IDXX DEF 14A Report ended Dec. 31, 2019

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Sustained Track Record of Innovation – Our substantial R&D investments over the years have resulted in novel, proprietary diagnostic and software product and service introductions, such as our IDEXX SDMA ® Test, the SediVue Dx ® Urine Sediment Analyzer and our IDEXX Digital Cytology TM service launched in North America in February 2020, as well as the addition of eight important new real-time tests to the Catalyst Dx ® and Catalyst One ® chemistry analyzers’ test menus in eight years, including our Bile Acids test announced commercially in January 2020.

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Senior Leadership Evolution Supporting Global Commercial Efforts and Growth – In January 2020, we announced senior leadership changes that resulted in some of our most talented senior executives, with more than 50 combined years of leadership experience at IDEXX, assuming new global roles or additional responsibilities. These new global roles – including a Chief Commercial Officer and a Chief Marketing Officer – and changes in responsibilities among the members of my leadership team will support global development of Companion Animal Group (CAG) market segments, enhance our global CAG commercial efforts and foster greater integration and efficiencies across regions.

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Enabling Our People and Organization to Do Business Ethically and in Alignment with Our Purpose – In 2019, we hired a Head of Corporate Responsibility to lead our global corporate responsibility strategy and activities, and we hired a Head of Diversity and Inclusion to further enhance our strategic plan for global diversity and inclusion. We also rolled out a new Global Whistleblower Policy that supplements our Code of Ethics and clearly describes how any IDEXXer may report ethical or other concerns and our strict non-retaliation policy and an updated, innovative training for all our managers to enable our leaders to work with their teams to put our Purpose into practice and to “live” our Code of Ethics.

1	Information regarding organic revenue growth and comparable constant currency EPS growth, which are non-GAAP financial measures, and their calculation is provided in Appendix A.

2	Based on total return to shareholders, assuming dividend reinvestment for those companies issuing dividends, for the twelve-month period ended December 31, 2019.

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*	You will need your 16-digit control number available from the Notice sent to you from Broadridge.

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Commitment to Sustained Growth in Financial Performance – As we invest in innovation and customer development capabilities, we remain committed to delivering strong financial results that drive growth in shareholder value. We have a consistent track record of organic revenue growth, operating margin expansion, strong free cash flow generation and a disciplined approach to capital allocation. As a result, our after-tax return on invested capital, excluding cash and investments, in 2019 was 46%. *

*	Information regarding after-tax return, excluding cash and investments, and its calculation is provided in Appendix A.

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**	Our long-term financial potential model represents our projected annual gains, assuming that foreign currency exchange rates remain the same and excluding year-over-year changes in share-based compensation tax benefits and non-recurring or unusual items.

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•	James Polewaczyk , who previously led our North America CAG commercial operations since our U.S. all-direct initiative described above, became our Chief Commercial Officer overseeing CAG commercial operations globally.

•	Kathy Turner , who previously led our CAG commercial operations in Europe and Asia, became our Chief Marketing Officer, responsible for our commercial marketing efforts worldwide, including global medical affairs and global marketing centers of excellence.

•	Michael Erickson , who previously led our Veterinary Software and Services line of business, now leads Global Corporate Accounts to support these strategic partners on an increasingly global basis.

•	Tina Hunt , who leads our in-clinic CAG Diagnostics portfolio globally, also took on responsibility for worldwide operations.

•	Michael Lane , who leads our Global Reference Laboratories business, assumed additional responsibility for our worldwide information technology organization.

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‡	Information regarding the following non-GAAP financial measures and their calculation is provided in Appendix A: organic revenue growth, comparable constant currency operating margin improvement, comparable constant currency EPS growth, free cash flow, ratio of free cash flow to net income and after-tax return on invested capital, excluding cash and investments (ROIC).

†	For the period from December 31, 2014 to December 31, 2019. The average purchase price per share of our stock has been adjusted for the effect of the two-for-one split of our common stock effected in the form of a common stock dividend paid on June 15, 2015.

*	Assumes the investment of $100 on December 31, 2014 in IDEXX’s common stock, the S&P 500 Index, the S&P 500 Health Care Index and the NASDAQ Stock Market Index (U.S. Companies) (NASDAQ Index) and the reinvestment of dividends, if any.

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•	Strengthening Board and management accountability and effectiveness;

•	Promoting alignment with the long-term interests of our shareholders and other stakeholders; and

•	Helping to maintain our shareholders’ and other stakeholders’ trust in our Company.

•	Independent Non-Executive Board Chair elected in November 2019 in connection with our CEO transition; in view of the current, specific characteristics and facts and circumstances relevant to IDEXX, the Nominating and Governance Committee and the Board determined that separating the roles of Board Chair and CEO remains appropriate at this time.

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Proxy access by-law adopted in December 2017 that permits a shareholder, or a group of up to twenty shareholders, owning at least 3% in aggregate of our outstanding common stock continuously for at least three years, to nominate and include in our annual meeting proxy materials two individuals or 20% of the number of Directors serving on the Board , whichever is greater , as Director nominees, provided that the nominating shareholder(s) and Director nominees satisfy the requirements of the proxy access bylaw provisions.

•	See “Shareholder Recommendation and Nomination of Directors” on page 24 and “Requirements for Submission of Proxy Proposals, Nomination of Directors and Other Business of Shareholders” on page 96 .

•	A majority-voting standard in uncontested elections adopted in December 2015.

•	See “Majority Voting and Director Resignation” on page 24 .

•	An anti-pledging policy, adopted in December 2015, that prohibits our executive officers and Directors from pledging or otherwise encumbering IDEXX equity securities.

•	See “Anti-Hedging and Short Sale and Anti-Pledging Policies” on page 41 .

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Reflects Mr. Ayers’s annual base salary for 2019 prior to his separation from the Company as an employee and February 2019 annual equity award, as well as the annual performance-based cash bonus that Mr. Ayers would have received for 2019, had he remained our President and CEO throughout 2019, calculated by applying the same overall performance factor – 120% – that was used to calculate our other NEOs’ bonuses.

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“Equity-Based Long-Term Incentives” includes only annual equity awards and Ms. Underberg’s equity award granted in February 2019 when she commenced employment with the Company, and excludes Mr. McKeon’s additional one-time equity award granted in August 2019. “Annual Performance-Based Cash Bonus” includes only annual performance-based cash bonuses, and excludes Ms. Underberg’s signing bonus in connection with her hiring in February 2019.

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*	The Compensation Committee annually establishes the respective weightings of the financial and non-financial performance factors, and for 2020, the Compensation Committee increased the weighting of the financial performance factor to 60% and decreased the weighting of the non-financial performance factor to 40%.

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Reflects Mr. Ayers’s annual base salary for 2019 prior to his separation from the Company as an employee and February 2019 annual equity award, as well as the annual performance-based cash bonus that Mr. Ayers would have received for 2019, had he remained our President and CEO throughout 2019, calculated by applying the same overall performance factor – 120% – that was used to calculate our other NEOs’ bonuses.

•	We shortened the employee equity award vesting schedule to a four-year period (as compared to a five-year period) for awards granted in 2020 and later. We believe that this change optimizes the effectiveness of our equity awards to attract and retain key talent.

•	A shortened vesting period enhances our ability to attract key talent by aligning our employee equity award vesting schedule more closely with typical market practice and enabling our employees to realize the value of their equity awards more quickly.

•	Our employee equity awards will continue to serve as an important retention tool because a four-year vesting schedule remains longer than median market practice.

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Our employee equity awards granted in 2018 and 2019 permit continued vesting for two vesting periods after retirement for eligible employees. Eligibility criteria include having been employed by IDEXX or any of its subsidiaries for at least ten years, retiring from IDEXX at the age of 60 years or older and providing written notice to IDEXX at least six months prior to retirement. We removed these provisions from our employee equity awards granted in 2020 and later. Our stock options, however, remain exercisable by our employees for two years after retirement if the employee retires at or after the age of 60 and after having been employed by IDEXX for at least ten years.

