UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Soliciting Material under §240.14a-12
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ORTHOPEDIATRICS CORP.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||||||
ORTHOPEDIATRICS CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2025
We are pleased to notify you that we will hold the 2025 annual meeting of our stockholders on May 23, 2025, at 11:30 a.m., Eastern Time, at The St. Louis Club, 7676 Forsyth Blvd., St. Louis, Missouri 63105 for the following purposes:
1. To elect four directors, each to serve until the 2028 annual meeting of our stockholders;
2. To approve, on an advisory basis, the compensation of our executive officers who are named in the compensation disclosures in the accompanying Proxy Statement;
3. To approve, on an advisory basis, the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2025; and
4. To transact such other business as may properly come before the meeting or any adjournments and postponements thereof.
Our Board of Directors has established the close of business on March 28, 2025 as the “record date” for this annual meeting. This means that you are entitled to vote at this meeting (in person or by legally-appointed proxy) if our stock records show that you owned our Common Shares at that time.
Under Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the Internet, we have elected to deliver our proxy materials to all of our stockholders over the Internet. This delivery process allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering the cost of delivery. On or about April 11, 2025, we will commence sending to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement for our 2025 annual meeting of stockholders and our 2024 annual report to stockholders. The Notice also provides instructions on how to vote online and includes instructions on how to receive a paper copy of the proxy materials by mail.
We hope you will be able to attend the annual meeting. Whether you plan to attend the annual meeting or not, it is important that you cast your vote either in person or by proxy. You may vote over the Internet as well as by mail. When you have finished reading the proxy statement, you are urged to vote in accordance with the instructions set forth in this proxy statement. We encourage you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend.
Thank you for your continued support of OrthoPediatrics Corp. We look forward to seeing you at the annual meeting.
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Daniel J. Gerritzen
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS OF
ORTHOPEDIATRICS CORP.
to be held May 23, 2025
INTRODUCTION
The Board of Directors of OrthoPediatrics Corp. is soliciting proxies from stockholders for its use at the 2025 annual meeting of stockholders, and at any adjournment or adjournments of that meeting. The annual meeting is scheduled to be held on May 23, 2025, at 11:30 a.m., Eastern Time, at The St. Louis Club, 7676 Forsyth Blvd., St. Louis, Missouri 63105.
To improve readability, OrthoPediatrics Corp., which has prepared this proxy statement, will sometimes speak in this document in the first-person (using words such as “we” or “our” or “us”) and will address its stockholders using second-person words (such as “you” or “your”). We will also sometimes refer to OrthoPediatrics Corp., as “the Company.” References to the Board of Directors of the Company in this proxy statement will usually be shortened to “our Board.” References to our “Proxy Committee” will refer to David R. Bailey and Bryan W. Hughes, who are designated by the proxy cards that accompany this proxy statement as being the persons who are authorized to vote at the annual meeting those shares that are owned of record by stockholders that sign and return such proxy cards.
This proxy statement relates to the solicitation of proxies by our Board of Directors for use at the annual meeting.
On or about April 11, 2025, we will commence sending the Important Notice Regarding the Availability of Proxy Materials to all stockholders entitled to vote at the annual meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
This proxy statement and our 2024 annual report to stockholders are available for viewing, printing and downloading at www.orthopediatrics.com under the Investors/Financial & Filings page. Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, 2024 on the website of the Securities and Exchange Commission at www.sec.gov, or at www.orthopediatrics.com under the Investors/Financial & Filings page. You may also obtain a printed copy of our Annual Report on Form 10-K, including our financial statements, free of charge, from us by following the instructions included on the Important Notice Regarding the Availability of Proxy Materials or by sending a written request to: OrthoPediatrics Corp., 2850 Frontier Drive, Warsaw, Indiana 46582, Attention: Secretary.
INFORMATION ABOUT THE MEETING AND VOTING
Purposes of the Meeting
The purposes of the annual meeting are:
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To elect four directors, each to serve until the 2028 annual meeting of our stockholders;
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To approve, on an advisory basis, the compensation of our executive officers who are named in the compensation disclosures in this proxy statement;
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To approve, on an advisory basis, the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2025; and
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To transact such other business as may properly come before the meeting.
Stockholders Entitled to Vote at the Meeting
Our Board has established the close of business on March 28, 2025 as the “record date” for this annual meeting. This means that you are entitled to vote at this meeting (and any adjournments) if our records show that you owned our Common Shares at that time. As of this record date, 24,831,427 of our common shares were issued and outstanding, held by approximately 681 registered stockholders of record. Each issued and outstanding Common Share as of the record date is entitled to one vote on each matter properly to come before the annual meeting and can be voted only if the record owner of that share, determined as of the record date, is present in person at the meeting or represented by proxy.
Voting Shares By Proxy That You Hold In Your Name
You have two choices:
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VOTE BY INTERNET -
http://www.investorvote.com/KIDS
. Use the Internet to transmit your voting instructions up until 1:00 A.M. Eastern Time on May 23, 2025. Have the Notice in hand when you access the website. Follow the steps outlined on the secured website.
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VOTE BY MAIL – If you requested and received a proxy card by mail, mark, sign and date your proxy card and return it in the postage-paid envelope we will provide or mail it to Proxy Services, c/o Computershare Investor Services, PO Box 43102, Providence, RI 02940-5068
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Voting Shares That You Hold in Brokerage or Similar Accounts
Many stockholders hold their shares through a stockbroker, bank, or other nominee rather than directly in their own name. If you hold your shares in one of these ways, you are considered a beneficial owner, not a record owner, and you therefore have no direct vote on any matter to come before the annual meeting. Your broker, bank, or nominee will send you voting instructions for you to use in directing the broker, bank or nominee in how to vote your shares. Your broker, bank or nominee may allow you to deliver your voting instructions via the telephone or the Internet.
If you hold your shares through a broker and you do not timely provide your broker with specific instructions on how to vote your shares, your broker will not be authorized to cast a vote on your behalf on Proposals 1 through 3. In such cases, a “broker non-vote” may be entered with respect to your shares on Proposals 1 through 3 to reflect that your broker was present with respect to your shares at the meeting but was not exercising voting rights on your behalf with respect to those shares.
Your Voting Options on Each of the Proposals
You may vote “for” or “withhold” (meaning you choose to withhold from our Proxy Committee your authority to vote) with respect to the election of each nominee for director (Proposal 1 on the proxy card).
You may vote “for,” “against” or “abstain” with respect to:
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the nonbinding advisory proposal on the compensation of our named executive officers (Proposal 2 on the proxy card); and
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the nonbinding advisory proposal on the approval of the appointment of Deloitte & Touche LLP (Proposal 3 on the proxy card).
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If any other matter is presented at the annual meeting, your proxy provides that your shares will be voted by the Proxy Committee in accordance with their best judgment. At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the annual meeting, other than those discussed in this proxy statement.
Our Board’s Voting Recommendations
Our Board recommends that you vote:
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FOR
the election as directors of the four individuals named as its nominees in this proxy statement (Proposal 1 on the proxy card);
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FOR
the approval, on an advisory basis, of the compensation of our executive officers who are named in the compensation disclosures in this proxy statement (Proposal 2 on the proxy card); and
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FOR
the approval, on an advisory basis, of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2025 (Proposal 3 on the proxy card).
If any other matter is properly brought before the annual meeting, the Company – through the individuals named in the proxy and acting as our “Proxy Committee,” or their designees, and pursuant to the blanket authorization granted under the proxy – will vote your shares on that matter in accordance with the discretion and judgment of the Proxy Committee.
