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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Check the appropriate box:
☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to § 240.14a-12
STERIS plc
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
☒		No fee required.
☐		Fee paid previously with preliminary materials.
☐		Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(l) and 0-11.

 

 

 

 

 

 

 

Proxy Statement
Notice of Annual Meeting of Shareholders
Tuesday, July 31, 2018
STERIS

STERIS plc

(A public limited company incorporated in Ireland with company number 595593)

NOTICE OF 2022 ANNUAL GENERAL MEETING OF SHAREHOLDERS

To the Holders of Ordinary Shares of STERIS plc:

The 2022 Annual General Meeting (the “Annual Meeting”) of shareholders of STERIS plc (the “Company,” “we,” “us,” or “our”) will be held on Thursday, July 28, 2022 at 2:00 p.m. Dublin Time (9:00 a.m. Eastern Daylight Saving Time) at 70 Sir John Rogerson’s Quay, Dublin 2, Ireland. The Company is monitoring COVID-19 developments and other circumstances. Should we determine that alternative Annual Meeting arrangements may be advisable or required, such as changing the date, time or location of the Annual Meeting, we will announce our decision by press release, post additional information at steris-ir.com, and make a public filing with the SEC.

You are being asked to consider and vote on the resolutions described below at the Annual Meeting.

Shareholders of the Company will be asked to consider certain proposals that may not be familiar to them because, unlike many companies with shares traded on the New York Stock Exchange, we are incorporated under the laws of Ireland. The Irish Companies Act 2014, as amended (the “Irish Companies Act”) obligates us to propose certain matters to shareholders for approval that would generally not be subject to periodic approval by shareholders of companies incorporated in the United States but are considered routine items for approval by shareholders of companies incorporated in Ireland. Each of these proposals is described more fully below.

Proposal 1—Ordinary resolutions to elect directors of the Company:

 

a)	To re-elect Richard C. Breeden as a director of the Company.

 

b)	To re-elect Daniel A. Carestio as a director of the Company.

 

c)	To re-elect Cynthia L. Feldmann as a director of the Company.

 

d)	To re-elect Christopher S. Holland as a director of the Company.

 

e)	To re-elect Dr. Jacqueline B. Kosecoff as a director of the Company.

 

f)	To re-elect Paul E. Martin as a director of the Company.

 

g)	To re-elect Dr. Nirav R. Shah as a director of the Company.

 

h)	To re-elect Dr. Mohsen M. Sohi as a director of the Company.

 

i)	To re-elect Dr. Richard M. Steeves as a director of the Company.

Proposal 2—Ordinary resolution regarding ratification of independent registered public accounting firm:

 

2.	To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending March 31, 2023.

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement

Proposal 3—Ordinary resolution to appoint Ernst & Young Chartered Accountants as our Irish statutory auditor:

 

3.	To appoint Ernst & Young Chartered Accountants as the Company’s statutory auditor under Irish law to hold office until the conclusion of the Company’s next annual general meeting.

Proposal 4—Ordinary resolution regarding our Irish statutory auditor’s remuneration:

 

4.	To authorize the board of directors of the Company (the “Board”) or the Audit Committee of the Board to determine the remuneration of Ernst & Young Chartered Accountants as the Company’s statutory auditor under Irish law.

Proposal 5—Advisory resolution (to be proposed as an ordinary resolution) on executive compensation:

 

5.

To approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers as disclosed pursuant to the disclosure rules of the U.S. Securities and Exchange Commission (the “SEC”), including the Compensation Discussion and Analysis and the tabular and narrative disclosure contained in the Company’s proxy statement dated June 14, 2022.

Proposal 6—Other business:

 

6.	To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

Proposals 3 and 4 are items required to be approved by shareholders under the Irish Companies Act and generally do not have an analogous requirement under United States law.

OUR BOARD OF DIRECTORS HAS DETERMINED THAT ALL THE RESOLUTIONS TO BE VOTED UPON AT THE MEETING ARE IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AS A WHOLE. OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” FOR ALL RESOLUTIONS.

In accordance with our articles of association (the “Articles”), all resolutions will be taken on a poll. Voting on a poll means that each share represented in person or by proxy will be counted in the vote.

All resolutions will be proposed as ordinary resolutions under Irish law. In each case, provided that a quorum is present, the relevant resolution must be passed by a simple majority of the votes cast for or against such resolution, whether in person or by proxy, in order to be approved. Abstentions and broker non-votes will not affect the voting results for a resolution. In the case of joint holders, the vote of the senior holder who tenders a vote shall be accepted to the exclusion of the votes of the other joint holders (with seniority being determined by the order that the names of the joint holders appear in the Company’s share register). Explanatory notes regarding each of the proposals (and related resolutions) are set out in the relevant sections of the accompanying Proxy Statement relating to such proposals. Only shareholders of record of ordinary shares, par value $0.001 per share, of the Company (“Ordinary Shares”) at the close of business in New York on June 1, 2022 are entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof. In accordance with the provisions of the Irish Companies Act and in accordance with our Articles, a shareholder of record is entitled to appoint another person as his or her proxy (or, in the case of a corporation which is a shareholder of record, a corporate representative) to exercise all or any of their rights to attend and to speak and vote at the Annual Meeting. A shareholder of record may appoint more than one proxy in relation to the Annual Meeting (provided that each proxy is appointed to exercise the rights attached to a different share or shares). A proxy need not be a shareholder of record. When you vote by telephone, through the Internet or by returning a completed proxy card, this proxy will be given to certain Directors and executive officers of the Company.

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement

Pursuant to the rules of the SEC, we provide access to our proxy materials through the Internet. As a result, on or before June 14, 2022, a Notice of Internet Availability of Proxy Materials will be mailed to certain shareholders as of the close of business in New York on June 1, 2022. On the date of mailing of the Notice of Internet Availability of Proxy Materials, shareholders will be able to access the proxy materials on a website referred to and at the URL address included in the Notice of Internet Availability of Proxy Materials and in the proxy statement. These proxy materials will be available free of charge. In addition, on or before July 1, 2022, we will also mail paper copies of the proxy materials to those shareholders as of the close of business on June 1, 2022 who have not consented to alternative delivery under Irish law or who have previously requested paper copies of the proxy materials.

Please note that if you are a shareholder of record voting by proxy, your vote may not be counted unless it is received no later than 5:00 p.m. Dublin Time (noon Eastern Daylight Saving Time) on Wednesday, July 27, 2022.

The results of the polls taken on the resolutions at the Annual Meeting and any other information required by the Irish Companies Act will be made available on the Company’s website as soon as reasonably practicable following the Annual Meeting and for a period of two years thereafter and filed with the SEC on a Form 8-K within four business days of the Annual Meeting.

During the Annual Meeting, management will present, for consideration at the meeting, the Company’s statutory financial statements under Irish law for the fiscal year ended March 31, 2022 (and the report of the directors and the Irish statutory auditor thereon) together with a review of the Company’s affairs. There also will be an opportunity for questions and answers immediately following the formal portion of the Annual Meeting.

By Order of the Board of Directors,

 

 

J. Adam Zangerle

Company Secretary

The Company’s registered office is at 70 Sir John Rogerson’s Quay, Dublin 2, Ireland.

June 14, 2022

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on July 28, 2022. Our Proxy Statement for the Annual Meeting (which includes the notice of the Annual Meeting), the Annual Report to Shareholders (including the Company’s Annual Report on Form 10-K) for the fiscal year ended March 31, 2022 and the Company’s Directors’ Report and Consolidated Financial Statements under Irish law for the fiscal year ended March 31, 2022 (the “Irish Statutory Accounts”) are available at www.proxyvote.com if you are a shareholder of record and are collectively referred to as the “Proxy Materials.” You can also view these materials in the “Online IR Kit” in the “Shareholder Resources” section of steris-ir.com.

Your vote is important. Whether or not you plan to attend the Annual Meeting, we encourage you to vote as promptly as possible by telephone, through the Internet or by requesting a paper proxy card to complete, sign and return by mail. Details of the deadlines for when your vote(s) must be submitted are described subsequently. If you attend the Annual Meeting in person, you may revoke your proxy and vote your shares in person.

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement

STERIS plc		70 Sir John Rogerson’s Quay Dublin 2, Ireland www.steris.com

Annual General Meeting of Shareholders of the Company

July 28, 2022—2:00 p.m. Dublin Time (9:00 a.m. Eastern Daylight Saving Time)

PROXY STATEMENT

TABLE OF CONTENTS

 

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement    i

PROXY SUMMARY

This summary highlights certain information contained elsewhere in this Proxy Statement or in the other documents being distributed or made available to shareholders in conjunction with this Proxy Statement, but does not contain all the information you should consider prior to casting your vote. Therefore, you should read this entire Proxy Statement carefully before voting.