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The 2020 Executive Incentive Plan adopted by the Compensation Committee in February 2020 provides that each participating senior executive’s annual performance-based cash bonus amount will be determined based on an overall performance factor, calculated using a financial performance factor and a non-financial performance factor. For 2019, the financial performance factor and non-financial performance factor were equally weighted in calculating the overall performance factor. For 2020, the Compensation Committee changed the weighting of these factors by increasing the weight of the financial performance factor to 60% and decreasing the weight of the non-financial performance factor to 40%.

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•	Class I Directors – currently three Directors whose terms expire at the 2021 Annual Meeting;

•	Class II Directors – currently three Directors whose terms expire at the 2020 Annual Meeting; and

•	Class III Directors – currently four Directors whose terms expire at the 2022 Annual Meeting.

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•	Reputation for integrity, honesty and adherence to high ethical standards;

•	Demonstrated business acumen, experience and ability to exercise sound judgment in matters that relate to our current and long-term objectives;

•	Willingness and ability to contribute positively to our decision-making process;

•	Record of substantial achievement in one or more areas that are relevant to us and a general understanding of the issues facing public companies of a size and operational scope similar to us;

•	Commitment to understanding us and our industry and to devoting adequate time and effort to Board responsibilities, including regularly attending and participating in Board and Committee meetings;

•	Interest in and understanding of the sometimes conflicting interests of our various constituencies, which include shareholders, employees, customers, government entities, creditors and the general public, and willingness to act in the interests of all shareholders; and

•	Absence of any conflict of interest, or appearance of a conflict of interest, that would impair the Director’s ability to represent the interests of all of our shareholders and to fulfill the responsibilities of a Director.

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•	Directors cannot serve on more than four other public company boards;

•	Audit Committee members cannot serve on more than two other public company audit committees or, if an Audit Committee member is a retired certified public accountant, chief financial officer or controller, or is a retired executive with similar experience, then he or she cannot serve on more than three other public company audit committees; and

•	Directors who are CEOs of other public companies cannot serve on more than two other public company boards (including the board of their employer).

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•	Oversees our long-term strategy for creating enduring growth and shareholder value-creation;

•	Reviews and approves our key financial and other objectives, the annual budget and other significant actions and transactions;

•	Oversees our processes for maintaining the integrity of our financial statements and other public disclosures and our compliance with law and high ethical standards;

•	Oversees the prudent management of risk;

•	Reviews plans for CEO succession and management’s succession planning for other key executive officers; and

•	Reviews the performance of the CEO and determines the compensation of our executive officers.

•	Under the Audit Committee charter, each Audit Committee member is also required to satisfy the independence criteria set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (Exchange Act); and

•	Under the Compensation Committee charter, each Compensation Committee member is also required to satisfy the heightened independence standard described in NASDAQ Rule 5605(d)(2)(A) and to qualify as a “non-employee director” pursuant to Rule 16b-3 under the Exchange Act.

•	Each of the Directors other than Mr. Mazelsky, our President and CEO, and Mr. Ayers, our Senior Advisor and former President and CEO, is independent under NASDAQ rules;

•	Each Audit Committee member satisfies the independence criteria of Rule 10A-3(b)(1) under the Exchange Act; and

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•	After taking into consideration the applicable factors, each Compensation Committee member satisfies the independence criteria of NASDAQ rules and qualifies as a “non-employee director” pursuant to Rule 16b-3 under the Exchange Act and an “outside director” within the meaning of 162(m) of the Code.

•	The fact that the Company’s relationship with IBM predated Dr. Vandebroek joining IBM;

•	That Dr. Vandebroek did not participate in the negotiation of any transactions by the Company with IBM for its services to the Company;

•	That such services were provided by IBM on arm’s length terms and conditions and in the ordinary course of business; and

•	That the services provided by IBM are routine and limited in scope (the Company paid IBM approximately $19,600 in 2017, $8,500 in 2018 and $3,080 in 2019 for software licenses and related services).

•	The fact that the Company’s relationship with Illumina predates Mr. Samad joining the Board;

•	That Mr. Samad did not participate in the negotiation of the intellectual property license between the Company with Illumina;

•	That the license was provided by Illumina on arm’s length terms and conditions and in the ordinary course of business; and

•	That the license provided by Illumina is routine and limited in scope (the Company paid Illumina approximately $500,000 in 2018 and $750,000 in 2019 for certain licensed intellectual property rights).

•	Any executive officer;

•	A Director, or nominee for Director;

•	A holder of 5% or more of our common stock; or

•	An immediate family member of any of those persons.

•	The related person owns less than a 10% equity interest in such entity;

•	The related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction;

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•	The amount involved in the transaction equals less than the greater of $200,000 or 5% of the annual gross revenue of the other entity involved in the transaction; and

•	The amount involved in the transaction equals less than 2% of the consolidated gross revenues of the Company for its most recent fiscal year.

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•	The Board appointed Mr. Mazelsky, who had been serving as our Interim President and CEO since June 28, 2019, as our President and CEO and elected him a Director, effective October 23, 2019.

•	Mr. Ayers, who had been on a medical leave since June 28, 2019, stepped down as Board Chair and a member of our management team, effective November 1, 2019, but remains as a Director and also serves as an external Senior Advisor to IDEXX.

•	The Board appointed Mr. Kingsley, who was our independent Lead Director at the time, as our independent Non-Executive Board Chair, effective November 1, 2019.

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•	Management regularly presents information to the Board regarding the Company’s various business segments, their markets and strategic priorities, as well as trends expected to pose significant risks or strategic opportunities for IDEXX.

•	The Board annually reviews and approves our key financial and other objectives and budget.

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Management regularly presents its capital allocation and deployment plans to the Finance Committee and the Board for review and discussion, and the Board (or the appropriate Committee) approves specific significant actions and transactions, to ensure that we deploy our capital to create long-term value for our shareholders and other stakeholders, including through capital and operating expenditures or strategic acquisitions that support future innovation or growth, as well as share repurchases that return cash to our shareholders.

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(1)	Audit Committee Financial Expert as defined under SEC rules.

(2)	Independent Non-Executive Board Chair

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•	We are a global company with shareholders all around the world;

•	The virtual meeting format is cost-effective and convenient for our shareholders, as well as the Company, and enables IDEXX to reduce the environmental impact of our 2020 Annual Meeting; and

•	Given the latest technology for holding virtual meetings and related online tools, we believe that the virtual meeting format will enhance shareholder access and participation in our 2020 Annual Meeting.

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An online pre-meeting forum will be available to our shareholders. Beneficial owners can enter at www.proxyvote.com and registered shareholders can enter at www.proxyvote.com/idxx . By accessing this online pre-meeting forum, our shareholders will be able to submit questions in writing in advance of our 2020 Annual Meeting, vote, view the 2020 Annual Meeting’s Rules of Conduct and Procedures and obtain copies of proxy materials and our annual report.

•	By following instructions on the online pre-meeting forum or at www.virtualshareholdermeeting.com/IDXX2020 , shareholders will have the ability to use their telephones to dial into a live audio webcast of the meeting and verbally ask

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•	We will publish the answer to each question received following the 2020 Annual Meeting, including those as to which there is not sufficient time to address during the meeting, except for those questions determined to be irrelevant or inappropriate.

•	Although the live audio webcast will be available only to shareholders at the time of the meeting, a replay of the meeting will be made publicly available at www.virtualshareholdermeeting.com/IDXX2020 after the meeting.