Required Votes to Approve Each Proposal
Four positions on our Board are scheduled to be filled by vote of the stockholders at the annual meeting. As a stockholder, you are entitled to cast one vote per share for each of up to four nominees for election as directors at the annual meeting, but you may not cumulate your votes (in other words, you may not cast votes representing four times the number of your shares entitled to vote in favor of a single nominee). Directors are elected from among the nominees by a plurality of the votes that are cast among all nominees; this means the individuals whose names are validly placed into nomination at the meeting who receive the four highest number of votes cast “for” their election will be elected as directors of the Company. A properly returned proxy indicating “withhold” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated. “Broker non-votes” will not be counted as votes cast on the proposal and will have no effect on the election of directors.
A majority of the votes cast at the meeting will approve: (i) the proposal to approve, on an advisory basis, the compensation of our named executive officers; (ii) the proposal to approve, on an advisory basis, the appointment of Deloitte & Touche LLP; and (iii) all other matters that arise at the annual meeting. Shares voted “for” the proposal and shares represented by returned proxies that do not contain instructions to vote against the proposal or to abstain from voting will be counted as shares cast for the approval of the proposal. Abstentions and broker non-votes will not be treated as votes cast “for” or “against” the proposal but shall be included for purposes of determining whether a quorum is present.
Please note, however, that because the votes on the compensation of our named executive officers and the appointment of Deloitte & Touche LLP are each advisory in nature, the results of such votes will not be binding upon our Board or its committees.
Quorum
Delaware law provides that any stockholder action at a meeting requires that a quorum exist with respect to that meeting. Once a share is represented for any purpose at a meeting, it is deemed by Delaware law to be present for quorum purposes for the remainder of the meeting and (unless a new record date is or must be set for any such adjournment) any adjournment of that meeting.
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A majority of the common shares entitled to vote at this meeting, present either in person or by proxy, will constitute a quorum for all purposes at the meeting. If a quorum should not be present, the annual meeting may be adjourned from time to time until a quorum is obtained.
Shares held of record by stockholders who (in person or by proxy) abstain from voting on any or all proposals (and shares represented by “broker non-votes,” described above under “Voting Shares That You Hold in Brokerage or Similar Accounts”) will be included in the number of shares present at the meeting for purposes of determining the presence of a quorum. However, abstentions and broker non-votes as to any proposal will not be considered to be votes that have been “cast” on that proposal and therefore will not affect the outcome of the vote on any proposals described by this proxy statement.
Voting on Possible Other Matters
We are not aware that any person intends to propose that any matter, other than the three numbered proposals specifically described by this proxy statement, be presented for consideration or action by our stockholders at our annual meeting. If any such other matter should properly come before the meeting, however, favorable action on such matter would generally require the affirmative vote of a majority of the votes cast, unless our certificate of incorporation or bylaws or applicable law require otherwise. If you vote by proxy, you will be granting our Proxy Committee authority to vote your shares on any such other matter in accordance with their discretion and judgment.
Revocation of Proxies or Voting Instructions
A stockholder of record who has delivered a proxy card in response to this solicitation may revoke it before it is exercised at the annual meeting by executing and delivering a timely and valid later-dated proxy, by voting by ballot at the meeting or by giving written notice to the Secretary. If a stockholder of record has voted via the Internet, such stockholder may also change that vote with a timely and valid later Internet vote or by voting at the meeting by ballot. Attendance at the meeting will not have the effect of revoking a proxy unless a stockholder gives proper written notice of revocation to the Secretary before the proxy is exercised or the stockholder votes by ballot at the meeting. Beneficial owners who have directed their broker, bank or nominee as to how to vote their shares should contact their broker, bank or nominee for instructions as to how they may revoke or change those voting directions.
Solicitation of Proxies
Our Board is making this solicitation of proxies for our annual meeting. Our Company will bear all costs of such solicitation, including the cost of preparing and distributing this proxy statement and the enclosed form of proxy. After the initial distribution of this proxy statement, proxies may be solicited by mail, telephone, facsimile transmission or personally by directors, officers, employees or agents of the Company. Brokerage houses and other custodians, nominees and fiduciaries will be requested to forward soliciting materials to beneficial owners of shares held by them for the accounts of beneficial owners, and we will pay their reasonable out-of-pocket expenses.
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PROPOSAL 1
ELECTION OF DIRECTORS
Our Board currently consists of 11 directors who are divided into three classes. All of the current directors were members of our Board at the conclusion of the 2024 annual meeting of stockholders. Directors in each class serve a three-year term. The terms of each class expire at successive annual meetings so that the stockholders elect one class of directors at each annual meeting. Pursuant to that certain Stockholders’ Agreement, dated October 16, 2017, between Squadron Capital LLC (“Squadron”) and the Company (the “Stockholders’ Agreement”), Squadron has caused the Company to nominate three appointed individuals to serve as directors. The persons nominated by Squadron are designated as “Squadron Directors” below. The current classification of our Board is:
Terms expiring at this annual meeting: Fred L. Hite, Bryan W. Hughes, Samuel D. Riccitelli and Mark C. Throdahl
Terms expiring at the 2026 annual meeting: George S. M. Dyer, MD, David R. Pelizzon (Squadron Director), Harald Ruf (Squadron Director) and Terry D. Schlotterback
Terms expiring at the 2027 annual meeting: David R. Bailey, Marie C. Infante (Squadron Director) and Jimmy D. McDonald
Our Board, on the recommendation of its Corporate Governance Committee, has nominated Mr. Hite, Mr. Hughes, Mr. Riccitelli, and Mr. Throdahl for election at this year’s annual meeting. If elected, each of these four nominees will serve on our Board until the 2028 annual meeting, or until his successor is duly elected and qualified in accordance with the Company’s bylaws. If any of these nominees should become unable to accept election, our Proxy Committee may vote for other person(s) selected by our Board. Our Board has no reason to believe that any of the nominees will be unable to accept election.
Below is certain information concerning our Board’s nominees for election at this year’s annual meeting, followed by information concerning those Board members who are not standing for election this year and whose term of office will continue after the annual meeting. The biographies of each of the nominees and continuing directors below contain information regarding the experiences, qualifications, attributes or skills that caused the Corporate Governance Committee and our Board to determine that the person should be elected (or should continue to serve even if not standing for election) as a director for the Company in 2025.
Following the director biographies is information concerning our corporate governance structure, including descriptions of the standing committees of our Board, namely our Audit, Compensation and Corporate Governance Committees. The directors serving on each committee are listed in the descriptions below. Our directors may also serve on other committees of our Board and the board of directors of the Company’s subsidiaries that are not required to be described by this proxy statement and which are therefore not identified in the information below.
Elsewhere in this proxy statement you will find information concerning the numbers of our common shares that are beneficially owned by each of our directors (see “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT”) and information regarding the compensation of our directors (see “EXECUTIVE AND DIRECTOR COMPENSATION”). We urge you to review all of this information when deciding how to vote on Proposal 1.
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Our Board recommends that you vote FOR all four of the nominees named below.
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The following persons have been nominated for election to the Board:
Nominees for Election at this Annual Meeting (with Terms to Expire at the 2028 Annual Meeting)
Fred L. Hite
, 57, has served as our Chief Financial Officer since February 2015, as our Chief Operating Officer since June 2020, and as a director since August 2015. Prior to joining our company, from 2004 through 2014, Mr. Hite served as the Chief Financial Officer and Investor Relations Officer of Symmetry Medical Inc., ("Symmetry"), a company previously listed on the New York Stock Exchange. Prior to joining Symmetry, Mr. Hite spent 13 years with General Electric Corporation in a variety of financial positions and areas including commercial, manufacturing, sourcing and services. Mr. Hite earned a Bachelor of Science in Finance from the Indiana University Kelley School of Business. We believe Mr. Hite’s financial acumen and public company management experience qualify him to serve on our board of directors.