General Information

 

Meeting Date:		July 28, 2022
Meeting Time:		2:00 p.m. Dublin Time (9:00 a.m. Eastern Daylight Saving Time)
Meeting Location:		70 Sir John Rogerson’s Quay Dublin 2, Ireland
Record Date:		Close of business in New York June 1, 2022
Stock Symbol:		STE
Exchange:		New York Stock Exchange
Shares Outstanding on Record Date:		100,080,031 Ordinary Shares
Registrar and Transfer Agent:		Computershare
Jurisdiction of Formation:		Ireland
Year of Incorporation:		2016 (Predecessors, 2014 and 1985, respectively)
Public Company Since:		2019 (Predecessors, 2015 and 1992, respectively)
Corporate Website:		www.steris.com
Date Proxy Statement First Furnished to Shareholders:		On or about June 14, 2022

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement    1

		Proxy Summary: Financial and Operating Highlights

 

 

Financial and Operating Highlights

Fiscal 2022 was a significant year for the Company with the acquisition of Cantel Medical (“Cantel Medical” or “Cantel”) and the resulting increases in the Company’s size and complexity of business.

Despite the challenges brought on by COVID-19 and the acquisition and integration of Cantel Medical in fiscal 2022, we continued to execute on our plans. Due to the strength of our balance sheet and cost management, we were able to continue to invest in new product development and expansion through acquisition.

 

•  As reported full year revenues increased 47.55% to $4,585.1 million, compared with $3,107.5 million in fiscal 2021, primarily due to the acquisition of Cantel Medical.

•  As reported full year net income declined 38.6% to $243.9 million, or $2.48 per diluted share, compared with $397.4 million, or $4.63 per diluted share, in the prior year.

•  Full year adjusted net income (see Appendix A) increased 46.9% to $778.9 million, or $7.92 per diluted share, compared with $530.2 million, or $6.17 per diluted share, in fiscal 2021.(1)

•  Net cash provided by operations for fiscal 2022 decreased 0.7% to $684.8 million, compared with $689.6 million in fiscal 2021.

•  Free cash flow (see Appendix A) for fiscal 2022 decreased 11.5% to $399.0 million, compared with $450.9 million in the prior year.(1)

•  We increased our dividend for the 16th consecutive year in the second quarter of fiscal 2022.

•  The closing price of Ordinary Shares reported on the New York Stock Exchange (NYSE) increased to $241.77 per share on March 31, 2022 from $190.48 per share on March 31, 2021.

•  The 52-week high closing price of Ordinary Shares reported on the NYSE during fiscal 2022 increased to $248.30 per share, compared to a 52-week high during fiscal 2021 of $203.91 per share.

 

 

2    Notice of Annual Meeting of Shareholders and 2022 Proxy Statement

(1)

Adjusted Net Income and Free Cash Flow, which are referenced in this Proxy Summary, are financial measures not prepared in accordance with Accounting Principles Generally Accepted in the United States (“GAAP”). For a discussion of these non-GAAP financial measures refer to Appendix A for definitions and the reconciliation to the most directly comparable GAAP measures.

		Proxy Summary: Director Nominee Highlights

 

 

Director Nominee Highlights

Each of the nine director nominees is elected annually by a majority of votes cast. Select information regarding each director is specified below. For more information about our nominees, see pages 11 through 14 of this proxy statement.

 

Board Committee Memberships at 3/31/22

Name

Age

Director      Since

Independent

Audit

Compensation      and       Organization      Development

Nominating      and      Governance

Compliance      and       Technology

Other      Public      Company       Boards

Diversity

Richard C. Breeden Chairman & CEO Breeden Capital Management

72

2008

✓

✓

—

Daniel A. Carestio President and CEO STERIS

49

2021

✓

—

Cynthia L. Feldmann Former President & Founder Jetty Lane Associates

69

2005

✓

✓

3

✓

Christopher S. Holland Former Senior VP & CFO C.R. Bard

55

2020

✓

✓

✓

1

Dr. Jacqueline B. Kosecoff Managing Partner, Moriah Partners, LLC

72

2003

✓

✓

4

✓

Paul E. Martin Former Senior V.P. & CIO Baxter International

64

2021

✓

✓

✓

3

✓

Dr. Nirav Shah Member of Stanford University Faculty

50

2018

✓

✓

✓

—

✓

Dr. Mohsen Sohi CEO of Freudenberg and Co.

63

2005

✓

—

Dr. Richard Steeves Former CEO and Director of Synergy Health

60

2015

✓

✓

—

 = Chairperson

 

Tenure Balance		Independence		Diversity

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement    3

		Proxy Summary: Governance Highlights

 

 

Governance Highlights

 

•  Strong Board independence (all but one of our director nominees are independent);

•  All members of the Audit, Compensation and Organization Development and Nominating and Governance Committees are independent;

•  Annual election of directors;

•  Board conducts annual self-evaluation;

•  Independent non-employee Chairman of the Board; if the Company does not have an independent Chairman, a lead independent director will preside over executive sessions of independent directors (which will occur at least every other regularly scheduled Board meeting);

•  Robust stock ownership guidelines for non-employee directors and officers;

•  Clawback policies applicable in specified situations to incentive compensation and equity awards;

•  No hedging or pledging or short sales of our shares is permitted by our directors, officers or employees;

•  Annual compensation risk assessment;

•  Incentive-based compensation programs linked to performance; and

•  No shareholder rights plan (Poison Pill).

Chief Executive Officer Compensation Highlights

Our Fiscal 2022 Compensation Programs Reward the Performance of Daniel Carestio, our President and Chief Executive Officer (“CEO”). Our 2022 compensation programs were intended to reward our CEO for generating value for our shareholders, as demonstrated by the following:

 

•  86.8% of total compensation delivered to our CEO was variable;

•  100% of annual incentive compensation delivered to our CEO was tied to annual financial performance measures based on EBIT and Free Cash Flow paying out an aggregate amount of $854,729 at 109.2% of target for fiscal 2022 with no adjustments based upon personal achievement;

•  67% of variable Long Term Incentive Plan (LTIP) opportunity was delivered to our CEO in the form of stock options, subject to an exercise price equal to 110% of the closing price per share of our Ordinary Shares on the grant date and pro rata four-year vesting conditions; and

•  33% of variable LTIP opportunity was delivered to our CEO in the form of restricted stock, subject to pro rata four-year vesting conditions.

 

4    Notice of Annual Meeting of Shareholders and 2022 Proxy Statement

		Proxy Summary: Voting Proposals and Board Recommendations

 

 

Summary of Voting Proposals and Board Recommendations

 

Proposal   Number		Proposal		Board Voting Recommendation
No. 1		By separate resolutions, to elect as directors the 9 nominees named in the Proxy Statement.			FOR each
All of the directors nominated by the Board to stand for election as directors of the Company are incumbent directors. Each nominee, if elected, will serve as a director for a term expiring at the next annual general meeting of shareholders and until his or her successor is duly elected and qualified.
No. 2		To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending March 31, 2023.			FOR
Our Audit Committee has appointed Ernst & Young LLP as the independent registered public accounting firm to audit our books and records for the year ending March 31, 2023. Ernst & Young LLP has acted as auditor for our predecessor since our predecessor was re-registered as a public limited company under the laws of England and Wales in November 2015 and previously served as auditor of STERIS Corporation for many years. We are offering shareholders the opportunity to ratify the appointment of our independent registered public accounting firm as a matter of good corporate governance practice.
No. 3		To appoint Ernst & Young Chartered Accountants as the Company’s Irish statutory auditor to hold office until the conclusion of the Company’s next annual general meeting.			FOR
The Irish Companies Act 2014, as amended, (the “Irish Companies Act”) requires that statutory auditor(s) be appointed at each annual general meeting of shareholders, to hold office from the conclusion of the annual general meeting until the conclusion of the next annual general meeting. Our Audit Committee has recommended that Ernst & Young Chartered Accountants be appointed as our Irish statutory auditor to hold office from the conclusion of the Annual Meeting of the shareholders of the Company until the conclusion of the next annual general meeting of the shareholders of the Company. Ernst & Young Chartered Accountants is based in Dublin and is affiliated with Ernst & Young LLP, who served as our predecessor’s U.K. statutory auditor from 2015 to 2019. If this proposal is not approved by the shareholders, the Board may appoint the Irish statutory auditor.
No. 4		To authorize the Board of Directors of the Company or the Audit Committee of the Board to determine the remuneration of Ernst & Young Chartered Accountants as the Company’s Irish statutory auditor.			FOR
Under the Irish Companies Act, the remuneration of the Irish statutory auditor must be fixed by the shareholders at a general meeting or in such other manner as the shareholders may determine thereat. This resolution authorizes our Board or the Audit Committee of our Board to determine the remuneration of Ernst & Young Chartered Accountants as the Company’s Irish statutory auditors.

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement    5

		Proxy Summary: Voting Proposals and Board Recommendations

 

 

Proposal   Number		Proposal		Board Voting Recommendation
No. 5		To approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers as disclosed pursuant to the disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis and the tabular and narrative disclosure contained in the Company’s proxy statement dated June 14, 2022.			FOR
U.S. law requires that the shareholders periodically vote on a non-binding advisory basis on the compensation of our “named executive officers” as disclosed herein. Our shareholders have determined on a non-binding advisory basis that we should hold this vote every year and our Board has concurred with this vote as a matter of good corporate governance practice.
No. 6		To transact such other business as may properly come before the Annual General Meeting or any adjournment or postponement thereof.			FOR
We are not aware of any other proposals that may come before the Annual Meeting. This proposal authorizes the proxy holders to vote on any other business that may properly come before that meeting in their best judgement and to the extent permitted by applicable law with respect to such matters in their discretion.