(1)

All retainers are paid in quarterly installments, and each non-employee Director may, at his or her option, defer all or any portion of any retainer in the form of fully vested deferred stock units under our Director Deferred Compensation Plan (Director Plan). A non-employee Director who joins the Board after the date of an Annual Meeting receives a pro rata amount of his or her quarterly installment of the retainer based on the number of days until the end of the quarter during which he or she was appointed. If a non-employee Director retires, resigns or otherwise ceases to be a Director before the expiration of his or her term, he or she will receive a pro rata amount of his or her quarterly installment of the retainer based on the number of days served, divided by the number of days in the applicable quarter.

(2)	Paid to all Audit Committee members, except the Audit Committee Chair.

(3)

We annually grant deferred stock units and non-qualified stock options to each non-employee Director on the date of the Annual Meeting. A non-employee Director who joins the Board after the date of an Annual Meeting receives a pro rata grant based on the number of months remaining until the next year’s grant. The maximum number of shares subject to equity awards granted under our 2018 Stock Incentive Plan (2018 Plan) during a single fiscal year to any non-employee Director, taken together with any cash fees paid during the fiscal year to the non-employee Director in respect of the Director’s service as a member of the Board during such year (including service as a member or chair of any committees of the Board), will be limited to $650,000 in total value (calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes), provided that the non-employee Directors who are considered independent (under NASDAQ rules) may make exceptions to this limit for a non-executive chair of the Board, if any, in which case the non-employee Director receiving such additional compensation may not participate in the decision to award such compensation.

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(4)

The number of deferred stock units granted equals the target value, divided by the price of our common stock on the grant date, rounded to the nearest whole share. Any non-employee Director who meets the target ownership under the stock ownership guidelines at the time of the annual grant may elect to receive restricted stock units (RSUs), in lieu of deferred stock units. The number of RSUs granted is calculated in the same manner as deferred stock units granted.

(5)	The value of the granted non-qualified stock options is calculated using the Black-Scholes-Merton option pricing model. This model is consistent with the valuation approach used to value executive awards.

(6)	In recognition of the additional responsibilities of the independent Non-Executive Board Chair, he or she receives an additional $80,000 in equity grants, as calculated in accordance with Notes 3 and 4 above.

(7)	All non-employee Directors complied with the stock ownership guidelines as of December 31, 2019.

•	Exercise price equal to the last reported sales price for a share of our common stock on the grant date;

•	Fully vest and are exercisable on the earlier of one year from the date of grant or the date of the next Annual Meeting;

•	Expire on the day immediately prior to the tenth anniversary of the grant date; and

•	Accelerated vesting upon a change in control of the Company as described in the discussion under “Stock Incentive Plans” beginning on page 85 .

•	Any cash compensation deferred by him or her is credited to the account as the number of vested deferred stock units equal to the aggregate value of the deferred compensation divided by the price of a share of common stock on the date of the applicable deferral; and

•	When the grant of deferred stock units made on the date of an Annual Meeting (or any prorated grant of deferred stock units made when he or she joins the Board) vests, those vested deferred stock units also are credited to this account.

•	Deferred Stock Units from Deferred Cash Compensation. A non-employee Director may elect to receive his or her distribution in either:

•	A single lump sum one year after his or her last day of Board service; or

•	For deferrals made on or after January 1, 2011, in:

•	A single sum on a non-discretionary and objectively determinable fixed date; or

•	Equal annual installments over four years on or after such fixed date.

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•	Annual Grant of Deferred Stock Units. Shares are distributed one year following the termination of his or her Board service.

•	Emergency Distribution. If the administrator of the Director Plan determines that a non-employee Director has suffered an unforeseeable emergency, the administrator may authorize the distribution of all or a portion of his or her deferred stock units.

•	Death or Disability. Unvested deferred stock units will vest immediately upon the non-employee Director’s death or disability.

•	Change in Control. Unvested deferred stock units will vest immediately upon a change in control of the Company. The shares of common stock in a Director’s account will be distributed in a single lump sum as soon as practicable after a change in control.

•	Any person or group acquires direct or indirect beneficial ownership of stock possessing 35% or more of the total voting power of the Company’s stock; or

•	A majority of the Board members is replaced during any twelve-month period by new Directors whose appointment or election is not approved by a majority of the Board members serving immediately before the appointment or election of any of these new directors; or

•	A change in the ownership of a substantial portion of our assets occurs such that any person or group acquires assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of our assets immediately prior to such acquisition.

•	At least 75% of our common stock received upon the exercise of options or the vesting and release of RSUs or deferred stock units during the following year, after payment or withholding of any applicable exercise price and taxes; and

•	All other shares of our common stock held by him or her.

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(1)

Stock awards to non-employee Directors are issued as deferred stock units (DSUs) pursuant to the Company’s Director Plan. The amount shown excludes DSUs received in lieu of deferred compensation as described in footnotes 5, 6, 8 and 12 and reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 (calculated by rounding $105,000 to the nearest share on the date of deferral). See Note 5 in the notes to the consolidated financial statements included in our 2019 Annual Report on Form 10-K for the relevant assumptions used to determine the valuation of our stock awards. As discussed under “Equity Compensation” above on page 43 , non-employee Directors receive only one DSU and option grant during the fiscal year. As of December 31, 2019, the following are the aggregate number of DSUs accumulated in each non-employee Director’s deferral account for all years of service as a Director, including DSUs issued for deferred fees elected by the Directors as well as DSUs issued as annual grants to non-employee Directors: Mr. Ayers, 214; Mr. Claflin, 1,958; Dr. Essig, 1,683; Dr. Henderson, 32,441; Mr. Junius, 3,605; Mr. Kingsley, 2,227, Mr. Samad, 293; Ms. Szostak, 4,145, and Dr. Vandebroek, 3,949. For information regarding DSUs issued to Mr. Ayers as an employee see “2019 Nonqualified Deferred Compensation” on page 83 .

(2)

Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 5 in the notes to consolidated financial statements included in our 2019 Annual Report on Form 10-K for the relevant assumptions used to determine the valuation of our option awards. As of December 31, 2019, each non-employee Director had the following number of stock options outstanding: Mr. Ayers, 726; Mr. Claflin, 18,168; Dr. Essig,6,123; Dr. Henderson, 26,235; Mr. Junius, 21,159; Mr. Kingsley, 9,117; Mr. Samad, 1,025; Ms. Szostak 35,025 and Dr. Vandebroek, 14,205. For information regarding the outstanding stock options granted to Mr. Ayers as an employee, see “2019 Outstanding Equity Awards at 2019 Fiscal Year End” on page 81 below.

(3)

Mr. Ayers served as our President and CEO until June 28, 2019 and as Board Chair until November 1, 2019. Following his separation, Mr. Ayers remains a member of the Board and also serves as a Senior Advisor to IDEXX. For information regarding compensation received by Mr. Ayers in 2019 for his service as an employee, including payments received by Mr. Ayers pursuant to the Ayers Mutual Separation Agreement in connection with his separation from the Company, see “Summary Compensation Table for 2019” on page 77 below. For information regarding compensation receivable by Mr. Ayers for his service as a Senior Advisor, please see the discussion under “Related Person Transactions” beginning on page 33 above and “CEO Transition and CEO Compensation Decisions” beginning on page 57 below.

(4)

Consists of a prorated equity grant made to Mr. Ayers with respect to the period from November 1, 2019 (when Mr. Ayers’s employment terminated while he continued to serve as a Board member) to May 6, 2020 (the scheduled date of the next annual equity grant to be made to all non-employee Directors), consisting of DSUs having a grant date value of $53,838 and nonqualified stock options having a grant date fair value of $53,938.

(5)	Includes compensation in the amount of $77,500 deferred and issued as 314 DSUs pursuant to the Director Plan.

(6)	Includes compensation in the amount of $24,375 deferred and issued as 100 DSUs pursuant to the Director Plan.

(7)	Mr. Kingsley was elected as the independent Non-Executive Board Chair on November 1, 2019.

(8)	Includes compensation in the amount of $25,000 deferred and issued as 120 DSUs pursuant to the Director Plan.