Bryan W. Hughes
, 47, has served as a director since 2012. Mr. Hughes is the Managing Director and Group Head of Medical Technology Investment Banking at P&M Corporate Finance, LLC, an investment bank providing merger and acquisition services to companies throughout North America and Europe, a position he has held since 2008. Mr. Hughes earned a B.B.A. with an emphasis in Finance and Accounting from the Stephen M. Ross School of Business at the University of Michigan. Mr. Hughes is a licensed securities representative, holding Series 7 and 63 registrations. We believe Mr. Hughes’s experience advising private and public medical technology companies in strategic, financial and transaction related matters qualifies him to serve on our board of directors.
Samuel D. Riccitelli
, 66, has served as a director since December 2017. Mr. Riccitelli served as a board director for Biocept, Inc. (Nasdaq: BIOC), a cancer diagnostics company, from October 2020, Chairman of the Board from July 2021, and interim President and Chief Executive Officer from February 2022 to June 2023. From 2019 to 2020 he served as Chief Executive Officer of Pathnostics, a privately-owned infectious disease diagnostics company. From 2017 to 2019, Mr. Riccitelli served as Chairman of the Board of Directors of Precipio, Inc. (Nasdaq: PRPO). From 2012 to 2017, Mr. Riccitelli served as President and Chief Executive Officer and a director of Signal Genetics, Inc., a publicly traded molecular diagnostic company that was ultimately sold to Miragen Therapeutics, Inc. Mr. Riccitelli was also previously the Executive Vice President and Chief Operating Officer of Genoptix, Inc., a publicly traded diagnostic company that was sold to Novartis in 2011. We believe Mr. Riccitelli’s extensive experience with healthcare companies, particularly emerging companies, qualifies him to serve on our board of directors.
Mark C. Throdahl
, 74, was appointed Chairman of the Board of Directors in 2024. Prior to his transition to Chairman of the Board, Mr. Throdahl previously served as our Executive Chairmen from June 2021 until 2024 and Chief Executive Officer from January 2011 until June 2021 and has served as a director since 2009. Prior to joining our company, Mr. Throdahl served from 2008 to 2009 as a Group President of Zimmer Holdings, Inc., a worldwide leader in orthopedic implants. Mr. Throdahl previously served from 2001 to 2007 as the Chief Executive Officer and director of Consort Medical plc in London, United Kingdom. During a 13 year career at Becton Dickinson & Co., he served as Senior Vice President of the Drug Delivery sector and President of Nippon Becton Dickinson in Tokyo. Mr. Throdahl began his career at Mallinckrodt, Inc. Mr. Throdahl is a graduate of Princeton University and earned an MBA from Harvard Business School. We believe Mr. Throdahl’s leadership of both large organizations and growing businesses qualifies him to serve on our board of directors.
The following persons will continue as directors:
Continuing Directors of the Class with Terms Expiring at the 2026 Annual Meeting
George S. M. Dyer, MD
, 57, was appointed as a director effective April 28, 2023. Dr. Dyer is currently an attending upper extremity surgeon on both the Hand and Upper Extremity Service and the Orthopedic Trauma Service at Brigham and Women’s and Children’s Hospital in Boston, Massachusetts. He first joined the staff at Brigham and Women's Hospital in 2008. Additionally, Dr. Dyer is an Associate Professor of Orthopedic Surgery at Harvard Medical School, a position he has held since 2017. He graduated from Harvard Medical School, the Harvard Combined Orthopedic Residency Program and the Upper Extremity Fellowship of the Brigham and Women’s Hospital and Children's Hospital. Dr. Dyer specializes in upper extremity adult trauma surgery, as well as complex
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post-traumatic reconstruction of the shoulder, elbow, wrist and hand concerning adults. In addition to his roles with Brigham and Women’s Hospital and Children’s Hospital and Harvard Medical School, Dr. Dyer serves in the United States Navy, Medical Corps (reserve). We believe Dr. Dyer's orthopedic surgery experience qualify him to serve on our board of directors.
David R. Pelizzon
, 69, has served as a director since 2011. Mr. Pelizzon was nominated pursuant to the Stockholders’ Agreement with Squadron. Mr. Pelizzon is the President of Squadron and a member of its Managing Committee, positions he has held since 2008. Since June 2020, Mr. Pelizzon has also served as a director of Alphatec Holdings, Inc. (Nasdaq: ATEC), a medical technology company focused on the design, development, and advancement of technology for the surgical treatment of spinal disorders. Prior to joining Squadron, Mr. Pelizzon was the Managing Director of Precision Edge Surgical Products Company from 2005 to 2008. Mr. Pelizzon is a retired U.S. Army officer who served nearly 30 years on active duty in airborne and special operations units. Mr. Pelizzon is a graduate of the U.S. Military Academy and earned advanced degrees from Harvard University and the U.S. Naval War College. We believe Mr. Pelizzon’s leadership and management experience qualify him to serve on our board of directors.
Harald Ruf
, 71, has served as a director since April 2017. Mr. Ruf was nominated pursuant to the Stockholders’ Agreement with Squadron. Mr. Ruf has worked for Squadron since 2014, first as Chief Financial Officer and currently as Chief Operating Officer. Mr. Ruf served on the board of directors of Chromogenex Limited, based in the United Kingdom, from 2014 to 2016. From 2010 to 2016, Mr. Ruf served as a Managing Partner of Teuscher Ruf & Walpole, LLC, an accounting firm providing tax, audit and consulting services. He is also the Chairman of Ruf Enterprises, LLC, a holding company that he co-founded 1993. During his career, he has co-founded a number of successful companies across several industries. Mr. Ruf is a graduate of Brigham Young University, where he earned a Bachelor of Science in Accounting, and he is an Emeritus Licensed Certified Public Accountant in Utah and an Inactive Licensed Certified Public Accountant in California. Mr. Ruf has served as an officer and board member for local and national companies and associations and has been recognized nationally for such service. We believe Mr. Ruf’s 35+ years of executive level experience in several industries, including medical device manufacturing, qualifies him to serve on our board of directors.
Terry D. Schlotterback
, 69, has served as a director since 2009 and was appointed as Lead Independent Director in June 2021, while previously serving as Chairman of the Board of Directors from September 2013 to June 2021. Mr. Schlotterback was also employed by us from February 2009 to February 2010. Prior to joining our board of directors, Mr. Schlotterback worked for Zimmer from 1982 to 1992 and from 1996 to 2006, where he served in various leadership positions in sales, marketing and research and development, including as President of the Trauma and Spinal divisions. Prior to joining Zimmer, Mr. Schlotterback served in senior management roles for Mitek Surgical Products from 1992 to 1995. Mr. Schlotterback is a founder of the Warsaw, Indiana chapter of VisionTech Angels, an investment group, and TDS Consulting, LLC, which provides consulting services to medical startup companies. Mr. Schlotterback also serves as a board member of OrthoLazer Inc. and as an Advisor for Ignite Orthopedics Inc. Mr. Schlotterback earned a Bachelor of Science in Mechanical Engineering Technology from Purdue University. We believe Mr. Schlotterback's extensive experience in the medical device field qualifies him to serve on our board of directors.