 

6    Notice of Annual Meeting of Shareholders and 2022 Proxy Statement

GENERAL INFORMATION

Proxy Voting and Solicitation of Proxies

This Proxy Statement was furnished beginning on or about June 14, 2022, to the shareholders of STERIS plc (“STERIS,” the “Company,” “we,” “us,” or “our”) of record as of the close of the stock transfer books on June 1, 2022. This Proxy Statement is provided in connection with the solicitation by the Board of Directors of proxies for the 2022 Annual Meeting of Shareholders of the Company (the “Annual Meeting”) to be held at 2:00 p.m. Dublin Time (9:00 a.m. Eastern Daylight Saving Time), on Thursday, July 28, 2022, at 70 Sir Rogerson’s Quay, Dublin 2, Ireland. The cost of soliciting the proxies will be borne by the Company. Directors, officers, and designated employees of the Company and affiliates may solicit proxies in person, by mail, by telephone, fax, or email. They will not receive any additional compensation for these activities. STERIS has engaged a professional proxy solicitation firm, Georgeson LLC (“Georgeson”), to assist in tracking voting with brokers, banks and other institutional holders. The Company will pay Georgeson a fee of approximately $14,500 for these services. Additional shareholder meeting services may be provided for additional fees.

As permitted by rules adopted by the U.S. Securities and Exchange Commission (“SEC”), we are making this Proxy Statement, and our 2022 Annual Report to shareholders, which includes STERIS’s Annual Report on Form 10-K (the “Annual Report”), and the Irish Statutory Accounts available at www.proxyvote.com. If you received a Notice regarding this availability, the Notice instructs you how to access and review the Proxy Statement, the Annual Report and our Irish Statutory Accounts, as well as the alternative methods to vote your shares—over the Internet, by telephone, or by mailing a completed form of proxy (if requested). If you received a Notice and would like to receive a printed copy of the Proxy Materials, you should follow the instructions in the Notice for requesting such materials.

If you received a printed copy of the Proxy Materials, the Company offers the opportunity to electronically receive future proxy statements and annual reports over the Internet. By using these services, you are not only able to access these materials more quickly, but you are also helping STERIS save resources and reduce printing and postage costs.

Voting and Annual Meeting Attendance

As of the record date set by the Board of Directors (June 1, 2022), the Company had 100,080,031 Ordinary Shares outstanding and entitled to vote at the Annual Meeting, each of which is entitled to one vote.

We encourage you to vote by proxy in advance of the Annual Meeting, even if you plan on attending in person.

In order to comply with any then applicable COVID-19 guidelines or mandates, we may limit the number of shareholders who may attend the meeting in person and will require compliance with any then-applicable governmental requirements or recommendations or facility requirements. These requirements may include the use of face coverings, proof of vaccination or negative test result, and maintaining appropriate social distancing.

To attend the meeting in person, you must present valid photo identification, such as a driver’s license or passport. If you are a beneficial owner and not a shareholder of record you also must present a letter from your broker or other nominee showing that you were the beneficial owner of the shares on

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement    7

		General Information: Redomiciliation and Combination

 

 

the record date together with a legal proxy from your broker or other nominee to vote your shares in person at the Annual Meeting.

If you are a shareholder of record, you may appoint a proxy to vote on your behalf using any of the following methods:

 

•

through the Internet, as instructed on the proxy card or the Notice of Internet Availability; or

 

•

by telephone using the toll-free telephone number shown on the proxy card or the Notice of Internet Availability;

 

•

if you received the Proxy Materials by mail or if you request a paper proxy card by telephone or through the Internet, you may elect to vote by mail by completing and signing the proxy card and returning it in the prepaid envelope provided to Vote Processing, c/o Broadridge, 51 Mercedes Way. Edgewood. NY 11717, United States of America (which will, upon receipt, be forwarded to the Company’s registered office in Ireland electronically) or otherwise depositing it at the Company’s registered office in Ireland.

To be valid, a proxy must be received using one of such procedures by no later than 5:00 p.m. Dublin Time (noon Eastern Daylight Savings Time) on Wednesday July 27, 2022 (or in the case of any adjournment or postponement thereof, such later time as may be announced by the Company, not being greater than 48 hours before the adjourned or postponed meeting).

We have retained Broadridge Financial Solutions (“Broadridge”) to distribute, receive, count and tabulate proxies.

Redomiciliation and Combination

On March 28, 2019, upon the consummation of a U.K. law Scheme of Arrangement (“the Redomiciliation”), the Company became the owner of the entire issued ordinary share capital of STERIS plc, a company organized under the laws of the United Kingdom and since renamed “STERIS Limited” (“Old STERIS”). Previously, on November 2, 2015, pursuant to a combination under U.K. law (the “Combination”), STERIS Corporation became a wholly owned indirect subsidiary of Old STERIS and Synergy Health plc became a wholly-owned direct subsidiary of Old STERIS.

References in this Proxy Statement to the actions of “the Company,” “us,” “we” or “STERIS” (or its Board of Directors, Committees of its Board of Directors, or its Directors and/or officers) or any similar references relating to periods from and after the consummation of the Redomiciliation should be construed as references to the actions of STERIS plc (or where appropriate, its Board of Directors, Committees of its Board or its Directors and/or officers) unless the context requires otherwise, and references in this Proxy Statement to the actions of “the Company,” “us,” “we” or “STERIS” (or its Board of Directors, Committees of its Board of Directors, or any of its Directors and/or officers) or any similar references relating to periods before the consummation of the Redomiciliation should be construed as references to the actions of Old STERIS or STERIS Corporation, as applicable (or, where appropriate, their respective Boards of Directors, Committees of their respective Board of Directors, or their respective Directors and/or officers) unless the context requires otherwise.

STERIS’s Annual Report to Shareholders, which includes STERIS’s Annual Report on Form 10-K, including consolidated financial statements for the year ended March 31, 2022, but excluding exhibits, and STERIS’s Irish Statutory Accounts accompany this Proxy Statement. Requests for copies of exhibits to STERIS’s Annual Report on Form 10-K should be submitted

 

8    Notice of Annual Meeting of Shareholders and 2022 Proxy Statement

		General Information: Votes Required to Adopt Proposals

 

 

to the Office of the Company Secretary, STERIS plc, 70 Sir John Rogerson’s Quay, Dublin 2, Ireland. A nominal fee may be charged for Exhibits (which fee will be limited to the expenses we incur in providing you with the requested exhibits). STERIS’s Annual Report on Form 10-K, including exhibits, and STERIS’s Irish Statutory Accounts are also available free of charge through our website in the “Online IR Kit” in the “Shareholder Resources” section of steris-ir.com. Nothing contained on or accessible through that website shall be deemed to be part of this Proxy Statement.

Votes Required to Adopt Proposals

Ordinary Shares represented by properly executed proxies will be voted in accordance with the specifications made thereon. If no specification is made, proxies will be voted “FOR” all proposals contained in the foregoing Notice of 2022 Annual Meeting of Shareholders.

Abstentions and broker non-votes are tabulated in determining the votes present at a meeting for purposes of determining a quorum. An abstention or a broker non-vote will have no effect with respect to the election of a director nominee. The proposal to elect directors is presented as separate ordinary resolutions. Each Director nominee will be elected, assuming a quorum is present, if a majority of the votes cast are in favor of his or her election. The other proposals are also proposed as ordinary resolutions requiring, assuming a quorum is present, a majority of the votes cast to be in favor of passage. Consequently, an abstention or broker non-vote also will have no effect on the passage of any of these proposals as the abstention or broker non-vote will not be counted in determining the number of votes cast.

Shareholder votes will be tabulated by a representative of Broadridge, our independent inspector of elections for the Annual Meeting.

Purposes of Annual Meeting

The Annual Meeting has been called for the purposes set forth in the foregoing Notice of 2022 Annual General Meeting of Shareholders. The persons named in the accompanying proxy form have been selected by the Board of Directors and will vote shares represented by valid proxies. They have indicated that, unless otherwise specified in the proxy, they intend to vote “FOR” for all proposals contained in the foregoing Notice of 2022 Annual General Meeting of Shareholders.

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement    9

PROPOSAL 1—RESOLUTIONS REGARDING THE ELECTION OF DIRECTORS

All nine of the current members of our Board of Directors (the “Board” or “Board of Directors”) have been nominated for and are standing for re-election at the Annual Meeting. The Nominating and Governance Committee recommended the nine nominees to serve on the Board for an additional term. All nominees for Director have consented to be named and have agreed to serve as Directors, if re-elected. We have no reason to believe that any of the nominees will not be available to serve as a Director. However, if any nominee should become unavailable to serve for any reason, the proxies will be voted for such substitute nominees as may be designated by the Board.

The term of each re-elected Director will expire at the next annual general meeting of shareholders, and each Director will continue in office until the election and qualification of his or her respective successor or until his or her earlier death, removal or resignation. Under the terms of the Company’s current Articles, the Board shall consist of such number of Directors as the Board may determine from time to time (subject to a maximum of fifteen and a minimum of seven). The size of the Board is currently set at nine members is authorized to have up to fifteen and not less than seven members. Proxies cannot be voted for a greater number of directors than the nine nominees as identified in this Proxy Statement.

Each of the nine nominees for Director will be elected by the vote of a majority of the votes cast with respect to such nominee, which means that the number of votes cast for a nominee must exceed the number of votes cast against that nominee. A shareholder may: (i) vote for the election of a nominee; (ii) vote against the election of a nominee; or (iii) abstain from voting for a nominee. For purposes of determining the outcome of the vote, abstentions will not be considered ‘votes cast’.