(9)

Consists of a prorated equity grant made to Mr. Kingsley with respect to the period from his election as the independent Non-Executive Board Chair on November 1, 2019 to May 6, 2020, the scheduled date of the next annual equity grant to be made to all non-employee Directors, consisting of DSUs having a grant date value of $20,629 and nonqualified stock options having a grant date fair value of $20,579.

(10)	Mr. Samad was appointed to the Board effective July 16, 2019.

(11)	Consists of a prorated equity grant made to Mr. Samad with respect to the period of his election to the Board on July 16, 2019 to May 6, 2020, the scheduled date of the next annual equity grant to be made to all non-employee Directors, consisting of DSUs having a grant date value of $84,894 and nonqualified stock options having a grant date fair value of $84,835.

(12)	Includes compensation in the amount of $77,500 deferred and issued as 314 DSUs pursuant to the Director Plan.

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*	Less than 1%

(1)	Consists of options to purchase shares of common stock exercisable, and RSUs vesting, on or within 60 days after February 28, 2020.

(2)	The number of shares beneficially owned by each person or group as of February 28, 2020 includes shares of common stock that such person or group had the right to acquire on or within 60 days after February 28, 2020, including but not limited to, upon the exercise of stock options or vesting of RSUs, but excluding DSUs.

(3)

For each individual and group included in the table, percentage of ownership is calculated by dividing the number of shares beneficially owned by such person or group as described above by the sum of 85,338,928 shares of common stock outstanding on February 28, 2020 and the number of shares of common stock that such person or group had the right to acquire on or within 60 days after February 28, 2020, including but not limited to, upon the exercise of stock options or vesting of RSUs, but excluding DSUs.

(4)

Includes 137,600 shares held by the Ayers Family Trust and 11,400 shares held by the Ayers Wild Cat Conservation Trust (Foundation). Mr. Ayers and his wife are the trustees of the Foundation, and as trustees, they have shared voting and dispositive power for the 11,400 shares held by the Foundation. Beneficial ownership of, and any pecuniary interest in, the 11,400 shares held by the Foundation is expressly disclaimed.

(5)	Includes 2,916 shares held by the M. Anne Szostak Trust and 6,717 shares held by the Szostak 2018 IDEXX GRAT.

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(1)	Consists of DSUs that are vested as of February 28, 2020.

(2)	Includes 137,600 shares held by the Ayers Family Trust and 11,400 shares held by the Foundation. Mr. Ayers and his wife are the trustees of the Foundation, and as trustees, they have shared voting and dispositive power for the 11,400 shares held by the Foundation. Beneficial ownership of, and any pecuniary interest in, the 11,400 shares held by the Foundation is expressly disclaimed.

(3)	Includes 2,916 shares held by the M. Anne Szostak Trust and 6,717 shares held by the Szostak 2018 IDEXX GRAT.

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(1)

For each group included in the table, percentage ownership is calculated by dividing the number of shares beneficially owned by such group on December 31, 2019, as reflected in the most recent filing by such group of statements of beneficial ownership with the SEC, by the 85,338,928 shares of common stock outstanding on February 28, 2020. Therefore, the percentage ownership may differ from the percentage ownership reported in such statements of beneficial ownership, which reflect ownership as of an earlier date.

(2)	Based solely upon information derived from a Schedule 13G/A filed by The Vanguard Group with the SEC on February 12, 2020, it has the sole power to vote 132,786 shares, sole power to dispose of 9,300,546 shares, shared power to vote 24,431 shares, and shared power to dispose of 149,272 shares.

(3)	Based solely upon information derived from a Schedule 13G/A filed by BlackRock, Inc. with the SEC on February 5, 2020, it has sole power to vote 6,530,473 shares and sole power to dispose of 7,424,845 shares.

(4)	Based upon information derived from a Schedule 13G filed by Fundsmith LLP with the SEC on February 14, 2020, it has the sole power to vote 4,567,446 shares and sole power to dispose of 4,591,899 shares.

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•	Reviewed the Company’s audited financial statements for the fiscal year ended December 31, 2019 and discussed them with management and PwC;

•	Discussed with PwC various communications that PwC is required to provide to the Audit Committee, including matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees ; and

•	Received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee concerning independence and discussed with PwC their independence.

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(1)	Mr. Ayers served as our President and CEO until June 28, 2019 and as Board Chair until November 1, 2019.

(2)	Mr. Mazelsky served as our Executive Vice President until June 28, 2019 when he was appointed our Interim President and CEO, and he served as our Interim President and CEO until he was appointed our President and CEO on October 23, 2019.

(3)	Mr. Lane served as a Corporate Vice President until January 15, 2020 when he was promoted to the position of Executive Vice President.

1	Refer to Appendix A for a description and reconciliation of organic revenue growth and after-tax return on invested capital, excluding cash and investments (ROIC), to their most directly comparable financial measures under generally accepted accounting principles in the United States of America (GAAP).

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•

Severance payments consistent with termination payments payable under Mr. Ayers’s pre-existing employment agreement in connection with a termination without cause. Approximately $2.5 million in severance payments, representing two years of annual base salary and medical benefit premiums and a pro-rated 2019 target cash bonus, all subject to delivery of an irrevocable release and execution of restrictive covenant agreements.

•	Board service as a non-employee Director. Continued service as a member of the Board (but not as Board Chair), with applicable non-employee Director compensation.

•

Continued vesting and exercisability of outstanding stock options, subject to compliance with non-compete and non-solicit restrictions. Continued vesting and exercisability of Mr. Ayers’s outstanding stock options for each stock option’s full term, subject to continued compliance with his non-compete and non-solicit restrictions. This represented a relatively modest incremental extension to the continued vesting and exercisability of these stock options, in light of Mr. Ayers’s continued Board service and the terms of his original equity award agreements and pre-existing employment agreement, in exchange for the opportunity to retain Mr. Ayers’s service as a Senior Advisor to IDEXX and the extension of valuable non-compete and non-solicit restrictions.

•	Extended non-compete and non-solicit restrictions. Non-compete and non-solicit restrictions during and for two years following the end of all service (including his service as an external Senior Advisor and as a Board member) or the continued equity vesting period, if longer.

•	Senior advisory fees. Advisory fees of $240,000 per year for service as an external Senior Advisor to IDEXX on an ongoing basis, subject to termination by either party on 90 days’ prior written notice.

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•	Annual base salary and cash bonus opportunity. In connection with his promotion and commensurate with the responsibilities of the President and CEO position, annual base salary of $850,000 (which will not increase in 2020 and will be reviewed by the Board on an annual basis commencing in the first quarter of 2021) and annual target cash bonus opportunity of 125% of annual base salary.

•	Board service. Appointed as a member of the Board (for which he receives no additional compensation).

•	Promotion equity award. A one-time premium-priced stock option with a grant date of November 4, 2019 and a grant date value of approximately $2,000,000, with 110% premium exercise price and vesting ratably over five years.

•

Annual equity award. Entitled to participate in all incentive plans, practices, policies and programs as the other executive officers and granted an annual equity award on February 14, 2020 with an aggregate grant date value of approximately $4,500,000, with 75% of the equity award value in the form of stock options and 25% of the equity award value in the form of RSUs, each of which vests ratably over four years and has a ten-year term.

•	Severance benefits. Severance benefits in event of certain termination of employment events, subject to delivery of an irrevocable release of claims.

•	Post-termination non-compete and non-solicit restrictions. Non-compete and non-solicit restrictions during and for two years following termination of employment for any reason.

•	Change in control agreement. Payments and other benefits in the event of a qualifying termination or resignation in connection with a change in control of the Company, generally consistent with the terms of the change in control agreements in place between the Company and certain other senior executives.

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(1)	Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 5 to our consolidated financial statements included in our 2019 Annual Report on Form 10-K for the relevant assumptions used to determine the valuation of our stock awards and stock options.