Continuing Directors of the Class with Terms Expiring at the 2027 Annual Meeting
David R. Bailey
, 46, was appointed to serve as the Company’s President and Chief Executive Officer effective June 1, 2021, and as a director effective November 3, 2021. He joined OrthoPediatrics in 2007 and has spent most of his career helping build the company from its early start-up days, to a publicly traded company. During his tenure, Mr. Bailey has held multiple leadership positions of increasing responsibility, including Domestic and International Sales, Operations and oversight of the Trauma & Deformity Correction and Scoliosis business units. As an early employee in the Company’s life cycle, Mr. Bailey was instrumental in setting the strategic agenda for the Company, raising start-up capital, championing new product development, and establishing a global distribution network. Prior to joining the Company, Mr. Bailey worked as a sales representative and independent distributor for Smith & Nephew Orthopaedics. He attended Purdue University in Lafayette and holds a Bachelor of Science in Sales and Sales Management. He has continued his education at the Harvard Business School, where in 2020, he completed
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the Professional Leadership Development program. We believe Mr. Bailey's extensive knowledge of the Company and all facets of its business and his experience in the medical device industry qualify him to serve on our board of directors.
Marie C. Infante
, 75, has served as a director since 2014. Ms. Infante was nominated pursuant to the Stockholders’ Agreement with Squadron. Her prior experience as a director includes educational, non-profit, and professional organizations. Ms. Infante has more than 25 years of experience as a healthcare lawyer and a certified compliance professional. Since 2013, she has been an active consultant and senior advisor in the healthcare industry. Recent affiliations have included Avalon Healthcare Services, Zimmet Healthcare Services Group, Triple Tree Capital Partners and BDO Center for Healthcare Excellence and Innovation. From 2006 to 2013, she served as the Senior Vice President, Chief Compliance Officer and General Counsel for Healthcare Law for a $3 billion leader in post-acute healthcare services whose 42,000 employees cared for over 60,000 patients annually. Her industry expertise also stems from 15 years as a clinical specialist in orthopedic nursing. Ms. Infante is a graduate of the University of Maryland, where she earned a Bachelor of Science in Nursing and a Master of Science. She also holds an MBA from Loyola University and a JD from the Catholic University of America. We believe Ms. Infante’s clinical orthopedic experience and knowledge as a healthcare lawyer and compliance expert qualify her to serve on our board of directors.
Jimmy D. McDonald
, 64, was appointed to the OrthoPediatrics Board in October 2022. Mr. McDonald retired from TE Connectivity ("TE"), a global industrial technology leader for connectivity and sensor solutions, in December 2022, at which time he served as Vice President and Chief Supply Chain Officer. He served as a member of its Operating Committee, which oversees and guides the overall operation of the organization. He continues his work with TE by currently serving as a member of its Operating Committee, which oversees and guides the overall operation of the organization. Prior to joining TE in 2013, Mr. McDonald worked for Honeywell Aerospace serving as Vice President of Strategic Sourcing. Prior to that, he spent 24 years with General Motors in diverse roles with increasing responsibilities within global operations. Mr. McDonald is also a founding member and Co-Executive sponsor of the TE African Heritage Employee Resource Group and a board member of the TE Foundation. Mr. McDonald graduated from Oakland University in Rochester, Michigan, where he received a Bachelor of Science degree in Business Administration. He also completed the Executive Development Program at the Kellogg School of Business at Northwestern University. We believe Mr. McDonald's experience in global business operations qualify him to serve on our board of directors.
Oversight of Social Impact Matters
OrthoPediatrics was founded on the cause of impacting the lives of children with orthopedic conditions. Since inception we have impacted the lives of over 1,140,000 children when including those served by our acquired companies. We believe we should continue to expand our social impact, create an inclusive culture, and ensure good corporate governance practices.
We encourage you to review our Social Impact page under the "About" section of our corporate website for more detailed information regarding our social impact efforts and current initiatives. On our website, among other information, are the following highlights:
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The Company and its associates regularly participate in philanthropic causes important to our local communities. We also partner with charitable organizations that provide pediatric orthopedic care around the world. In 2020 we were named as "Corporate Partner of the Year" by the World Pediatric Project - with whom we continue to work to provide access to medical care for children in developing countries.
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We are committed to fostering an environment that is respectful, compassionate, and inclusive of everyone in our community, which is communicated in our diversity and inclusion policy. For nine years, we have been recognized by the Indiana Chamber of Commerce - Best Places to Work in Indiana.
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The Company and its Board of Directors understand the value of diversity. In 2022 and again in 2023, the Company added diverse Directors to our Board.
We believe effectively managing our priorities, as well as increasing our transparency related to social impact programs, will help create long-term value for our stakeholders. We expect to continue to increase our disclosures and communicate our social impact efforts in future SEC filings.
Nothing on our website shall be deemed part of or incorporated by reference into this Definitive Proxy Statement on Schedule 14A.
Board Leadership Structure
Our Board is currently led by its Chairman of the Board, Mr. Throdahl. Our Board recognizes that it is important to determine an optimal board leadership structure to ensure the independent oversight of management as the Company continues to grow. We separate the roles of Chief Executive Officer and Chairman of the Board in recognition of the differences between the two roles. The Chief Executive Officer is responsible for setting the strategic direction for the Company and the day-to-day leadership and performance of the Company, while the Chairman of the Board provides guidance to the Chief Executive Officer and presides over meetings of the full Board. We believe this separation of responsibilities provides a balanced approach to managing the Board and overseeing the Company. Additionally, the Board appointed Mr. Schlotterback, the Board's former Chairman, to serve as Lead Independent Director. In light of the Chairman of the Board's extensive history with and knowledge of the Company, and because of the role of the Lead Independent Director in the Board's leadership and in reinforcing its independence, the Board believes that it is advantageous for the Company to have Mr. Throdahl serve as Chairman of the Board. During the 2024 year, Mr. Throdahl's title changed from Executive Chairman to Chairman of the Board.
The Lead Independent Director is empowered to, among other duties and responsibilities, assist the Board of Directors in assuring effective corporate governance and to serve as chairperson of meetings of the independent directors that are held without the presence of any directors who may at that time be deemed not to be independent. As a result, while the Company's Corporate Governance Guidelines do not require a Lead Independent Director, the Board believes that, at this time, the Lead Independent Director can help ensure the effective independent functioning of the Board in its oversight responsibilities.
While our Board has concluded that the current leadership structure is appropriate at this time, it will continue to periodically review its leadership structure and will make such changes in the future as it deems appropriate.
Director Independence
Our Board of Directors currently consists of 11 members. Our Board has determined that Dr. Dyer, Mr. Hughes, Ms. Infante, Mr. McDonald, Mr. Riccitelli, Mr. Schlotterback, Mr. Ruf, and Mr. Pelizzon are independent directors in accordance with the listing requirements of the Nasdaq Global Market ("Nasdaq"). The Nasdaq independence definition includes a series of objective tests, including that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his or her family members has engaged in various types of business dealings with us. In addition, as required by Nasdaq rules, our Board has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of our Board, would interfere with his or her exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our Board reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. There are no family relationships among any of our directors or executive officers.
Role of Board in Risk Oversight Process
Our Board has responsibility for the oversight of the Company’s risk management processes and, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential
9
impact on our business and the steps we take to manage them. The risk oversight process includes receiving regular reports from Board committees and members of senior management to enable our Board to understand the Company’s risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic and reputational risk.