Unless a proxy contains instructions to the contrary, it is assumed that the proxy will be voted FOR the re-election of each nominee for Director named on the following pages.

STERIS values a number of attributes and criteria when identifying nominees to serve as a Director, including professional background, expertise, reputation for integrity, business, financial and management experience, leadership capabilities, time availability, and diversity. In addition to the specific experience and qualifications set forth below, we believe all of the nominees are individuals with a reputation for integrity, demonstrate strong leadership capabilities, and are able to work collaboratively to make contributions to the Board and Company.

 

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Nominees for Election as Directors

Biographical and other background information concerning each nominee for Director is set forth below. This information includes each nominee’s principal occupation as well as a discussion of the specific experience, qualifications, attributes, and skills of each nominee that led to the Board’s conclusion that such nominee should serve as a Director. Ages and other biographical information provided for all Directors are as of June 7, 2022. In addition, set forth below is the period during which each nominee has served as a Director of STERIS. For those persons who served as Directors or executives of Old STERIS immediately prior to the Redomiciliation and STERIS Corporation immediately prior to the Combination, the specified period includes their periods of service as Directors or executives of Old STERIS or STERIS Corporation, as the case may be, as STERIS plc’s predecessors. The information presented below has been confirmed by each nominee for purposes of its inclusion in this Proxy Statement.

Richard C. Breeden, age 72, director since April 2008, and Chairman and Chief Executive Officer of Breeden Capital Management LLC since 2005. Since 1996 he has also been Chairman of Richard C. Breeden & Co., LLC, a professional services firm providing consulting services. From time to time Mr. Breeden also handles asset distributions to victims of unlawful conduct, typically on behalf of U.S. Government agencies. Since late 2012, Mr. Breeden has served as Special Master on behalf of the U.S. Department of Justice to administer and distribute just over $4 billion in forfeited assets to victims of the fraud at Madoff Securities through the Madoff Victim Fund. Mr. Breeden has previously handled asset distributions to victims of unlawful conduct at WorldCom, Enron, Adelphia, Royal Dutch Shell, British Petroleum, JPMorgan Chase, and other companies. Mr. Breeden served as Chairman of the SEC from 1989 to 1993.

Daniel A. Carestio, age 49, director since January 2021, and President and CEO of the Company since July 2021. He served as Senior Vice President and Chief Operating Officer from August 2018 to July 2021. He served as Senior Vice President, Sterilization and Disinfection from February 2018 to July 2018 and as Senior Vice President, STERIS Applied Sterilization Technologies and Life Sciences from August 2015 to February 2018.

Cynthia L. Feldmann, age 69, director since March 2005 and President and Founder of Jetty Lane Associates, a consulting firm, from December 2005 to December 2011. Ms. Feldmann is a retired certified public accountant with 27 years of experience in two large global accounting firms. From 2003 to 2005, Ms. Feldmann served as the Life Sciences Business Development Officer for the Boston law firm Palmer & Dodge, LLP. From 1994 to 2002, Ms. Feldmann was a partner with KPMG LLP, primarily serving as Partner-in-Charge of its National Medical Technologies Practice. From 1975 to 1994, Ms. Feldmann was employed by Coopers & Lybrand (now PricewaterhouseCoopers LLP), and during that time was named Partner-in-Charge of its Life Sciences practice. Ms. Feldmann has a Bachelor of Science, Accounting, and holds a Master Professional Director Certification from the American College of Corporate Directors. Ms. Feldmann served as a director of HeartWare International, Inc. until August 2016 and served as a director of Hanger, Inc. until January 2018. Ms. Feldmann is a director of, and a member of the Nominating Committee and chair of the Audit Committee of, UFP Technologies, Inc. and is a director of and serves on the Audit Committee of Frequency Therapeutics, and is a director of and serves on the Science and Technology Committee of Alexandria Real Estate Equities, Inc.

Christopher S. Holland, age 55, director since July 2020, and former Senior Vice President and Chief Financial Officer of C.R. Bard, a developer, manufacturer, and marketer of medical technologies, from

 

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May 2012 until its December 2017 acquisition by Becton, Dickinson and Company. From 2015 through 2017, Mr. Holland’s responsibilities also included business development, corporate marketing, reimbursement, healthcare economics and strategy. From 2013 through 2015, he also had operating responsibility for Bard Medical Division. Earlier, Mr. Holland was Senior VP, Finance, and Treasurer of Aramark Corporation, a global provider of food, facilities and uniform services, from 2006 through 2012, and Vice President and Treasurer from 2003 to 2006. Prior to joining Aramark, he served as Vice President and medical device sector head at J.P. Morgan and Company, Inc. from 1999 to 2003. Prior to that, Mr. Holland held various positions of increasing responsibility at J.P. Morgan. He also has served as a director of Jabil Inc. since January 2018 and is Chair of the Audit Committee and a member of the Cybersecurity Committee of Jabil Inc..

Dr. Jacqueline B. Kosecoff, age 72, director since October 2003 and, since March 2012, Managing Partner, Moriah Partners, LLC, a private equity firm focused on health services and technology, and Senior Advisor to Warburg Pincus LLC, a private equity fund. She also has served as a member of the Executive Advisory Board of SAP America, Inc., a software and enterprise applications provider, from November 2010 through May 2017. From October 2007 to November 2011, Dr. Kosecoff served as Chief Executive Officer of OptumRx (formerly named Prescriptions Solutions), a pharmacy benefits management company and subsidiary of UnitedHealth Group, and continued to serve as a senior advisor to OptumRx from December 2011 to February 2012. Dr. Kosecoff served as Chief Executive Officer of Ovations Pharmacy Solutions, a UnitedHealth Group company, from December 2005 to October 2007. From July 2002 to December 2005, Dr. Kosecoff served as Executive Vice President, Specialty Companies, of PacifiCare Health Systems, Inc., one of the nation’s largest consumer health organizations. From 1998 to 2002, Dr. Kosecoff was President and Founder of Protocare, Inc., a firm involved in the development and testing of drugs, devices, biopharmaceutical and nutritional products, and consulting and analytic services. Dr. Kosecoff is a director of GoodRx Holdings, Houlihan Lokey, TriNet Group, Inc. and Alignment Healthcare. Dr. Kosecoff served as a director of athenahealth, Inc. until February 2019 and of Sealed Air Corporation until May 2021.

Paul E. Martin, age 64, director since May 2021 and former Senior Vice President & Chief Information Officer of Baxter International, a multinational health care company, from January 2011 to October 2020. Mr. Martin also serves as director of Unisys Corporation, Ping Identity Holdings, and Owens Corning, a member of the Audit and Finance Committee of Unisys Corporation and Chair of its Security and Risk Committee, a member of the Audit and Finance Committees of Owens Corning, and a member of the Audit Committee of Ping Identity Holdings.

Dr. Nirav R. Shah, age 50, director since May 2018. Dr. Shah has served on the faculty of Stanford University since August 2018 and served from March of 2022 as Chief Medical Officer of Olea Health. Previously, Dr. Shah served from July 2020 through March 2022 as Chief Medical Officer of doc.ai, inc., and its successor, Sharecare Inc., a digital healthcare platform company. Dr. Shah also served as Commissioner of Health of the State of New York from January 2011 to May 2014 and as Senior Vice President and Chief Operating Officer for Clinical Operations for Kaiser Permanente Southern California from May 2014 to October 2017. Dr. Shah is a graduate of Harvard College and Yale School of Medicine and is Board Certified in Internal Medicine.

Dr. Mohsen M. Sohi, age 63, director since July 2005, and Chairman of the Board of Directors of STERIS since July 28, 2018. Since July 2012, Dr. Sohi has served as Chief Executive Officer of Freudenberg and Co., a general multi-industry company serving industries that include automotive, medical, aerospace, oil and gas, and power generation and transmission. From July 2010 to

 

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June 2012, Dr. Sohi served as Managing Partner of Freudenberg and Co. From March 2003 through June 2010, Dr. Sohi served as President and Chief Executive Officer of Freudenberg-NOK, a privately-held joint venture partnership between Freudenberg and NOK Corp. of Japan, one of the world’s largest producers of elastomeric seals and custom molded products for automotive and other applications. From January 2001 to March 2003, Dr. Sohi was with NCR Corporation, a leading global technology company, most recently as the Senior Vice President, Retail Solutions Division. Prior to NCR, Dr. Sohi was with Honeywell International Inc. and its pre-merger constituent, Allied Signal, Inc.,    providers of aerospace, automation and control solutions, specialty materials, and transportation systems, for 14 years, serving from July 2000 to January 2001 as President, Honeywell Electronic Materials. Dr. Sohi previously served as a director of Aviat Networks, Inc. (formerly known as Harris Stratex Networks, Inc.) from 2007 until January 2015 and Hayes Lemmerz International from 2004 until 2009. Mr. Sohi serves as a member of the Supervisory Board of ZF AG and of the Board of Tetra Laval Group.