(2)

Reflects Mr. Ayers’s annual base pay and target bonus prior to separation from the Company and the aggregate grant date fair value of equity-based long-term incentive awards granted in February 2019 in the normal course. Mr. Ayers’s employment with the Company ended on November 1, 2019. Pursuant to the Ayers Mutual Separation Agreement, Mr. Ayers is entitled to receive severance payments consistent with termination payments payable under his pre-existing employment agreement, including a pro-rated 2019 target cash bonus. For more information regarding such severance payments, please see “Summary Compensation Table for 2019” on page 77 . Following termination of his employment, Mr. Ayers remains a member of the Board and serves as a Senior Advisor. For additional information regarding compensation for his service as a Director, please see “2019 Non-Employee Director Compensation Table” on page 45 .

(3)

Reflects Mr. Mazelsky’s annual base pay following his promotion to service as our President and CEO, target bonus (based on his pro-rated annual base pay after taking into account Mr. Mazelsky’s transition to President and CEO) and actual bonus awarded for fiscal 2019, and the aggregate grant date fair value of equity-based grants made in February 2019 in the normal course, a one-time Interim CEO equity award granted in August 2019, and a one-time promotion equity award granted in November 2019 to reflect Mr. Mazelsky’s promotion to service as our President and CEO. Mr. Mazelsky received no additional compensation for his service as a Director.

(4)	Reflect Mr. Mazelsky’s and Ms. Underberg’s target bonuses calculated from their respective pro-rated annual base salaries after taking into account his promotion to President and CEO on October 23, 2019 and her hire date of February 11, 2019, respectively.

(5)	Reflects the aggregate grant date fair value of equity-based grants made in February 2019 in the normal course and an additional one-time equity award granted in August 2019.

(6)	Reflects the aggregate grant date fair value of equity-based grants made in February 2019 when Ms. Underberg commenced employment with the Company. Ms. Underberg was hired to succeed our retiring General Counsel and was appointed our Corporate Vice President, General Counsel and Corporate Secretary effective March 1, 2019.

(7)	Does not include a signing bonus of $112,000 paid in connection with the hiring of Ms. Underberg in February 2019.

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*

Reflects Mr. Ayers’s annual base salary for 2019 prior to his separation from the Company as an employee (under “Base Salary”) and February 2019 annual equity award (under “Equity-Based Long-Term Incentives”), as well as the annual performance-based cash bonus that Mr. Ayers would have received for 2019, had he remained our President and CEO throughout 2019, calculated by applying the same overall performance factor – 120% – that was used to calculate our other NEOs’ bonuses (under “Annual Performance-Based Cash Bonus”).

†

“Equity-Based Long-Term Incentives” includes only annual equity awards and Ms. Underberg’s equity award granted in February 2019 when she commenced employment with the Company, and excludes Mr. McKeon’s additional one-time equity award granted in August 2019. “Annual Performance-Based Cash Bonus” includes only annual performance-based cash bonuses, and excludes Ms. Underberg’s signing bonus in connection with her hiring in February 2019.

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*

During 2019, the Compensation Committee was assisted by its independent compensation consultant FW Cook. Other than the support that it provided to the Compensation Committee, FW Cook provided no other services to the Company or management and only received compensation from the Company for the services provided to the Compensation Committee. During the year, the Compensation Committee conducted an evaluation of the independence of FW Cook considering the relevant regulations of the SEC and the NASDAQ listing standards. The Compensation Committee concluded that FW Cook was independent of the Company and the services performed by FW Cook and the individual compensation advisors employed by FW Cook raised no conflicts of interest.

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•	DENTSPLY SIRONA Inc. and NuVasive, Inc. were removed due to differences in size and/or business model; and

•	Agilent Technologies, Inc., Elanco Animal Health Incorporated and Zoetis Inc. were added because they are industry and size appropriate as well as consistent with the criteria described above.

*	All data in this table, except for the IDEXX Laboratories, Inc. – 2019 data, was compiled by FW Cook from Standard & Poor’s Capital IQ database.

(1)	Most recently reported four quarters publicly available as of September 15, 2018.

(2)	As of September 15, 2018. Calculated using the most recently reported shares outstanding and stock price publicly available as of September 15, 2018.

(3)	Excludes extraordinary items and discontinued operations, as applicable.

(4)	Fiscal year employee number based upon the most recently filed Annual Report on Form 10-K as of September 15, 2018.

(5)	For comparative purposes only. 2019 data is as of or for the year ended December 31, 2019, except for the number of employees, which is as of February 7, 2020 and reported in our 2019 Annual Report on Form 10-K.

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•	A financial performance factor (determined by measuring against specific financial metrics selected by the Compensation Committee); and

•	A non-financial performance factor (determined by measuring the Company’s achievement of non-financial performance goals approved by the Board that are focused on strengthening and positioning the Company for sustained future growth and profitability).

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(1)

In evaluating financial performance, the Compensation Committee reviewed the 2019 budget as adjusted to eliminate the effects of changes in foreign currency exchange rates during 2019 , as compared to the rates assumed in the budget, as well as the effects of an acquisition, the tax effects of share-based compensation activity under ASU 2016-09,”Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” and certain charges related to the CEO transition described under “CEO Transition” beginning on page 57 .

(2)	Achievement of the Company’s approved budget goal for each of the financial metrics equates to 100% payout, with separate pre-defined performance scales for each financial metric resulting in an increase or decrease in the percentage payout, as described above.

(3)

Organic revenue growth is not a measure defined by GAAP, otherwise referred to herein as a non-GAAP financial measure. In calculating organic revenue growth, we exclude the effect of changes in foreign currency exchange rates because changes in foreign currency exchange rates are not under management’s control, are subject to volatility and can obscure underlying business trends. We also exclude the effect of acquisitions that are considered to be acquisitions of “businesses” consistent with ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” because the nature, size and number of such acquisitions can vary dramatically from period to period and therefore can also obscure underlying business trends. Information regarding organic revenue growth and its calculation is provided in Appendix A.

(4)

ROIC is a non-GAAP financial measure. Information regarding ROIC and its calculation is provided in Appendix A. The 2019 approved budget goal for ROIC was lower than the 2018 approved budget goal for ROIC to reflect the impact of investments made in 2018 (and projected investments in 2019) in support of future long-term performance, including investments in our commercial capacity, expanding our headquarters in Westbrook, Maine and relocating and expanding our core reference laboratory in Germany.

•	Implement operational initiatives intended to improve our reference laboratory diagnostic and consulting services;

•	Advance the functionality and security of our key, strategic, global IT platforms that benefit customers, global laboratory operations and employees;

•	Execute of key risk management initiatives and improvements;

•	Focus on identified aspects of talent recruitment and retention, including the expansion and development of our key leadership team, employee engagement positively impacting employee turnover and advancement and promotion of a diverse employee population; and

•	Advance and build the organizational infrastructure to support the Company’s Corporate Responsibility strategy and reporting.

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•	At least 75% of our common stock received upon the exercise of options or the vesting and release of RSUs during the following year, after payment or withholding of any applicable exercise price and taxes; and

•	All other shares of our common stock held by the senior executive.

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(1)	Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 5 to our consolidated financial statements included in our 2019 Annual Report on Form 10-K for the relevant assumptions used to determine the valuation of our stock awards and stock options.

(2)	Amounts shown reflect the NEOs’ annual, performance-based cash bonus amounts under our Executive Incentive Plan. See the discussion under “Annual Performance-Based Cash Bonus” on page 18 above.

(3)	Mr. Ayers served as our President and CEO until June 28, 2019 and as Executive Board Chair until November 1, 2019. Amounts shown reflect compensation Mr. Ayers received as an employee, including payments receivable by Mr. Ayers pursuant to the Ayers Mutual

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(4)

Amount shown includes $1,600,000 for two years’ base salary continuation, $40,000 for approximately 24 months of medical insurance coverage premium costs, and $833,333 representing a pro-rated annual target bonus for 2019 through November 1, 2019, all payable to Mr. Ayers pursuant to the terms of the Ayers Mutual Separation Agreement, consistent with the terms of his pre-existing employment agreement, as well as $14,000 in Company matching contributions under the Company’s 401(k) plan, and the remainder includes tax preparation fees, reimbursements for executive physical examinations and premiums paid on behalf of Mr. Ayers under the Company’s disability and life insurance plans.