The Audit Committee reviews information regarding liquidity and operations and oversees our management of financial risks. Periodically, the Audit Committee reviews our policies with respect to risk assessment, risk management, loss prevention and regulatory compliance. Oversight by the Audit Committee includes direct communication with our external auditors and discussions with management regarding significant risk exposures and the actions management has taken to limit, monitor or control such exposures. The Compensation Committee is responsible for assessing whether any of our compensation policies or programs has the potential to encourage excessive risk-taking. The Corporate Governance Committee manages risks associated with the independence of the Board, corporate disclosure practices, and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about such risks. Matters of significant strategic risk are considered by our Board as a whole.
The Company’s management also keeps our Board informed of cybersecurity developments by providing periodic updates on preventive measures being taken to avoid attacks, as discussed in more detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. As the Company reviews and updates it cybersecurity plans and policies over time, it will continue to take the steps necessary to ensure effective Board oversight of this area and will provide disclosures relating to such oversight that are consistent with the SEC’s regulations and guidance.
Committees and Attendance
Our Board held seven meetings during 2024. During that time, no member of the Board attended fewer than 75% of the aggregate of (i) the total number of meetings of our Board (held during the period for which he or she was a director), and (ii) the total number of meetings held by all committees of the Board on which he or she served (held during the period that such director served).
Our Board has established three standing committees – Audit, Compensation, and Corporate Governance – each of which operates under a charter that has been approved by our Board.
Audit Committee
Out Audit Committee comprises Mr. Hughes, Mr. Riccitelli, and Mr. Schlotterback. The committee met five times during 2024. Mr. Hughes serves as the chairperson of the committee. All members of our Audit Committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and Nasdaq. Our Board has determined that Mr. Hughes is an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable rules and regulations of Nasdaq. Our Board has determined that each of Mr. Hughes, Mr. Riccitelli and Mr. Schlotterback is independent under the applicable rules and regulations of Nasdaq and meets the independence requirements contemplated by Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq.
The Audit Committee’s main function is to oversee our accounting and financial reporting processes and the audits of our financial statements. This committee’s responsibilities include, among other things: appointing our independent registered public accounting firm; evaluating the qualifications, independence, and performance of our independent registered public accounting firm; approving the audit and non-audit services to be performed by our independent registered public accounting firm; reviewing the design, implementation, adequacy, and effectiveness of our internal accounting controls and our critical accounting policies; discussing with management and the independent registered public accounting firm the results of our annual audit and the review of our quarterly unaudited financial statements; reviewing, overseeing, and monitoring the integrity of our financial statements and
10
our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters; reviewing on a periodic basis, or as appropriate, any investment policy and recommending to our Board any changes to such investment policy; reviewing with management and our auditors any earnings announcements and other public announcements regarding our results of operations; preparing the report that the SEC requires in our annual proxy statement; reviewing and approving any related person transactions and reviewing and monitoring compliance with our code of business conduct and ethics; and reviewing and evaluating, at least annually, the performance of the Audit Committee and its members, including compliance of the Audit Committee with its charter. The Audit Committee charter is available under the Investors/Corporate Governance page of our website, www.orthopediatrics.com.
Please also see the report of the Audit Committee set forth elsewhere in this proxy statement.
Compensation Committee
Our Compensation Committee comprises Mr. Schlotterback, Dr. Dyer, and Mr. McDonald. The committee met three times during 2024. Mr. Schlotterback serves as the chairperson of the committee. Our Board has determined that each of Mr. Schlotterback, Dr. Dyer, and Mr. McDonald is independent under the applicable rules and regulations of Nasdaq and is a “non-employee director” as defined in Rule 16b-3 under the Exchange Act. The Compensation Committee operates under a written charter, which the Compensation Committee reviews and evaluates at least annually. The Compensation Committee charter is available under the Investors/Corporate Governance page of our website, www.orthopediatrics.com.
The Compensation Committee reviews and approves policies relating to compensation and benefits of our officers and employees. The Compensation Committee reviews and approves corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, evaluates the performance of these officers in light of those goals and objectives and approves the compensation of these officers based on such evaluations. The Compensation Committee also reviews and approves the issuance of restricted stock and other awards under our equity incentive plan. The Compensation Committee reviews and evaluates, at least annually, the performance of the Compensation Committee and its members, including compliance by the Compensation Committee with its charter.
Corporate Governance Committee
Our Corporate Governance Committee comprises Ms. Infante, Mr. McDonald, and Mr. Riccitelli. The committee met two times during 2024. Ms. Infante serves as the chairperson of the committee. Our Board has determined that each of Ms. Infante, Mr. McDonald, and Mr. Riccitelli is independent under the applicable rules and regulations of Nasdaq. The Corporate Governance Committee operates under a written charter, which the Corporate Governance Committee reviews and evaluates at least annually. The Corporate Governance Committee charter is available under the Investors/Corporate Governance page of our website, www.orthopediatrics.com.
The Corporate Governance Committee is responsible for making recommendations to our Board regarding candidates for directorships and the size and composition of the Board. In addition, the Corporate Governance Committee is responsible for overseeing our corporate governance policies and reporting and making recommendations to our Board concerning governance matters.
Compensation Committee Interlocks and Insider Participation
From February 2009 to February 2010, Mr. Schlotterback served as an officer of our company. No other member of our Compensation Committee has ever been one of our officers or employees. None of our executive officers currently serves, or has served, as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee.
11
Clawback Policy
In November 2023, the Compensation Committee adopted a Clawback Policy (the "Clawback Policy"). The Clawback Policy is designed to comply with Section 10D and Rule 10D-1 of the Exchange Act and applicable Nasdaq rules. A copy of the policy was attached as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Insider Trading Policy and Hedging
We maintain an insider trading policy for securities transactions applicable to all officers, directors, and employees of the Company which prohibits engaging in short sales, transactions in puts, calls, or other derivative instruments, hedging transactions, and other short-term or speculative transactions with respect to our stock at any time. In addition, our insider trading policy prohibits our officers, directors, and employees from trading during quarterly and special blackout periods. A copy of the policy was attached as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
Code of Ethics and Business Conduct Policy
We have adopted a written code of ethics and business conduct policy that applies to our directors, officers and employees, including our principal executive officer and principal financial and accounting officer. Our Code of Ethics and Business Conduct Policy is available under the Investors/Corporate Governance page of our website, www.orthopediatrics.com. In addition, we will post on our website all other disclosures that are required by law or the listing standards of Nasdaq concerning any amendments to, or waivers from, any provision of the code and policy.
Corporate Governance Guidelines
Our Board has adopted corporate governance guidelines in order to assist in the exercise of the Board’s duties and responsibilities and to serve the best interests of the Company and our stockholders. These guidelines, which provide a framework for the conduct of our Board’s business, provide that:
•
the business and affairs of the Company will be managed by or under the direction of the Board, including through one or more of its committees;
•
each director is expected to spend the time and effort necessary to properly discharge his or her responsibilities, including becoming and remaining well-informed about the Company’s business and operations and general business and economic trends affecting the Company;
•
a majority of the members of our Board shall be independent directors;
•
the independent directors meet at least twice a year in executive session;
•
directors have full and free access to the Company’s management;
•
the Board and each committee of the Board have the power to hire and consult with independent advisors; and
•
new directors participate in an orientation program and all directors are expected to participate in continuing director education on an ongoing basis.
Our corporate governance guidelines are available under the Investors/Corporate Governance page of our website, www.orthopediatrics.com.