Dr. Richard Steeves, age 60, director since November 2015. Dr. Steeves served as Chief Executive Officer and director of Synergy Health plc, a provider of specialty outsourced services to the healthcare and related industries, from 1992 until 2015, and founded the Company in 1991. Dr. Steeves served as a director of Gama Aviation plc from January 2018 to February 2019. Dr. Steeves has served since July 2017 as Executive Chairman of Advanced Research Cryptography Ltd., since October 2017 as Chairman of TrustFlight Ltd., and since April 2018 as Nonexecutive Chairman of Future Health Works Ltd.

The Board of Directors believes that each of the director nominees has the necessary personal and professional ethics, integrity, experience, commitment, judgment, diversity of background, and other attributes to make them well qualified to serve as a director of STERIS, including the following:

 

•

Mr. Breeden’s experience as Chairman of the SEC, CEO of an investment advisory firm, and a director of several public companies; Mr. Breeden’s experience provides our Board with extensive managerial, governance and regulatory insights regarding issues facing public companies; as an investor, Mr. Breeden also provides valuable insight on issues such as shareholder return, executive compensation programs, and capital structure;

 

•

Mr. Carestio’s many years of experience in all operating aspects of STERIS’s business and familiarity with healthcare and related industries and the Company’s Customers. Mr. Carestio leads the management team, assists the Board in its oversight of the Company, and provides unique perspectives into healthcare and related industries and our operations, direction and strategies;

 

•

Ms. Feldmann’s experience as Partner-in-Charge of a national medical technologies practice and Life Sciences practice for leading public accounting firms and director of publicly traded companies; Ms. Feldmann’s overall experience and financial expertise supports the Board’s oversight of critical financial policy, reporting, and risk matters encountered by public companies;

 

•

Mr. Holland’s thirty plus years of combined professional experience as a finance executive and investment banker, including experience as the CFO of a publicly traded medical technologies company; Mr. Holland’s extensive financial experience and experience relating to the healthcare industry, medical devices and technology, provide our Board with invaluable experience and expertise relative to those matters;

 

•

Dr. Kosecoff’s experience as Chief Executive Officer for a number of large healthcare organizations and a director of publicly traded companies; Dr. Kosecoff’s background provides our Board with

 

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extensive managerial, government and regulatory experiences, and insight in the healthcare industry;

 

•

Mr. Martin’s extensive professional management experience as an information technology executive, his technology and security risk experience and his financial experience; Mr. Martin’s IT experience as well as international experience and life sciences and healthcare experience provide the Company with invaluable resources and strengthen our Board’s oversight of information security and healthcare matters;

 

•

Dr. Shah’s experience at one of the nation’s leading public health agencies and service as COO for Clinical Operations of one of America’s leading health care providers and not-for-profit health plans; Dr. Shah provides the Board with years of policy and regulatory experience, management experience in our industry and experience as a practicing physician, as well as a new area of focus in innovative models in healthcare;

 

•

Dr. Sohi’s experience as President and Chief Executive Officer of international industrial companies and international operating experience; Dr. Sohi provides our Board with substantial strategic planning, manufacturing, operational excellence, executive development, succession planning, and international experience, which are important factors for the Board’s oversight and the Company’s strategies; and

 

•

Dr. Steeves’s previous role as founder and former Chief Executive Officer of Synergy Health plc; Dr. Steeves provides the Board with extensive legacy business knowledge, as well as a strong technical and science background and knowledge of issues facing healthcare and medical device companies, particularly in the U.K. and Europe.

 

 

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PROPOSAL 2—RESOLUTION REGARDING RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed Ernst & Young LLP as STERIS’s independent registered public accounting firm for the fiscal year ending March 31, 2023. Ernst & Young LLP was retained in 2015 as the independent registered public accounting firm of our predecessor entity, Old STERIS, and was first retained in 1989 as the independent registered public accounting firm of Old STERIS’s predecessor entity, STERIS Corporation, and served in that capacity continuously through the Combination and the Redomiciliation. The appointment was based upon the considerations described in the Section “Independent Registered Public Accounting Firm” that begins on page 32, including the evaluation described therein.

Although the ratification of this appointment is not required to be submitted to a vote of the shareholders, the Board and Audit Committee believe it appropriate as a matter of corporate governance policy to request that the shareholders ratify the appointment of the independent registered public accounting firm for the fiscal year ending March 31, 2023. If this proposal does not receive the affirmative vote of the holders of a majority of the shares entitled to vote and present in person or represented by proxy at the Annual Meeting, the Audit Committee will reconsider the appointment.

We anticipate that the lead audit partner from Ernst & Young LLP will be present at the Annual Meeting. The lead audit partner (or other attending representative) will be given the opportunity to make a statement if he or she desires to do so, and is expected to be available to respond to any appropriate questions that may be submitted by shareholders at the Annual Meeting.

 

 

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PROPOSAL 3—RESOLUTION APPOINTING ERNST & YOUNG CHARTERED ACCOUNTANTS AS THE COMPANY’S IRISH STATUTORY AUDITOR

The Irish Companies Act requires that our statutory auditors be appointed at each annual general meeting of Shareholders, to hold office from the conclusion of the annual general meeting until the conclusion of the next annual general meeting. Ernst & Young Chartered Accountants has served as our Irish statutory auditor since the Redomiciliation and is affiliated with Ernst & Young LLP, who served as the U.K. statutory auditor of Old STERIS prior to the Redomiciliation from 2015 to 2019. Our Audit Committee has recommended that Ernst & Young Chartered Accountants be appointed as our Irish statutory auditor. If this resolution does not receive the affirmative vote of the holders of a majority of the shares cast in person or by proxy at the Annual Meeting, the Board may appoint a person or firm to fill the vacancy.

 

 

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PROPOSAL 4—RESOLUTION TO AUTHORIZE THE BOARD OF DIRECTORS OR THE AUDIT COMMITTEE OF THE BOARD TO DETERMINE THE REMUNERATION OF ERNST & YOUNG CHARTERED ACCOUNTANTS AS THE COMPANY’S IRISH STATUTORY AUDITOR

Under the Irish Companies Act, the remuneration of our Ireland statutory auditor must be fixed by the shareholders in a general meeting or in such other manner as the shareholders may determine. We are asking our shareholders to authorize our Board or the Audit Committee to determine Ernst & Young Chartered Accountant’s remuneration as our Irish statutory auditor. It is expected that the Board would delegate the authority to determine the remuneration of the Irish statutory auditor for the Company’s fiscal year ending March 31, 2023 to the Audit Committee in accordance with the Board’s procedures and applicable law.

 

 

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PROPOSAL 5—ADVISORY RESOLUTION ON NAMED EXECUTIVE OFFICER COMPENSATION

We believe that our compensation policies and procedures are based on a pay-for-performance philosophy and are aligned with the long-term interests of our shareholders. However, to obtain the specific input of shareholders with respect to these policies and procedures in accordance with the provisions of the United States Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and Section 14A of the United States Securities Exchange Act of 1934 (“Exchange Act”), the proposal described below provides shareholders with the opportunity to approve, on a non-binding advisory basis, the compensation of our named executive officers.

This proposal, commonly known as a “Say on Pay” proposal, gives shareholders the opportunity to provide input to endorse or not endorse the compensation of the Company’s named executive officers. The Company’s predecessors, STERIS Corporation and Old STERIS, conducted say on pay votes every year beginning in 2010 and continuing through 2018. We have held annual say on pay votes since 2019 and expect to continue to hold our say on pay votes on an annual basis. We expect to hold our next say on pay vote at our 2023 annual general meeting of shareholders. We strongly encourage you to carefully review the Compensation Discussion and Analysis and compensation tables and narrative discussions and related material beginning on page 35 of this Proxy Statement. Thereafter, we request your input on the compensation of the Company’s named executive officers through your vote on the following resolution:

“Resolved, that the shareholders approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers, as disclosed pursuant to the disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis and the tabular and narrative disclosures contained in the Company’s proxy statement dated June 14, 2022.”

The non-binding resolution to approve the compensation of our named executive officers will be considered adopted if approved by the affirmative vote of the holders of a majority of the votes cast by shareholders represented in person or by proxy and entitled to vote thereon. Because your vote is advisory, it will not be binding upon the Board or the Compensation and Organization Development Committee. However, the Compensation and Organization Development Committee will take into account the outcome of the vote when considering future executive compensation decisions.

 

 

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PROPOSAL 6—RESOLUTION TO TRANSACT SUCH OTHER BUSINESS AS MAY COME BEFORE THE MEETING

The Board is not aware of any business to be acted upon at the Annual Meeting other than that described in this Proxy Statement. If any other business properly comes before the Annual Meeting or any adjournment or postponement thereof, the proxy holders (as indicated on the accompanying proxy card or cards) will vote the proxies according to their best judgment and to the extent permitted by applicable law with respect to such matters in their discretion.

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UNLESS OTHERWISE SPECIFIED, THE PROXY HOLDERS WILL VOTE “FOR” FOR ALL

PROPOSALS.

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BOARD OF DIRECTORS INFORMATION

Board Meetings and Committees

Our Board of Directors met five times during the fiscal year ended March 31, 2022. The Board has four standing committees—the Audit Committee, the Compensation and Organization Development Committee, the Nominating and Governance Committee and the Compliance and Technology Committee (collectively, the “Board Committees”). Each committee has adopted a written charter that may be found at the “Corporate Governance” section of steris-ir.com. A copy of each charter will also be made available upon a request sent to the Company’s Secretary. From time to time, our Board may also establish various special committees.