(5)	Mr. Mazelsky served as our Executive Vice President until June 28, 2019 when he was appointed our Interim President and CEO, and he served as our Interim President and CEO until he was appointed our President and CEO on October 23, 2019. Amounts shown reflect compensation Mr. Mazelsky received as an employee. Mr. Mazelsky received no additional compensation for his service as a Director.

(6)	Amount shown includes an annual equity award having a grant date value of approximately $1,800,000 granted in the ordinary course in February 2019, a one-time Interim CEO equity award having a grant date value of approximately $2,000,000 granted in August 2019, and a one-time promotion equity award having a grant date value of approximately $2,000,000 granted in November 2019.

(7)	Amount shown includes $14,000 in Company matching contributions under the Company’s 401(k) plan, and the remainder includes tax preparation fees, reimbursements for executive physical examinations and premiums paid on behalf of Mr. Mazelsky under the Company’s disability and life insurance plans.

(8)

Amount shown includes an annual equity award having a grant date value of approximately $1,800,000 granted in the ordinary course in February 2019 and an additional one-time equity award having a grant date value of approximately $1,000,000 granted in August 2019 in recognition of Mr. McKeon’s assumption of additional responsibilities following Mr. Mazelsky’s appointment as our Interim President and CEO.

(9)	Amount shown includes $14,000 in Company matching contributions under the Company’s 401(k) plan, and the remainder includes tax preparation fees, reimbursements for executive physical examinations and premiums paid on behalf of Mr. McKeon under the Company’s disability and life insurance plans.

(10)	Mr. Lane became an executive officer on May 9, 2018, serving as a Corporate Vice President until January 15, 2020, when he was promoted to the position of Executive Vice President.

(11)	Amount shown includes $14,000 in Company matching contributions under the Company’s 401(k) plan, and the remainder includes tax preparation fees, reimbursements for executive physical examinations and premiums paid on behalf of Mr. Lane under the Company’s disability and life insurance plans.

(12)

Amount shown includes $1,062,523 in Dutch taxes paid relating to the exercise of stock options and vesting of RSUs attributable to Ms. Turner’s assignment in the Netherlands, $114,682 in tax equalization benefits and gross-ups relating to the payment of these Dutch taxes on Ms. Turner’s behalf, $16,849 in tax gross-up payments relating to expatriate tax equalization benefits provided in 2018, $14,000 in Company matching contributions under the Company’s 401(k) plan, $13,359 in tax gross-up payments relating to an amended 2017 tax return reflecting expatriate tax equalization benefits in 2017, and expenses related to spousal travel to our annual President’s Club event recognizing our highest performing sales employees (including a tax gross-up on such travel expenses of $2,390), and the remainder includes tax preparation fees, reimbursements for executive physical examinations and premiums paid on behalf of Ms. Turner under the Company’s disability and life insurance plans.

(13)	Ms. Underberg was hired by the Company and became an executive officer on February 11, 2019.

(14)	Amount shown includes a signing bonus of $112,000 paid in connection with the hiring of Ms. Underberg in February 2019.

(15)	Amount shown includes the aggregate grant date fair value of equity awards granted to Ms. Underberg in February 2019 when Ms. Underberg commenced employment with the Company.

(16)	Amount shown includes $36,125 in relocation costs and $20,394 of associated tax gross-up for taxable relocation amounts, and the remainder includes tax preparation fees, reimbursements for executive physical examinations and premiums paid on behalf of Ms. Underberg under the Company’s disability and life insurance plans.

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(1)	On each of the action dates reflected, the Compensation Committee approved the grant of the above stock options and RSUs to the NEOs at the closing sale price of the common stock on the NASDAQ Global Select Market on the applicable grant date. See the discussion under “Equity Award Grant Policy” on page 76 above.

(2)

The non-equity incentive plan awards reported under this caption represent the possible annual, performance-based cash bonus amounts under our Executive Incentive Plan, the material terms of which are discussed under “Annual Performance-Based Cash Bonus” on page 18 above. The actual award payments under the Executive Incentive Plan, as determined by the Compensation Committee on February 11, 2020, are included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above. The Executive Incentive Plan does not provide for a threshold payout, and if minimum performance goals are not met, no annual performance-based cash bonus is earned under the plan.

(3)

Annual performance-based cash bonus amounts for 2019 awarded under the Executive Incentive Plan are determined by multiplying a target bonus, represented as a percentage of annual base salary, by a factor calculated by combining two equally weighted measures: (1) Company financial performance against budget with respect to pre-determined financial metrics, and (2) achievement of non-financial performance goals, and in consideration of individual performance. For a discussion of the 2019 financial metrics and performance goals under the Executive Incentive Plan, see the discussion under “Annual Performance-Based Cash Bonus” on page 18 above. For 2019, Mr. Ayers had a target bonus of 125% of base salary, Mr. Mazelsky had a target bonus of 125% of his pro-rated base salary in connection with Mr. Mazelsky’s transition to President and CEO, Mr. McKeon had a target bonus of 75% of base salary, each of Mr. Lane and Ms. Turner had a target bonus of 60% of base salary and Ms. Underberg had a target bonus of 60% of her pro-rated base salary after taking into account her hire date of February 11, 2019. The “Target” amount set forth above represents an assumption that the financial and non-financial performance goal ratings for each of the NEOs participating in the Executive Incentive Plan is 100%.

(4)	The maximum annual performance-based cash bonus for fiscal year 2019 was determined under the Executive Incentive Plan as 200% of target bonus.

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(5)	Granted under our 2018 Plan as RSUs that vest in equal annual installments over a five-year period commencing on the first anniversary of the date of grant (subject to the executive’s continued employment). For more information regarding these RSUs, see the information under “Equity-Based Long Term Incentive Compensation” beginning on page 71 .

(6)	Options become exercisable in equal annual installments over a five-year period commencing on the first anniversary of the date of grant (subject to the executive’s continued employment).

(7)

Pursuant to the 2018 Plan, upon a change in control of IDEXX, each outstanding stock option or RSU award held by all employees of IDEXX, including executives, is subject to the vesting provisions described below under “Stock Incentive Plans.” Under the change in control agreements between the Company and each of its executives, vesting of options and RSUs held by each executive may accelerate in full in the event of a change in control of the Company followed by a qualifying termination of the executive’s employment, as described under “Change in Control Agreements” on page 89 below.

(8)	Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 5 to our consolidated financial statements included in our 2019 Annual Report on Form 10-K for the relevant assumptions used to determine the valuation of our stock awards and stock options.

(9)

In accordance with the terms of the Ayers Mutual Separation Agreement, Mr. Ayers is entitled to continued vesting of his unvested stock options in accordance with the vesting schedule set forth in the applicable award agreement and exercisability for each stock option’s full term, in each case without any continued service requirement, subject to his ongoing compliance with a standard invention and non-disclosure agreement and certain non-competition and non-solicitation restrictions. See “Ayers Mutual Separation Agreement” on page 87 below. Following termination of his employment effective November 1, 2019, Mr. Ayers remains a member of the Board and was granted equity awards as a Director. For information regarding equity awards granted to Mr. Ayers as a Director, please see “2019 Non-Employee Director Compensation Table” on page 45 above.