Director Nomination Process
In considering whether to recommend any particular candidate for inclusion in our Board’s slate of recommended director nominees, our Corporate Governance Committee expects every nominee to have a high level
12
of personal and professional integrity, strong ethics and values and the ability to make mature business judgments. We also value experience on other public company boards of directors and board committees.
The biography for each of the director nominees included herein indicate each nominee’s experience, qualifications, attributes and skills that led our Corporate Governance Committee and our Board to conclude each such director should continue to serve as a director of our company. Our Corporate Governance Committee and our Board believe that each of the nominees has the individual attributes and characteristics required of each of our directors, and the nominees as a group possess the skill sets and specific experience desired of our Board as a whole.
Our Corporate Governance Committee does not have a policy (formal or informal) with respect to diversity, but believes that our Board, taken as a whole, should embody a diverse set of skills, experiences and backgrounds. In this regard, the committee also takes into consideration the value of diversity (with respect to gender, ethnicity and other factors) of our Board members. The committee does not make any particular weighting of diversity or any other characteristic in evaluating nominees and directors.
Stockholders have the right under our bylaws to directly nominate director candidates for election at an annual meeting of stockholders, without any action or recommendation on the part of the Corporate Governance Committee or our Board of Directors, by submitting to the Company (i) the name of each director nominee, together with appropriate biographical information and background materials, (ii) information with respect to the stockholder or group of stockholders making the nomination, including the number of shares of common stock owned by such stockholder or group of stockholders, and (iii) a representation as to whether such stockholder will be or is part of a group that will deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the Company’s outstanding capital stock required to elect the nominee, and by otherwise complying with the requirements of our bylaws. Such information should be submitted to: OrthoPediatrics Corp., 2850 Frontier Drive, Warsaw, Indiana 46582. Pursuant to an agreement with the Company, Squadron has the right to designate up to four nominees for election to the Company's Board of Directors, depending on the percentage of capital stock beneficially owned by Squadron. Currently, three members of the Company's Board are Squadron designees.
Communication with Directors and Director Attendance at Annual Meetings
Any stockholder desiring to communicate with our Board, or one or more of our directors, may send a letter addressed to the Board of Directors, OrthoPediatrics Corp., 2850 Frontier Drive, Warsaw, Indiana 46582, Attention: Secretary. The Secretary will review and forward to the appropriate members of the Board copies of all such correspondence that, in the opinion of the Secretary, deals with the functions of the Board or its committees or that the Secretary otherwise determines requires their attention. Concerns relating to accounting, internal controls or auditing matters will be brought promptly to the attention of the chairman of the Audit Committee.
Our Board has adopted a resolution that declares that it is the policy of the Board that all members of the Board, regardless of whether they are standing for election at any such meeting, are strongly encouraged to attend each annual meeting of the stockholders of the Company that occurs during their tenure on our Board. With the exception of David Pelizzon, George Dyer, and Terry Schlotterback, all of the directors who were members of the Board at the time of the 2024 annual meeting of stockholders attended the 2024 annual meeting.
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and accompanying footnotes set forth information with respect to the beneficial ownership of our common stock by:
• each person known by us to beneficially own more than 5% of our common stock;
• each of our named executive officers;
• each of our directors (including the director nominees); and
• all of our directors and executive officers as a group,
based upon 24,831,427 shares of common stock outstanding as of March 28, 2025.
Beneficial ownership is determined under the SEC rules and regulations and generally includes voting or investment power over securities. Except in cases where community property laws apply or as indicated in the footnotes to this table, we believe each stockholder identified in the table possesses sole voting and investment power over all shares of equity securities shown as beneficially owned by the stockholder.
Shares of common stock subject to options that are currently exercisable or exercisable within 60 days of the date of March 28, 2025 are considered outstanding and beneficially owned by the person holding the options for the purposes of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise indicated, the address of each beneficial owner listed below is c/o OrthoPediatrics Corp., 2850 Frontier Drive, Warsaw, Indiana 46582.
|
Name of Beneficial Owner
|
Number of
Shares Beneficially Owned |
Percentage
Beneficially
Owned
|
||||||||||||||||||
|
5% or Greater Stockholders:
|
||||||||||||||||||||
|
Squadron Capital LLC
(1)
|
6,901,764 | 27.8% | ||||||||||||||||||
|
Brown Capital Management, LLC
(2)
|
1,882,405 | 7.6% | ||||||||||||||||||
|
Brown Advisory Incorporated
(3)
|
1,621,102 | 6.5% | ||||||||||||||||||
|
BlackRock, Inc.
(4)
|
1,285,948 | 5.2% | ||||||||||||||||||
| Named Executive Officers and Directors: | ||||||||||||||||||||
|
David R. Pelizzon
(5)
|
6,926,311 | 27.9% | ||||||||||||||||||
|
David R. Bailey
(6)
|
319,155 | 1.3% | ||||||||||||||||||
|
Fred L. Hite
(7)
|
207,989 | * | ||||||||||||||||||
|
Mark C. Throdahl
(8)
|
181,977 | * | ||||||||||||||||||
|
Gregory A. Odle
(9)
|
148,788 | * | ||||||||||||||||||
|
Joseph W. Hauser
(10)
|
137,663 | * | ||||||||||||||||||
|
Daniel J. Gerritzen
(11)
|
110,767 | * | ||||||||||||||||||
|
Harald Ruf
(12)
|
21,647 | * | ||||||||||||||||||
|
Terry D. Schlotterback
(13)
|
20,764 | * | ||||||||||||||||||
|
Bryan W. Hughes
(14)
|
12,826 | * | ||||||||||||||||||
|
Samuel D. Riccitelli
(15)
|
12,022 | * | ||||||||||||||||||
|
Marie C. Infante
(16)
|
11,365 | * | ||||||||||||||||||
|
Jimmy D. McDonald
(17)
|
4,731 | * | ||||||||||||||||||
|
George S. M. Dyer, MD
(18)
|
4,731 | * | ||||||||||||||||||
|
All executive officers and directors as a group (14 persons)
(19)
|
8,120,736 | 32.7% | ||||||||||||||||||
| Compensation Element | Compensation Objectives Designed to be Achieved and Key Features | |||||||
| Base Salary | Attract and retain key talent by providing base cash compensation at competitive levels | |||||||
| Annual Cash Bonuses | Provides short-term incentives based on annual performance and achievement of specified financial and strategic goals | |||||||
| Long-Term Incentive Compensation in the Form of Equity Awards | Provides long-term incentives to drive financial and operational performance and stockholder value creation | |||||||
| Retirement Benefits | Attract and retain key talent by providing vehicles to plan for the future | |||||||
| Severance and Other Benefits Potentially Payable upon Termination of Employment or Change in Control | Create clarity around termination or change of control events and provide for retention of executives | |||||||
| Health and Welfare Benefits | Attract and retain key talent by providing a competitive benefits package | |||||||
Base Salary
The base salaries of our NEOs are an important part of their total compensation package, and are intended to reflect their respective positions, duties and responsibilities. Base salary is a visible and stable fixed element of our executive compensation program and is an important element of compensation intended to attract and retain highly talented individuals. Generally, we use base salary to provide each NEO with a specified level of cash compensation during the year with the expectation that he or she will perform such individual’s responsibilities to the best of his ability and in our best interests.
Generally, we establish the initial base salaries of our NEOs through arm’s-length negotiation at the time of hire, taking into account the individual’s position, qualifications, experience and prior salary level, and the base salaries of our other executive officers. Thereafter, the Compensation Committee reviews the base salaries of our named executive officers each year as part of its annual review of our executive compensation program, with input from our CEO (except with respect to his own base salary) and makes decisions as it determines to be reasonable and necessary to reflect the scope of an NEO’s performance, individual contributions and responsibilities, position in the case of a promotion and market conditions.