 

 

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		Board of Directors Information: Board Meetings and Committees

 

 

 

 

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		Board of Directors Information: Board Meetings and Committees

 

 

 

 

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Meetings

Each incumbent director attended more than 75% in the aggregate of all meetings of the Board of Directors and the Committees on which he or she served while in office during fiscal 2022.

Summary Table of Standing Committee Members

The following table summarizes the membership of the Board’s standing Committees during fiscal 2022 and the Committee Chairs at the end of fiscal 2022:

 

Directors		Audit		Compensation      and      Organization       Development		Compliance and      Technology		Nominating      and      Governance
Richard C. Breeden				*
Daniel Carestio						*
Cynthia L. Feldmann		*				*
Christopher S. Holland
Dr. Jacqueline Kosecoff
David B. Lewis		*						*
Walter M Rosebrough, Jr.						*
Paul E. Martin				*
Dr. Nirav Shah
Dr. Richard M. Steeves		*

= Member

= Chairperson

* = Committee member during part of fiscal 2022

The Board and Oversight of Risk Generally

The Board has determined that the existing leadership structure, with an independent, nonexecutive serving as Chairman of the Board and a separate person serving as President and Chief Executive Officer, as well as a director, is currently the most efficient and effective structure for the Company. The Board believes that separation of the Chairman of the Board and CEO roles provides an effective balance between management and director participation in the Board process.

The Board of Directors and each of its standing Committees has oversight with respect to business risks identified by the Company or risks which the Directors may identify or consider based on their experience. Management of the Company is responsible for the operation of the business and the reasonable management of risks that may arise in the course of our business, and must provide the appropriate control environment, and procedures and programs to identify, detect, and reasonably manage risks encountered by the Company. While they do not conduct risk-related audits or implement risk-related procedures, the Board and its Committees endeavor to understand the Company’s strategies and drivers of success, engage in a constructive dialogue with management about potential risks and risk management, and monitor the Company’s internal control and compliance activities. For example: (1) the Audit Committee monitors internal controls and litigation

 

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		Board of Directors Information: Board Meetings and Committees

 

 

and cybersecurity and cybersecurity risks; (2) the Compliance and Technology Committee monitors quality, regulatory and legal compliance risks and protection of the Company’s technology, innovation and intellectual property; (3) the Compensation and Organization Development Committee provides risk oversight regarding the Company’s incentive and other compensation programs and practices and human capital management; (4) the Nominating and Governance Committee provides oversight regarding potential conflicts, governance and succession risks; and (5) the Board provides oversight concerning the Company’s enterprise risk management process, which is our integrated, process-orientated, approach to managing key business risks. Each Committee also provides reports on risk oversight matters in its area of responsibility to the Board. In providing this oversight, the Board and Committees rely on information, opinions, reports or statements, including financial statements and other data prepared or presented by officers or employees of the Company, legal counsel, independent accountants, or other professional or expert advisors.

Cybersecurity Oversight

The Board recognizes the importance of maintaining the trust and confidence of our Customers and employees to safeguard sensitive information and the integrity of our information systems. To more effectively prevent, detect and respond to information security threats, the Company has formed an Executive Cybersecurity Steering Committee consisting of the Vice President, Compliance; Senior Vice President, General Counsel and Secretary; Senior Vice President and Chief Financial Officer; Vice President, Controller and Chief Accounting Officer; and Chief Information Officer, and has appointed a Chief Information Security Officer (“CISO”) reporting to the Chief Information Officer. The CISO, along with his team, is responsible for leading an enterprise-wide information security strategy, including policy, standards, architecture, and processes, and managing many of the security services that run on PCs and servers. The Audit Committee meets with the CISO and various members of the Executive Cybersecurity Steering Committee routinely to review and discuss the Company’s cyber risks and threats, incident responses, technology, the status of projects to strengthen the Company’s information security systems, assessments of the Company’s security program and the emerging threat landscape.

The Audit Committee’s engagement of Ernst & Young LLP to audit the Company’s internal controls over financial reporting includes SOX testing with respect to processes and procedures designed to control access to information systems. An independent third-party security company engaged by the Company tests for cyber vulnerabilities on a monthly basis. Another third party performs penetration tests on an annual basis. The Company also has initiated regular information technology reviews performed by a third party based on the NIST Cybersecurity Framework.

The Company also conducts information security and awareness training to ensure that employees are aware of information security risks and to enable them to take steps to mitigate those risks. As part of this program, the Company also takes steps designed to provide appropriate guidance regarding security to our executive management and employees, including any employee who may come into possession of confidential financial information.

The Company has begun conducting cybersecurity “tabletop” exercises administered by an independent third party with respect to breach and other problematic information security scenarios. The administrator posed questions to participants and advised how other companies typically respond to similar situations. Participants included the Company’s President and CEO; Senior Vice President, General Counsel and Secretary; Senior Vice President and Chief Financial Officer; Vice President, Controller and Chief Accounting Officer; Vice President, Compliance; Chief Information Officer; and CISO; and other members of executive management and employees.

 

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To date, no attempted cyber-attack or other attempted intrusion on our information technology networks has resulted in a material adverse impact on our operations or financial results, or in any penalties or settlements. In the event an attack or other intrusion were to be successful, we have a response team of internal and external resources engaged and prepared to respond. We also maintain cyber liability insurance to help mitigate potential liabilities resulting from cyber issues.

The Company also has various technical, administrative, and physical safeguards in place to help protect against unauthorized access to, use, or disclosure of the Customer and individual information and data we collect and store. The Company’s Vice President, Compliance is responsible for supervision of the Company’s Compliance Department and assesses the effectiveness of privacy controls and compliance with various legislative and regulatory requirements. The Company’s Audit Committee also is responsible for reviewing data privacy risks, as well as steps taken by management to understand and mitigate such risks. The Vice President, Compliance periodically provides updates on data privacy issues to the Audit Committee.

 

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		Board of Directors Information: Governance Generally

 

 

Governance Generally

Our business is managed by our employees under the oversight of the Board of Directors. The Board of Directors directs and oversees the management of the business and affairs of the Company, and serves as the ultimate decision making body of the Company except for those matters reserved to our shareholders at law or under our Articles. The Board oversees the STERIS management team, to whom it has delegated responsibility for the Company’s day-to-day operations, as well as other matters. While the Board’s oversight role is very broad and may concentrate on different areas from time to time, its primary areas of focus are oversight of strategy, governance and compliance, as well as assessing management’s performance. In many of these areas, significant responsibilities are delegated to Board Committees. Except for Messrs. Walter Rosebrough, Jr., former President and CEO, and Daniel Carestio, current President and CEO, of the Company, none of the Board members were an employee of the Company during fiscal 2022. The Board limits membership of the Audit Committee, Compensation and Organization Development Committee, and Nominating and Governance Committee to persons determined to be independent non-management directors.

The Board of Directors has established Governance Guidelines that, along with the charters of the Board committees, the Company’s Code of Business Conduct and the Director Code of Ethics, provide the framework for the governance of the Company. Our Director Code of Ethics, Governance Guidelines, Code of Business Conduct, Board Committee charters and other corporate governance information are available at the Corporate Governance section of steris-ir.com. Any shareholder also may request these items in print, without charge, by submitting a request to the Company Secretary.

The Board of Directors has charged the Nominating and Governance Committee with helping the Company to remain in the forefront of good corporate governance. The Nominating and Governance Committee is responsible for periodically reviewing and making recommendations to the Board of Directors in connection with the Company’s governance principles and practices.

Independence Standards

The Board has determined that independent directors should comprise a substantial majority of the Board. It is expected that at least two-thirds of the Board should be independent. Under our Governance Guidelines, an independent director is one who meets the definition of independence as defined by NYSE listing requirements. A director will not be considered independent if he or she has a material relationship with the Company. Generally, the Board will not consider a director to be independent under the following circumstances:

 

•

The director is, or has been within the last three years, an employee of the Company, or an immediate family member of the director is, or has been within the last three years, an executive officer, of the Company;

 

•

The director or an immediate family member has received, during any 12-month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);

 

•

(a) The director or an immediate family member is a current partner of a firm that is our internal or external auditor; (b) the director is a current employee of such firm; (c) the director has an immediate family member who is a current employee of such a firm who participates in the firm’s audit,

 

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assurance or tax compliance (but not tax planning) practice; or (d) the director or an immediate family member was within the last three years (but is no longer) a partner or employee of such firm and personally worked on our audit within that time;

 

•

The director or an immediate family member is, or has been within the last three years, employed as an executive officer of another entity where any of the present executive officers at the same time serves or served on that entity’s compensation committee;

 

•

The director is a current employee, or an immediate family member is a current executive officer, of an entity that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or two percent of such entity’s consolidated gross revenues; or

 

•

The director is an executive officer of a charitable organization and, within the last three years, the Company’s charitable contributions in any year to the organization (exclusive of gift-match payments) exceed the greater of $1 million or two percent of the organization’s consolidated gross revenues.