(10)

Equity grants shown reflect an annual equity award having a grant date value of approximately $1,800,000 granted in the ordinary course in February 2019, a one-time Interim CEO equity award having a grant date value of approximately $2,000,000 granted in August 2019, and a one-time promotion equity award having a grant date value of approximately $2,000,000 granted in November 2019. In the event of termination of Mr. Mazelsky’s employment by the Company other than for cause (except following a change in control), his stock options and RSUs will continue to vest in accordance with their terms for two years. See “Mazelsky Employment Agreement” on page 87 below.

(11)

Equity grants shown reflect an annual equity award having a grant date value of approximately $1,800,000 granted in the ordinary course in February 2019 and an additional one-time equity award having a grant date value of approximately $1,000,000 granted in August 2019 in recognition of Mr. McKeon’s assumption of additional responsibilities following Mr. Mazelsky’s appointment as our Interim President and CEO.

(12)	Equity grants shown reflect equity awards granted to Ms. Underberg in February 2019 when Ms. Underberg commenced employment with the Company as an executive officer.

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(1)

Upon a change in control of IDEXX, each outstanding stock option or RSU award held by all employees of IDEXX, including executives, is subject to the vesting provisions described below under “Stock Incentive Plans.” Under the change in control agreements between the Company and each of its executives, vesting of options and RSUs held by each executive may accelerate in full in the event of a change in control of the Company followed by a qualifying termination of the executive’s employment. See “Change in Control Agreements” below.

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(2)	Options become exercisable in equal annual installments over a five-year period commencing on the first anniversary of the date of grant. RSUs vest in equal installments over a five-year period commencing on the first anniversary of the date of grant.

(3)	Options expire on the day immediately prior to the tenth anniversary of the date of grant.

(4)	Market value of unvested stock awards is determined by multiplying the number of unvested shares by $261.13, the closing sale price of the Company’s common stock on December 31, 2019.

(5)

In accordance with the terms of the Ayers Mutual Separation Agreement, Mr. Ayers is entitled to continued vesting of his unvested stock options in accordance with the vesting schedule set forth in the applicable award agreement and exercisability for each stock option’s full term, in each case without any continued service requirement, subject to his ongoing compliance with a standard invention and non-disclosure agreement and certain non-competition and non-solicitation restrictions. See “Ayers Mutual Separation Agreement” on page 87 below. Following termination of his employment effective November 1, 2019, Mr. Ayers remains a member of the Board and was granted equity awards as a Director. For information regarding equity awards granted to Mr. Ayers as a Director, please see “2019 Non-Employee Director Compensation Table” on page 45 above.

(6)

Mr. Mazelsky was granted a one-time Interim CEO equity award on August 5, 2019 in connection with his appointment as our Interim President and CEO and a one-time promotion equity award on November 4, 2019 in connection with his appointment as our President and CEO. In the event of termination of Mr. Mazelsky’s employment by the Company other than for cause (except following a change in control), his stock options and RSUs will continue to vest in accordance with their terms for two years. See “Mazelsky Employment Agreement” on page 87 below.

(7)

Mr. McKeon was granted awards prior to January 1, 2014 as a Director. All grants after January 1, 2014 were in connection with his hiring or employment as Executive Vice President, Chief Financial Officer and Treasurer, including a one-time additional equity award granted to Mr. McKeon on August 5, 2019 in recognition of his assumption of additional responsibilities following Mr. Mazelsky’s appointment as our Interim President and CEO.

(8)	Ms. Turner was granted awards on June 1, 2014 in connection with her hiring in May 2014.

(9)	Ms. Underberg was granted awards on February 14, 2019 in connection with her hiring as an executive officer in February 2019.

(1)	Reflects the gross number of shares acquired and value realized upon exercise by each NEO, without reduction for shares that were used to pay the exercise price or to satisfy tax obligations.

(2)	Reflects the number of shares acquired and value of such shares upon vesting prior to the withholding of the following number of shares for each NEO to satisfy such executive officer’s tax obligations: Ayers (824), Mazelsky (762), McKeon (2,618), Lane (324) and Turner (351).

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(1)	Represents the increase in the value of DSUs during 2019. No portion of the amounts reported in this column represent above-market or preferential interest or earnings accrued on the applicable plan and, accordingly, have not been included in a “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the 2019 Summary Compensation Table.

(2)

This amount represents the portions of bonuses earned by Mr. Ayers in 2003, 2004 and 2005 that he elected to defer under the Executive Plan, plus all earnings accrued thereon in subsequent years. The bonuses were payable (absent the deferral) in February 2004, 2005 and 2006, respectively, and represented compensation for 2003, 2004 and 2005 in the amounts of $273,000, $288,750 and $325,000, respectively, and as such those amounts were reported in the Summary Compensation Tables for those years.

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*

In calculating this ratio, we used the same median employee that we identified for fiscal year 2017, as permitted by the applicable SEC rules, because there has been no change in our employee population or employee compensation arrangements that we believe could significantly affect our pay ratio calculations. We identified this median employee, who is an hourly employee located in the United States, by examining the total gross earnings (i.e., base salary plus bonus or commission, income from vesting equity, if applicable, overtime paid and other income and allowances) for all individuals, excluding our CEO, employed by us on December 31, 2017 (whether employed on a full-time, part-time, seasonal or temporary basis). As of this date, we estimate that we had a total of 7,979 such employees, of whom 5,148 are U.S. employees and 2,831 are non-U.S. employees. For purposes of identifying the median employee, we excluded, as the SEC rules allow, certain non-U.S. employees, as depicted in the following table:

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(1)	Only stock option awards were used in computing the weighted-average exercise price.

(2)

Consists of shares of common stock subject to outstanding options, restricted stock units and deferred stock units under the 2009 Stock Incentive Plan (2009 Plan) (2,267,075 shares) and 2018 Plan (448,857 shares). As of December 31, 2019, the Company had 2,311,236 options outstanding with a weighted average exercise price of $117.1309 and a weighted average term of 6.44 years, and 404,696 full value shares outstanding and granted under equity compensation plans (257,658 restricted stock units granted to employees, 61,815 deferred stock units issued to employees, and 85,223 deferred stock units issued to directors). Excludes 1,147,579 shares issuable under the Company’s 1997 Employee Stock Purchase Plan (1997 Plan) in connection with the current and future offering periods. See Note 5 to our consolidated financial statements included in our 2019 Annual Report on Form 10-K for a description of our equity compensation plans.

(3)

Includes 6,811,309 shares available for issuance under the 2018 Plan. The 2018 Plan provides for the issuance of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock unit awards and other stock unit awards. Also includes 1,147,579 shares issuable under the 1997 Plan in connection with the current and future offering periods. See Note 5 to the consolidated financial statements for the year ended December 31, 2019 included in our 2019 Annual Report on Form 10-K for a description of our equity compensation plans

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(1)	Amount shown is calculated by multiplying by two the annual base salary in effect on November 1, 2019.

(2)	Represents pro-rated annual target bonus for 2019 through November 1, 2019.

(3)	Represents lump sum payment to compensate Mr. Ayers for approximately 24 months of medical insurance coverage premium costs.

(4)	Mr. Ayers’s unvested stock options will continue to vest in accordance with their terms. This amount represents the intrinsic value of unvested stock options as of November 1, 2019 that will continue to vest following Mr. Ayers’s termination on November 1, 2019 using the closing sale price of the Company’s common stock as of November 1, 2019.

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(1)	Mr. Mazelsky’s salary will be paid by the Company for two years following termination. Amount shown is calculated by multiplying by two the annual base salary in effect on December 31, 2019.

(2)

Amount shown represents the aggregate estimated amount of the employer portion of the costs of continued health benefits for Mr. Mazelsky and his covered dependents for the 24-month period following termination, based on the level of coverage in effect as of December 31, 2019, consisting of the following: (a) medical and dental coverage ($30,732), and (b) premiums paid on behalf of Mr. Mazelsky under the Company’s accidental death and dismemberment, disability and life insurance plans ($9,359).