In November 2023, the Compensation Committee reviewed the base salaries of our NEOs taking into consideration the 2022 competitive market analysis prepared by NFP and the recommendations of our CEO (except with respect to his own base salary), as well as the other factors described in “
Compensation-Setting Process – Setting Target Total Direct Compensation
” above. Following this review, the Compensation Committee adjusted the base salaries of each of our NEOs to bring their base salaries to levels that were comparable to a minimum level of compensation at the 50
th
percentile per NFP’s data.
25
The 2024 base salaries of our incumbent NEOs, which became effective January 1, 2024, were as follows:
| Named Executive Officer | 2023 Annual Base Salary ($) | 2024 Annual Base Salary ($) | Percentage Adjustment (%) | |||||||||||||||||
| David R. Bailey | 500,000 | 550,000 | 10.0 | % | ||||||||||||||||
| Fred L. Hite | 450,000 | 501,000 | 11.3 | % | ||||||||||||||||
| Gregory A. Odle | 353,100 | 368,000 | 4.2 | % | ||||||||||||||||
| Daniel J. Gerritzen | 353,100 | 368,000 | 4.2 | % | ||||||||||||||||
| Joseph W. Hauser | 353,100 | 400,000 | 13.2 | % | ||||||||||||||||
Annual Cash Bonuses
We consider short-term incentive compensation in the form of annual cash bonuses to be an important component of our total compensation program and to motivate our executive officers, including our named executive officers to achieve our annual business goals and achieve our retention objectives. In November 2023, the Compensation Committee approved the 2024 Corporate Bonus Plan to provide incentives for our NEOs to meet or exceed certain 2024 financial and corporate objectives set by the Company.
Target Annual Cash Bonus Opportunities
In November 2023, as part of its annual review of our executive compensation program, the Compensation Committee reviewed the target annual cash bonus opportunities of our NEOs and the recommendations of our CEO (except with respect to his own target annual cash bonus opportunity), as well as the other factors described in “
Compensation-Setting Process – Setting Target Total Direct Compensation
” above. Following this review, the Compensation Committee set the target annual cash bonus opportunities, expressed as a percentage of his annual base salary, for our CEO and our other incumbent NEOs.
The target annual cash bonus opportunities for our incumbent named executive officers, were as follows:
| Named Executive Officer | 2024 Annual Base Salary ($) | Percentage of 2024 Annual Base Salary at Target Plan Goal (%) | Target Annual Cash Bonus Opportunity ($) | |||||||||||||||||
| David R. Bailey | 550,000 | 75.0 | % | 412,500 | ||||||||||||||||
| Fred L. Hite | 501,000 | 75.0 | % | 375,750 | ||||||||||||||||
| Gregory A. Odle | 368,000 | 50.0 | % | 184,000 | ||||||||||||||||
| Daniel J. Gerritzen | 368,000 | 50.0 | % | 184,000 | ||||||||||||||||
| Joseph W. Hauser | 400,000 | 50.0 | % | 200,000 | ||||||||||||||||
Corporate Performance Measures
In November 2023, the Compensation Committee established performance measures to determine payouts for purposes of the 2024 Corporate Bonus Plan. The payout, if any, was to be based upon the achievement of threshold and target Sales Performance (revenue) (payout threshold was 80% of Sales Performance quarterly budget and 40% of the bonus) and Adjusted EBITDA goals (payout threshold was 80% of Adjusted EBITDA quarterly budget and 25% of the bonus), along with 2024 Individual Performance (10% of the bonus) and Corporate Objectives (25% of the bonus). Overachievement of Sales Performance and Adjusted EBITDA was permitted (multiplier at 100+% for Sales Performance and for Adjusted EBITDA any overachievement will be annualized and put in a pool for discretionary bonuses at year-end 2024). If 80% threshold quarterly Sales Performance was not achieved, there was to be no payout for Sales Performance for that quarter. Additionally, if 80% threshold Adjusted EBITDA quarterly budget was not achieved there was to be no payout for Adjusted EBITDA for that quarter.
26
2024 Bonus Plan Payments
In February 2025, based on the assessment of our performance against these goals, the Compensation Committee determined to award cash bonus payments to our NEOs, pursuant to the 2024 Corporate Bonus Plan and approved bonus payments equal to 98% target for our NEOs. 98% achievement was based on the Corporate Performance Measures detailed above. No adjustments were made to performance targets established in November 2023.
The following table sets forth the target annual cash bonus opportunities and the actual bonus payments made to our NEOs for 2024:
| Named Executive Officer | Target Annual Cash Bonus Opportunity ($) | Annual Payout of 2024 Target Bonus Opportunity (%) | 2024 Actual Bonus Award ($) | |||||||||||||||||
| David R. Bailey | 412,500 | 98.0 | % | 402,984 | ||||||||||||||||
| Fred L. Hite | 375,750 | 98.0 | % | 367,082 | ||||||||||||||||
| Gregory A. Odle | 184,000 | 98.0 | % | 179,755 | ||||||||||||||||
| Daniel J. Gerritzen | 184,000 | 98.0 | % | 179,755 | ||||||||||||||||
| Joseph W. Hauser | 200,000 | 98.0 | % | 195,386 | ||||||||||||||||
Long-Term Incentive Compensation
We view long-term incentive compensation in the form of equity awards as a critical component of our balanced total compensation program. Equity-based compensation creates an ownership culture among our employees that provides an incentive to contribute to the continued growth and development of our business and aligns the interests of our NEOs with those of our stockholders. We do not currently have any formal policy for determining the number of equity-based awards to grant to NEOs.
We have historically granted restricted stock awards to our NEOs. Moreover, historically, 100% of the shares of each annual restricted stock award granted to our NEOs vests three years from the grant date subject to the NEO’s continued service with the Company through the vesting date. However, in 2024, because the Company’s 2024 Incentive Plan was approved by the stockholders at the 2024 Annual Meeting in late May 2024, 100% of the shares of each restricted stock award granted to our NEOs on June 11, 2024 vests on March 15, 2027 (approximately two years and nine months from the subject grant dates) subject to the NEO’s continued service with the Company through the vesting date. Long-term equity incentives promote retention, as our executive officers will only receive value if they remain employed by us over the required term. In addition, these awards foster an ownership culture among our NEOs by making them stockholders with a personal stake in the value they intend to create.
The target value of the equity awards granted to our NEOs are determined and approved by the Compensation Committee after considering the intensely competitive market in which we operate, the value of our highly experienced executive team and the following factor:
•
the outstanding equity holdings of each named executive officer (including the current economic value of his or her unvested equity holdings and the ability of these unvested holdings to satisfy our retention objectives).
27
The restricted stock awards granted in 2024 to our incumbent named executive officers were as follows:
| Named Executive Officer | Restricted Stock Awards (number of shares) | |||||||
| David R. Bailey | 90,395 | |||||||
| Fred L. Hite | 57,018 | |||||||
| Gregory A. Odle | 34,901 | |||||||
| Daniel J. Gerritzen | 34,901 | |||||||
| Joseph W. Hauser | 37,936 | |||||||
Perquisites and Other Personal Benefits
We did not provide any perquisites or other personal benefits to our NEOs in 2024 (other than the Health and Welfare Benefit Plans and executive-level insurance benefits explained below). We did not make gross-up payments to cover our executive officers’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by us in 2024. The Compensation Committee may from time to time approve perquisites or other personal benefits in the future when the Compensation Committee determines that such perquisites are necessary or advisable to fairly compensate or incentivize our employees.