Based upon the foregoing criteria, the Board of Directors determined that all of the following incumbent directors are independent within the meaning of NYSE listing requirements: Richard C. Breeden, Cynthia L. Feldmann, Christopher S. Holland, Dr. Jacqueline B. Kosecoff, Paul E. Martin, Dr. Nirav R. Shah, Dr. Mohsen M. Sohi, and Dr. Richard M. Steeves. The Board of Directors also determined that each of the Compensation and Organization Development Committee members meets the additional requirements for independence required to be a member of a compensation committee under NYSE listing requirements and applicable law. The Board of Directors also has determined that each of the members of the Audit Committee meets the requirements for independence and financial literacy and possesses the accounting or related financial management expertise required to be a member of an audit committee under NYSE listing requirements and applicable law and is an audit committee financial expert as defined in SEC regulations. The Board of Directors has further determined that all members of the Nominating and Governance Committee are independent within the meaning of the NYSE listing standards.

Related Person Transactions

Since the beginning of fiscal 2022, we have not been a participant in, and there are not currently proposed, any related person transactions (within the meaning of, and required to be disclosed under, Item 404(a) of Regulation S-K).

Our Director Code of Ethics provides that STERIS directors may not receive any loans, consulting fees, or other material personal profit or benefit in connection with any transaction involving STERIS, other than compensation, expense payments and committee fees as a director (or in the case of a director employed by the Company, compensation as an employee), as approved by the full Board. Other than such payments, a director must disclose to the Company’s General Counsel any transaction, or proposed transaction, between a STERIS entity and the director, a member of the director’s immediate family, or a business the director or an immediate family member owns, controls, or has a substantial interest in. Directors also may not have a personal or family financial interest in any STERIS supplier, customer, consultant, reseller or competitor that has a reasonable potential for causing a conflict of interest or divided loyalty or resulting in material personal gain.

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement    27

		Board of Directors Information: Governance Generally

 

 

Our Code of Business Conduct for employees requires that relationships with third parties, as well as all business decisions, be based on what is required by law and in the best interests of STERIS, and not be motivated or influenced by personal considerations. This Code also requires that employees discuss with their supervisor or the STERIS Legal Department any activity that might create a conflict of interest, including personal financial interests that might reasonably affect their business judgment on behalf of the Company. Our Conflicts of Interest Policy also contains prohibitions with respect to conflicts of interest or transactions involving personal financial gain.

In addition, our Board has adopted a policy with respect to related party transactions. In general, this policy requires that all transactions or proposed transactions between the Company and a related party that exceed $120,000 and in which the related party has a direct or indirect material interest, be disclosed to and ratified or approved by the Nominating and Governance Committee or by disinterested members of our full Board. Under this policy, related parties include all of our Directors and executive officers and their immediate family members, and entities owned (more than 5% ownership) by a Director, executive officer or their immediate family members. In fiscal year 2022, there were no related party transactions between us and related parties that required ratification or approval under this policy.

Governance Guidelines

Our Board adopted its Governance Guidelines to assist primarily with the proper management and governance of the activities of the Board. The following is a summary of those Guidelines. A complete copy of the Governance Guidelines may be found at the “Corporate Governance” section of steris-ir.com.

Term—There is no limitation on the number of terms a Director may serve. However, the Nominating and Governance Committee will not ordinarily recommend a nominee for election for a term beginning on or after the nominee’s 75^th birthday unless it has determined that under the circumstances such nomination would be in the best interest of the Company and its shareholders.

Annual Meeting of Shareholders—The Board of Directors encourages all of its members to attend the Annual Meeting of Shareholders. All of the current Directors attended the 2021 Annual Meeting of Shareholders in person or via telecommunication equipment.

Executive Sessions—The independent Directors of the Board will meet separately as a group at least every other regularly scheduled Board meeting. During fiscal 2022, the independent Directors met in executive session 4 times. The Chairman or Lead Director (if the Chairman is not independent) will assume the chair of the meetings of independent Directors and assume such further tasks as set forth in the Governance Guidelines and as the independent Directors may determine from time to time. As indicated under “Independence Standards” above, the current Chairman has been determined to be independent.

Authority—Each member of the Board has complete and open access to management. Board members are expected to use their judgment so as to not distract management from the day-to-day operation of the Company. The Board and each Committee have the authority to obtain advice, reports or opinions from internal and external counsel and expert advisors and have the power to hire independent legal, finance and other advisors as they may deem necessary, without consulting with, or obtaining approval from, any officer in advance.

Board and Committee Evaluations—The Board has conducted self-evaluations as well as individual director evaluations to assess the effectiveness of the Board and its members. The

 

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		Board of Directors Information: Governance Generally

 

 

Chairman (or Lead Director, if the Chairman is not independent) and the Nominating and Governance Committee coordinate these evaluations. The purpose of these self-evaluations is to increase the effectiveness of the Board and each Committee, as well as their individual members. Changes in Board committee structure, if any, are to be evaluated and recommended by the Nominating and Governance Committee, but require the concurrence of the full Board.

Majority Voting—If an incumbent nominee for Director in an uncontested election does not receive the vote of at least the majority of the votes cast at any meeting for the election of Directors at which a quorum is present, and no successor has been elected at such meeting, the Director will promptly offer his or her resignation as a Director to the Board of Directors. A majority of votes cast for the purposes of this provision means that the number of shares voted “for” a Director’s election exceeds 50% of the number of votes cast with respect to that director’s election.

The Nominating and Governance Committee will make a recommendation to the Board regarding whether to accept or reject the offered resignation or whether other action should be taken. The Board will consider the offer of resignation and disclose its decision regarding the offer and the rationale for its decision within 90 days from the date of the certification of the election results. If an incumbent Director’s offer of resignation is not accepted by the Board, such fact will be promptly communicated to the Director and such Director will continue to serve until a successor is duly elected, or such Director’s earlier resignation or removal.

If a director’s resignation is accepted by the Board, then the resignation will be effective as of the date of acceptance, and the acceptance will be promptly communicated to the Director. If a Director’s resignation is accepted in the foregoing circumstances, or a director otherwise resigns or is removed or fails to be re-nominated, then the Board, in its sole discretion, may fill any resulting vacancy, or may decrease the size of the Board of Directors, pursuant to the Company’s Articles. If an election of directors is contested, a plurality voting standard shall apply to all directors.

New Director Orientation—All new Directors will be provided an orientation to acquaint them with the Company’s business, strategies, long-range plans, financial statements, the Governance Guidelines, and the Director Code of Ethics. New Directors will also be introduced to our senior management, internal auditor, and independent auditor. In addition, from time to time, Directors will receive information and updates on legal and regulatory changes that affect the Company, its employees and the operation of the Board. The Nominating and Governance Committee will from time to time make other recommendations regarding further educational opportunities for directors.

Attendance at Meetings—In order to effectively oversee management, all Directors are expected to attend Board meetings and meetings of committees of which they are members. Directors who attend less than 75% of Board meetings and meetings of committees of which they are members for two consecutive years will be subject to assessment by the Board to determine continued eligibility for directorship.

Shareholder Communications—Shareholders and other interested parties may communicate with the Board of Directors as a group, with the non-management directors as a group, or with any individual director by sending written communications to STERIS plc, 70 Sir John Rogerson’s Quay, Dublin 2, Ireland, Attention: Corporate Secretary. Complaints regarding accounting, internal accounting controls, or auditing matters will be forwarded directly to the chairperson of the Audit Committee. All other communications will be provided to the individual Directors or group of Directors to whom they are addressed. Communications that are considered to be improper for

 

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		Board of Directors Information: Governance Generally

 

 

submission to the intended recipients will not be provided to the directors. Examples of communications that would be considered improper for submission include, without limitation, solicitations, routine Customer matters, communications that do not relate, directly or indirectly, to our business and communications that relate to improper or irrelevant topics.

Insider Trading Policy—Hedging and Pledging of Company Securities

The Company maintains an Insider Trading Policy which restricts activities in or relating to Company stock by Directors, executive officers and employees, and their respective related persons. These restrictions include advance clearance requirements for Directors, executive officers and certain other employees for all transactions as well as “blackout” provisions. The Insider Trading Policy also includes a blanket prohibition that prevents Directors, executive officers, employees and their respective related persons from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars or exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, decreases in the market value of the Company’s equity securities, whether granted as part of compensation to, or otherwise held directly or indirectly by, such Director, executive officer, employee or their respective related persons. The Insider Trading Policy further prohibits other types of speculative transactions in Company stock, including short-term trading, short sales, option trading and pledging (including margin purchases of Company stock).

Ethics and Compliance

The Company is committed to conducting its business fairly, honorably and with integrity wherever it operates. The Company’s Code of Business Conduct sets the standard for legal and ethical behavior, addressing topics such as bribery and corruption, supply chain transparency, proper behavior in the workplace, and avoiding conflicts of interest.

Employees have been instructed that if they have any questions or concerns about compliance with the Company’s Policies, applicable laws, or principles as outlined in the STERIS Code of Business Conduct, or are unsure of the “right thing” to do, they should talk with their supervisor, their local or Corporate Human Resources department personnel, STERIS’s Vice President, or the STERIS Legal Department, or submit a report to the STERIS Ethics Line. The STERIS Ethics Line does not replace other communication channels already in place. However, if employees have an issue regarding an ethics or compliance related matter that they believe they cannot communicate effectively using existing internal channels, they are instructed by the Code of Business Conduct to call the STERIS Ethics Line. Reports on the STERIS Ethics Line may be made anonymously and without reprisals for matters reported in good faith.

Sustainability

The Company supports its mission, vision and values by designing and manufacturing products and providing services which reduce their impact on the environment as we produce or provide them, and when the Company’s Customers use them, and by pursuing sustainable practices throughout the Company.