(3)

Mr. Mazelsky’s stock options and RSUs would continue to vest in accordance with their terms for two years following termination. This amount represents the intrinsic value of unvested stock options and RSUs as of December 31, 2019 that would continue to vest for two years following termination on December 31, 2019 using the closing sale price of the Company’s common stock as of December 31, 2019 to illustrate the potential value at termination.

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•	The acquisition by any person of 35% or more of the shares of common stock or combined voting power of the Company’s outstanding securities;

•	A change in the composition of the Company’s Board such that a majority of the Board no longer consists of incumbent directors, or directors nominated or elected by incumbent directors, who had been directors of the Company during the 24 months prior to the change in composition;

•	A reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (business combination), unless immediately following such business combination:

•	The shareholders of the Company immediately prior to such business combination own more than a majority of the outstanding shares of common stock and the combined voting power of the Company’s outstanding voting securities of the corporation resulting in the business combination in substantially the same proportion as their ownership immediately prior to the transaction;

•	No person owns 20% or more of the stock of the corporation resulting from the business combination; and

•	At least half of the members of the board of the corporation resulting from the business combination were members of the Board at the time of the agreement providing for such business combination; and

•	Approval by the shareholders of a complete liquidation or dissolution of the Company or sale of substantially all of the assets of the Company.

•	For each executive other than Mr. Mazelsky, a prorated payment of the executive’s target bonus for the portion of the year of termination prior to the date of termination;

•	An amount equal to two times (or three times in the case of Mr. Mazelsky) the sum of the executive’s annual base salary plus the average bonus received by the executive for the three full fiscal years preceding the change in control;

•

The continuation of all benefits under welfare, benefit, savings and retirement plans (including, without limitation, medical, dental and life insurance plans) for a period of two years, or, in the case of Mr. Mazelsky, a lump sum cash payment equal to three years of the employer portion of medical coverage for Mr. Mazelsky and his covered dependents to the same extent as was paid immediately prior to termination; and

•	Any other amounts or benefits required to be paid to the executive under any plan, program, policy or practice or contract or agreement of the Company.

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•	Any material reduction of the executive’s annual base salary (or, with respect to Mr. Mazelsky, any material reduction of Mr. Mazelsky’s annual bonus opportunity);

•	Any material reduction of the executive’s authority, duties or responsibilities;

•	Any material reduction of the budget over which the executive has authority;

•	A material change in the geographic location at which the executive is employed; or

•	Certain breaches by the Company of the agreement.

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(1)

Amounts shown for Mr. Mazelsky are three times his salary and three times his average annual bonus for the prior three years. Amounts shown for all other NEOs represent two years of such payments. In addition, the NEOs other than Mr. Mazelsky would each be entitled to a pro-rated amount of his or her target bonus for the then-current fiscal year. Salary and bonus payments shall generally be paid in a lump sum on the 90th day following the date of termination (or, in the case of Mr. Mazelsky, on the 60th day following the date of termination), provided that the executive has signed the required release and the statutory period during which the executive is entitled to revoke the release has expired on or before that day. Benefits shall be paid by the Company as stated in notes (3) through (7) below.

(2)	Represents the intrinsic value of accelerated equity awards (stock options and RSUs), calculated based on the exercise price of the underlying awards and the closing sale price of the Company’s common stock as of December 31, 2019.

(3)

Amount shown represents the aggregate estimated amount of the employer portion of the costs of continued health benefits for Mr. Mazelsky and his covered dependents for the 36-month period following termination, based on the level of coverage in effect as of December 31, 2019, payable in a lump sum on the 60th day following the date of termination (provided that Mr. Mazelsky has signed the required release and the statutory period during which Mr. Mazelsky is entitled to revoke the release has expired on or before that day), consisting of the following: (a) medical and dental coverage ($46,099), and (b) premiums paid on behalf of Mr. Mazelsky under the Company’s accidental death and dismemberment, disability and life insurance plans ($14,038).

(4)	Amount shown represents the aggregate incremental cost to the Company to continue to provide benefits to Mr. McKeon for a period of two years following termination, consisting of the following: (a) medical and dental coverage ($30,733), and (b) premiums paid on behalf of Mr. McKeon under the Company’s accidental death and dismemberment, disability and life insurance plans ($3,072)

(5)	Amount shown represents the aggregate incremental cost to the Company to continue to provide benefits to Mr. Lane for a period of two years following termination, consisting of the following: (a) medical and dental coverage ($30,733), and (b) premiums paid on behalf of Mr. Lane under the Company’s accidental death and dismemberment, disability and life insurance plans ($8,284).

(6)	Amount shown represents the aggregate incremental cost to the Company to continue to provide benefits to Ms. Turner for a period of two years following termination, consisting of the following: (a) medical and dental coverage ($24,062), and (b) premiums paid on behalf of Ms. Turner under the Company’s accidental death and dismemberment, disability and life insurance plans ($8,920).

(7)	Amount shown represents the aggregate incremental cost to the Company to continue to provide benefits to Ms. Underberg for a period of two years following termination, consisting of the following: (a) medical and dental coverage ($24,227), and (b) premiums paid on behalf of Ms. Underberg under the Company’s accidental death and dismemberment, disability and life insurance plans ($9,392).

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Shareholder of Record : If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered the shareholder of record of those shares and these proxy materials are being made available directly to you by us. As the shareholder of record, you have the right to grant your voting proxy directly to us or to vote in person at the 2020 Annual Meeting.

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Beneficial Owner of Shares Held in Street Name : If your shares are held in a brokerage account through a bank, broker, trustee or other nominee, you are considered the beneficial owner of shares held in “street name” and these proxy materials are being made available to you through your bank, broker, trustee or nominee. As the beneficial owner of shares held in street name, you have the right to direct your bank, broker, trustee, or nominee on how to vote and are also invited to attend the 2020 Annual Meeting. Your bank, broker, trustee or nominee is obligated to provide you with voting instructions for use in instructing the bank, broker, trustee or nominee how to vote these shares. However, since you are not the shareholder of record, you may not vote these shares in person at the meeting unless you have obtained a legal proxy from your bank, broker, trustee or nominee entitling you to vote your shares at the 2020 Annual Meeting.

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•	You may vote over the Internet;

•	You may vote by telephone;

•	If you are a registered holder of our shares, you may request a paper proxy card from us, and indicate your vote by completing, signing and dating the card where indicated and by mailing or otherwise returning the card in the prepaid envelope accompanying the paper proxy card; or

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You may vote online at the virtual 2020 Annual Meeting. If you attend the 2020 Annual Meeting over the Internet, you will be able to vote your shares online, even if you already voted by Internet, telephone or mail. You will need to enter your control number (included in your Notice of Internet Availability, your proxy card or the voting instructions that accompanied your proxy materials) to vote your shares at the 2020 Annual Meeting.

•	Submitting a new proxy with a later date, including a proxy given via the Internet or by telephone;

•	Providing written notice to our Corporate Vice President, General Counsel and Corporate Secretary before or at the 2020 Annual Meeting prior to the voting on any proposal, if you are a registered holder of our shares; or

•	Voting online at the virtual 2020 Annual Meeting.

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•	Election of Directors (Proposal One)

•	The Advisory Vote to Approve Executive Compensation (Proposal Three)

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•	The shareholder submitting the nomination or proposal;

•	Any nominee for Director; and/or

•	The item of business.

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(1)	After-tax income from operations represents income from operations reduced by our reported effective tax rate of 18.1% for the year ended December 31, 2019 excluding the impact of non-recurring tax items. See Note 13 to our consolidated financial statements included in our 2019 Annual Report on Form 10-K for information on the impact of these items on our effective tax rate.

(2)	Average invested capital, excluding cash and investments, represents the average of the amount of total invested capital, excluding cash and investments, as of December 31, 2018 and December 31, 2019 .

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(1)	Amounts presented may not recalculate to constant currency operating margin or constant currency margin improvement due to rounding.

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(1)	Amounts presented may not recalculate due to rounding.

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