2017 LivaNova Short-Term Incentive Plan

On February 22, 2017, the Compensation Committee (the "Committee") of the Board of Directors of LivaNova Plc (the "Company") approved the Company's 2017 annual short-term incentive plan (the "2017 STIP").  The Company's chief executive officer, Damien McDonald, and chief financial officer, Vivid Sehgal, as well as one of its named executive officers, Jacques Gutedel, are eligible to participate in the 2017 STIP.¹  In addition, our other executive officers, Douglas Manko and David Wise, will also participate in the 2017 STIP.

Under the 2017 STIP, each participant is eligible to receive a target bonus amount calculated as a percentage of base salary, as specified in the participants' employment agreements, copies of which are on file with the Securities and Exchange Commission, or as subsequently determined by the Committee.  The current target bonus percentage for each of the participants is as follows:

Payment of the target bonus amount is conditioned on the Company's achievement of certain financial objectives and, with the exception of our chief executive officer, each participant's achievement of an individual objective related to talent, as follows:

The funding for each financial objective is scaled for underachievement and overachievement of the objective, as follows:

¹ André-Michel Ballester is no longer employed by the Company.  Michel Darnaud is not eligible to participate in the 2017 STIP.

 

 

For example, if the Company achieves 110% of its Group Adjusted Net Sales objective and 98% of its Group Adjusted Net Income objective, then Mr. McDonald's bonus amount would be 110% of his base salary, calculated as follows.  For each 1% of the Company's overachievement of the Group Adjusted Net Sales objective, he receives an incremental 3% of achievement for this objective, resulting in an overachievement of 30% (= 10% x 3) and an achievement percentage for this objective equal to 78% (= 60% + (60% x 30%)).  For each 1% of underachievement of the Group Adjusted Net Income objective, he loses 10% of achievement for this objective, resulting in an underachievement of 20% (= 2% x 10) and an achievement percentage for this objective equal to 32% (= 40% ─ (40% x 20%)).  Thus, Mr. McDonald's total achievement percentage is 110% (= 78% + 32%), and his 2017 STIP payment would be 110% of his target bonus amount, or 110% (= 100% x 110%).

In the event that the Company fails to achieve all Group and Regional financial objectives applicable to any participant, that participant is nonetheless eligible to receive a payment for the portion of the participant's short-term incentive payment that is based on such Group and Regional financial objectives if shareholder value, as measured by the price of the Company's stock on the NASDAQ Stock Exchange, has increased by at least a threshold amount, as follows.

The table below shows the minimum and maximum achievement of the target short-term incentive payment under the 2017 STIP.