Zimmer Biomet CEO Bryan Hanson [Photo courtesy Zimmer Biomet]
About 54% of voting shareholders supported the pay packages of the company’s five top-paid executives at the May 13 meeting, according to results filed with the SEC yesterday.
In 2021, nearly 93% of voting shareholders supported the executive compensation plan in what’s known as the Say-on-Pay vote, the company said in an SEC filing.
Because these are advisory votes, they don’t require the board or management to take action and won’t affect executive pay unless the board takes steps on its own. But it’s a way for investors to put the board and top executives on notice.
How much does the CEO of Zimmer Biomet and his top executives make?
Warsaw, Indiana-based Zimmer Biomet reported nearly $15 million in total compensation for President and CEO Bryan Hanson, who is also chair of the board of directors. Hanson’s total pay increased about 15% from $13 million the year before.
Hanson was the company’s top-paid employee in 2021, with a $1.18 million annual salary, $5.8 million in stock awards, $5.8 million in option awards, $1.8 million in bonuses and about $316,000 in other compensation, including matching contributions to his 401(k) and deferred compensation plan and personal use of corporate aircraft.
Chief Operating Officer Ivan Tornos was Zimmer Biomet’s second-highest-earning employee after Hanson, with total compensation of nearly $4.9 million. EVP and CFO Suketu Upadhyay came in at No. 3 with $4.6 million, followed by EMEA President Wilfred van Zuilen with $4.1 million and APAC President Sang Yi at $3.4 million.
Zimmer Biomet said Hanson’s most recent pay package was 234 times more than pay for its median employee, which the company calculated at $63,981.
Hanson made almost as much in 2021 as Geoff Martha made as CEO of Medtronic (NYSE:MDT) in its most recent fiscal year.
Medtronic — the largest company in medtech — reported profits of $3.63 billion on sales of $30.1 billion in fiscal 2021 (ended April 30, 2021), compared to Zimmer Biomet’s $402.1 million profit on sales of $7.84 billion in calendar year 2021.
It’s been a big year for Hanson and Zimmer Biomet, which spun off its dental and spine business as ZimVie (Nasdaq:ZIMV) in March. Zimmer Biomet has also become more competitive, introducing new ortho surgical offerings based on artificial intelligence and mixed reality. They are also first out of the gate with a smart knee implant.
In April 2020, Zimmer Biomet announced pay cuts for the board and management, including Hanson, who was going to give up all of his annual salary. At the annual meeting one month later, the executive compensation plan won the support of 92% of voting shareholders.
However, in June 2020, the board’s Compensation and Management Development Committee retroactively reversed the pay cuts.
Medical Design & Outsourcing has asked Zimmer Biomet what steps the board and management will take in response to the latest Say-on-Pay vote. This story will be updated when more information is available.
“Our Board and Compensation and Management Development Committee believe that our executive compensation program is tied to performance, aligns with shareholder interests and merits shareholder support,” the company told investors ahead of the May 2022 vote. … “Although this vote is non-binding, the Board and the Compensation and Management Development Committee value the views of our shareholders and will review the voting results. If there are significant negative votes, we will take steps to understand those concerns that influenced the vote, and consider them in making future decisions about executive compensation.”
Institutional Shareholder Services (ISS), which advises large institutional investors on how to vote on executive compensation and other governance issues, examines a company’s responsiveness to shareholders if a Say-on-Pay vote receives less than 70 percent support.
“If the company has demonstrated poor responsiveness, ISS will generally recommend a vote against the say-on-pay proposal and incumbent compensation committee members,” ISS told clients ahead of this year’s annual meetings. “ISS may limit the adverse recommendation to the say-on-pay proposal if the board has demonstrated a limited degree of responsiveness, but which falls short of a robust response. In cases of multiple years of insufficient responsiveness indicating a systemic problem around board stewardship and oversight, ISS may recommend against the full board.”
Henry Schein, another company on the MDO Medtech Big 100, also filed vote totals with the SEC on Friday after nearly half of voting shareholders voted against that company’s executive compensation packages.
APRIL 2023 UPDATE: Zimmer Biomet changes executive pay plans after shareholder vote
Executive Editor Chris Newmarker contributed to this report.
I find that anybody getting compensated that much for any job doing anything is quite offensive.
It is very obvious that those supporting the incredible pay rates are operating with the attitude of “It’s not my money” being the primary motivation.
That level of compensation assures that the recipient will be totally detached from reality in all of their decisions, and that is the flaw intrinsic in such levels of pay.