Health and Welfare Benefit Plans
All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including:
•
medical, dental, and vision benefits;
•
medical and health savings accounts;
•
short-term and long-term disability insurance; and
•
life insurance.
Our NEOs are eligible for certain enhanced benefits under our executive-level life insurance and short-term and long-term disability insurance. We believe the benefits described above are necessary and appropriate to provide a competitive compensation package to our NEOs.
Retirement Benefits
We do not offer pension arrangements or retirement plans or arrangements to our NEOs that are different from or in addition to those offered to our employees. We currently maintain a Section 401(k) retirement savings plan for our employees, including our executive officers, who satisfy certain eligibility requirements. The Internal Revenue Code allows eligible employees to defer a portion of their compensation, up to 100% of their eligible compensation on a pre-tax basis through contributions to the Section 401(k) plan, subject to applicable annual Code limits. All participants’ interests in their deferrals are 100% vested when contributed. We provide a Safe Harbor nonelective employer contribution to all eligible participants in an amount equal to 4% of eligible compensation. We believe that providing a vehicle for tax-deferred retirement savings though our Section 401(k) plan, and making fully vested employer contributions, adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our executive officers, in accordance with our compensation policies.
Additionally, in November 2023, the Compensation Committee adopted a retirement policy ("Policy") for OrthoPediatrics Corp. employees and applicable U.S.-based subsidiaries. The Policy applies to all exempt and non-exempt, full-time employees. To be considered eligible to receive the retiree benefits described herein, an Employee must be in good standing with the Company up to the time of their Retirement, have provided Human Resources at
28
least twelve (12) months advanced written notice of their planned Retirement date, and meet the following Retirement Age threshold: AGE + YEARS OF FULL-TIME SERVICE = 65
The Retirement benefit is based on length of service with OrthoPediatrics (or as adjusted through acquisition) and is calculated at two weeks of base pay (salary or standard hourly wages and does not include bonus and or commissions), for every year of service – as calculated based on the hire date as a full-time, permanent Employee.
There is no maximum number of weeks to earn the benefit. The Retirement benefit will be processed as a one-time Restricted share grant (equivalent to Employee’s base pay amount) which will vest upon your Retirement date subject to the Employee signing a Retirement Agreement & General Release in the form provided by OrthoPediatrics. The number of Restricted shares granted will be calculated as the equivalent of the amount of Employee’s Retirement benefit divided by the closing price of KIDS stock on the date that is 12 months prior to Employee’s planned Retirement date. The retiree will be responsible for funding any federal, state and local tax withholding that may apply. Employee may not be entitled to both a Retirement benefit and any other severance payment under any applicable policy.
Restricted Stock
Upon Retirement, eligible Employees will be allowed to retain any previously granted and unvested Restricted shares which the Employee holds at Retirement, which will continue to vest on the schedule set forth by the Equity Incentive Plan (“EIP”) as though Employee remained an employee of OrthoPediatrics, unless otherwise specified by the EIP Administrator.
Employment and Severance Arrangements
On October 15, 2024, the Company entered into a substantially similar employment agreement (each, an Agreement and collectively, the “Agreements”) with each of our NEOs. The Agreements superseded and replaced the existing employment agreements with the NEOs, dated July 31, 2014 (or, in the case of Mr. Hite, February 1, 2015, and, in the case of Mr. Hauser, March 1, 2022). The Compensation Committee approved the Agreements. The Agreements provide for an initial three-year term, and will automatically renew for successive one-year terms thereafter unless either party provides notice of their intent not to renew 30 days prior to the end of the term. Under the Agreements, the NEOs receive annual base salaries as follows: Mr. Bailey receives $550,000 per year; Mr. Hite receives $501,000 per year; Mr. Odle receives $368,000 per year; Mr. Gerritzen receives $368,000 per year; and Mr. Hauser receives $400,000 per year. Additionally, the Agreements provide for (i) participation in the Company’s annual bonus plan; (ii) employee benefits and fringe benefits generally made available to all of the Company’s employees; and (iii) reimbursement of all reasonable business expenses incurred by an NEO on the Company’s behalf. The Agreements also provide that any compensation is subject to deductions or claw backs as may be required pursuant to any law, government regulation, or stock exchange listing requirement (or any claw back policy adopted by the Company pursuant to any such law, government regulation, or stock exchange listing requirement).
The Agreements contain customary confidentiality, invention assignment, and non-competition covenants. The non-competition covenant restricts the NEOs during their respective employment term and for a period of 30 months thereafter from soliciting the Company’s customers or employees and from competing with the Company in any location where the Company or the NEO conducted business during the 12-month period immediately preceding such NEO’s termination.
Subject to continued compliance with the restrictive covenants and execution and non-revocation of a general release of claims in favor of us, the Agreements also provide for certain severance payments and benefits if the executive’s employment is terminated by us without “cause” or by the executive for “good reason” (each, as defined in the applicable agreement). In any such event, each executive is entitled to receive:
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an amount equal to (i) 30 months of the NEO’s annual base salary then in effect, plus (ii) 2.5 times the average of the NEO’s bonus payments for the three fiscal years immediately prior to the termination date, payable in 30 substantially equal monthly installments;
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a lump-sum payment in the amount equal to any unpaid bonus that was earned by the NEO in any fiscal year ending prior to his termination;
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a lump-sum payment equal to the pro-rated value of any bonus earned upon the satisfaction of pre-established performance objectives, payable in the year following the year in which the services were performed when such bonuses are normally paid to employees; and
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up to 12 months of Company-subsidized healthcare continuation coverage for the NEO and his dependents.
The Agreements also provide that each NEO is entitled to the severance payments and benefits listed above in the event of a “Change of Control” (as defined in the applicable Agreement), provided that the NEO’s employment is terminated or the NEO’s title is changed within 12 months after the change of control.
Other Compensation Policies
Stock Ownership Guidelines
All of our members of our Board of Directors are expected to have a significant long-term financial interest in the Company. To align the interests of the directors to the stockholders, we adopted Corporate Governance Guidelines in November 2021 for our directors to hold a minimum amount of shares valued at $225,000. The guidelines are to be met within a compliance period of three years from the date of becoming a director of the Company.
The Stock Ownership Guidelines are as follows:
| Individual Covered | Stock Ownership Guideline ($) | |||||||
| Directors | 225,000 | |||||||
Anti-Hedging and Anti-Pledging Policy
Our Insider Trading Compliance Policy prohibits individuals from pledging Company securities as collateral for a loan, purchasing Company securities on margin (i.e., borrowing money to purchase the securities), or placing Company securities in a margin account. Pursuant to our Insider Trading Compliance Policy hedging transactions by all executive officers, directors, employees and certain consultants of the Company, involving the Company’s securities, such as prepaid variable forward contracts, equity swaps, collars and exchange funds or other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s equity securities, are prohibited.
Compensation Recovery (“Clawback”) Policy
We adopted a clawback policy in compliance with applicable Nasdaq rules and Section 10D and Rule 10D-1 of the Exchange Act effective November 1, 2023. This clawback policy applies to current or former Section 16 officers and requires us, subject to limited exemptions provided by the Nasdaq rules, to recoup incentive-based compensation (as that term is defined in Section 10D of the Exchange Act) erroneously received on or after October 2, 2023, and within the three fiscal years preceding the date an accounting restatement is determined to be required.
A copy of the policy was attached as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2023.