our NEOs in 2023) increased from 2020 to 2022, but not at the target levels we had set for ourselves, and this was reflected in the lower executive compensation actually paid over that same three-year period. However, net sales grew substantially in 2023 as described above, and our executive compensation increased in parallel.
Adjusted EBITDA – Our Adjusted EBITDA declined from 2020 to 2022, which was expected due, in part, to the end of enforcement discretion as mentioned above, along with other expenses, including higher general and administrative expenses as well as costs associated with the clinical trial and related research and development that we stopped pursing in 2023. However, Adjusted EBITDA grew substantially in 2023 as described above, and our executive compensation increased in parallel.
R&D Goals – The Company also set several R&D goals for the business in order to continue to bring new products to the market. In late-2022, we were able to successfully launch two such products for our Wound & Surgical business, in 2023 we launched an additional product, and we continue to invest in R&D activities with the aim of continuing to innovate, resulting in the launches of additional products in future periods.
Our net income and loss variations from 2020 to 2022 were more reflections of the end of FDA enforcement discretion and other factors, and therefore had less impact on our executive compensation actually paid. However, net income grew in 2023 as described above, and our executive compensation increased in parallel.
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