We have established a dedicated Environmental, Sustainability and Governance (“ESG”) function with the appointment of a Vice President of Environmental, Sustainability and Governance and are continuing to develop additional roles within the function. The Company also has established

 

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		Board of Directors Information: Governance Generally

 

 

a Global Sustainability Steering Committee, comprised of a cross-functional team of our senior leadership, subcommittee chairs, and subject matter experts spanning our brands, legal, investor relations, human resources, continuous improvement, compliance, facilities, and health, safety, and environment, to build ESG values and implement strategy across the Company. The ESG function works with the Global Sustainability Steering Committee and in close collaboration with our President and Chief Executive Officer, General Counsel and other senior executives to actively develop and refine our ESG strategies, programs and policies. The ESG team regularly updates the Nominating and Governance Committee of our Board of Directors concerning the Company’s ESG efforts.

Sustainability objectives have been established for many of the Company’s operating facilities. The Company also strives to create an environment focused on the health and safety of its employees as well as the communities and environments in which the Company operates. The Company has programs in place to ensure all facilities around the globe, including those acquired, work toward OSHA world-class standards for injury-free incidents.

For a more detailed discussion of some of the Company’s sustainability and related efforts, including environmental health and safety and energy and conservation, please refer to the Company’s Annual Report on Form 10-K. Information available on or through the Company’s Annual Report on Form 10-K is not part of this Proxy Statement unless specifically incorporated herein.

 

Notice of Annual Meeting of Shareholders and 2022 Proxy Statement    31

		Board of Directors Information: Independent Registered Public Accounting Firm

 

 

Independent Registered Public Accounting Firm

Ernst & Young LLP was appointed as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2022, by the Audit Committee of the Board of Directors, which appointment was ratified by the shareholders on July 29, 2021. The lead audit partner from Ernst & Young LLP is expected to be present at the Annual Meeting and will be given an opportunity to make a statement if so desired and to answer appropriate questions with respect to that firm’s audit of the Company’s financial statements and records for the fiscal year ended March 31, 2022.

During fiscal 2022, the Audit Committee regularly evaluated the services provided by Ernst & Young LLP. The Audit Committee discussed the services of Ernst & Young LLP privately with the Senior Vice President and Chief Financial Officer (“CFO”) and Vice President, Controller and Chief Accounting Officer (“Controller”) outside of the presence of the firm, separately with the Vice President, Compliance (who is responsible for Internal Audit), outside the presence of the firm and the CFO and Controller, and with the firm outside the presence of the foregoing individuals. These discussions generally occurred at each regular Audit Committee meeting, as well as at other times.

As part of the independent registered public accounting firm appointment process for fiscal 2022, the Audit Committee conducted, with the assistance of an independent third party, a comprehensive formal evaluation of Ernst & Young LLP. The evaluation included an assessment of the following categories: quality of services provided; sufficiency of audit firm resources; communication and interaction; and independence, objectivity and professional skepticism. This evaluation was performed individually by each member of the Audit Committee. The Senior Vice President and Chief Financial Officer, the Vice President, Controller and Chief Accounting Officer, the Vice President, Compliance, and other members of management who regularly interacted with Ernst & Young LLP undertook a similar assessment and provided their evaluation of Ernst & Young LLP to the Audit Committee. The Audit Committee reviewed and discussed the evaluation responses from the Committee members and from management.

Also, as part of its annual independent auditor appointment process, the Audit Committee considers whether to rotate its independent registered public accounting firm. Ernst & Young LLP has been the Company’s independent registered public accounting firm since the end of fiscal 2019 and was the independent registered public accounting firm for Old STERIS from the Combination until the Redomiciliation (and was first retained by the predecessor entity of Old STERIS, STERIS Corporation, beginning with the 1989 fiscal year). Ernst & Young LLP rotates its lead audit partner every five years; the Audit Committee interviews candidates proposed by Ernst & Young LLP and selects the lead audit partner from the proposed candidates. There are significant benefits to having an independent registered public accounting firm with an extensive history with the Company. These include:

 

•

Higher quality audit work and accounting advice, due to Ernst & Young LLP’s institutional knowledge of our business and operations, accounting policies and financial systems, and internal control framework; and

 

•

Operational efficiencies and a resulting lower fee structure because of Ernst & Young LLP’s history and familiarity with our business.

The Audit Committee has adopted policies and procedures which are intended to control the non-audit or audit related services provided by Ernst & Young LLP and to monitor their continuing independence.

 

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		Board of Directors Information: Independent Registered Public Accounting Firm

 

 

Under these policies, the Audit Committee must pre-approve all services performed by Ernst & Young LLP. In addition, the Audit Committee may delegate authority to grant certain pre-approvals to a member of the Committee. Pre-approvals granted by a member of the Audit Committee are reported to the full Audit Committee at its next regularly scheduled meeting.

The aggregate fees for professional services by Ernst & Young LLP for the Company for the fiscal years ended March 31, 2022 and March 31, 2021 were:

 

		Years Ended March 31,
		2022				2021
Type of Fees		(in thousands)
Audit Fees			$7,322				$6,107
Audit-Related Fees			—				2
Tax Fees			996				1,807
All Other Fees			—				—
Total			$8,318				$7,916

All of the services provided by Ernst & Young LLP in fiscal year 2022 were pre-approved in accordance with the Audit Committee’s pre-approval policies and procedures described above. In the above table, “Audit Fees” are fees paid to Ernst & Young LLP for professional services for the audit of the Company’s consolidated financial statements included in Form 10-K and in the Irish Statutory Accounts and review of financial statements included in Form 10-Qs, for the audit of the Company’s internal control over financial reporting and for services that are provided by the accountant in connection with statutory audits; “Audit-Related Fees” include fees billed by Ernst & Young LLP for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements, benefit plan audits and access to technical research tools; and “Tax Fees” include fees for tax compliance, tax advice and tax planning. The increase in Audit Fees in fiscal year 2022 is primarily due to audit services arising from the Company’s acquisition and financing activities in the fiscal year 2022. The decrease in Tax Fees in fiscal year 2022 is primarily due to the fact that certain tax planning associated with acquisitions and management of intangible property during fiscal 2021 did not reoccur.

 

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		Board of Directors Information: Report of the Audit Committee

 

 

Report of the Audit Committee

The Audit Committee has been established in accordance with the Exchange Act. The Board of Directors of the Company has adopted a written Audit Committee charter. A copy of the Audit Committee’s charter may be found at the “Corporate Governance” section of steris-ir.com. Based on the review and determination of the Board, members of the Audit Committee meet the financial literacy and independence criteria to serve on the audit committee of a public company. The Audit Committee met 8 times during fiscal 2022 and holds executive sessions following each regular quarterly meeting.

The Audit Committee has reviewed and discussed with the Company’s management and Ernst & Young LLP, the Company’s independent registered public accounting firm, the audited financial statements of the Company contained in the Company’s Annual Report on Form 10-K for the year ended March 31, 2022 and Ireland Annual Report. The Audit Committee has also discussed with the Company’s independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Accounting Oversight Board and the Securities and Exchange Commission.

The Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young LLP their independence. The Audit Committee has also concluded that Ernst & Young LLP’s provision of non-audit services to the Company is compatible with their independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022 filed with the Securities and Exchange Commission.

The Audit Committee evaluated Ernst & Young LLP in connection with its consideration of the appointment of an independent registered public accounting firm in connection with its reappointment of the firm for fiscal 2023. Based upon the evaluation and considerations described in the Section “Independent Registered Public Accounting Firm” that begins on page 32, the Audit Committee recommends that the Company’s shareholders ratify the reappointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal 2023.

Other actions regularly undertaken by the Audit Committee during the fiscal year include: pre-review and discussion with management of Form 10-Qs filed by the Company with the SEC, pre-review and discussion with management of Company earnings releases, annual review of internal controls over financial reporting (ICFR), critical accounting policies and pronouncements (including the recently implemented lease accounting standard) as well as other important financial accounting and reporting issues.

The Audit Committee also is responsible for and periodically reviews the Company’s cybersecurity programs, security risks and the Company’s efforts to minimize and eliminate these risks. For more information on cybersecurity oversight and risk, and the Audit Committee’s roles and responsibilities with respect to the same, see “Cybersecurity Oversight” at page 24.

In addition, the Audit Committee, with the assistance of an independent third party, undertook a self-evaluation of its performance and effectiveness for fiscal 2022.

Audit Committee of the Board of Directors

Richard C. Breeden – Chair

Cynthia Feldmann

Christopher S. Holland

Richard Steeves

 

34    Notice of Annual Meeting of Shareholders and 2022 Proxy Statement

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

 

Named Executive Officers

Our named executive officers for fiscal 2022, as shown in the Fiscal 2022 Summary Compensation Table appearing on page 58, were as follows:

 

•

Daniel J. Carestio, President and CEO from July 29, 2021 through the end of fiscal 2022, and previously Senior Vice President and COO;

 

•

Walter M Rosebrough, Jr., President and CEO from the beginning of fiscal 2022 through July 29, 2021 and now CEO Emeritus and Senior Advisor;

 

•

Michael J. Tokich, Senior Vice President and CFO;

 

•

J. Adam Zangerle, Senior Vice President, General Counsel and Corporate Secretary;

 

•

Andrew Xilas, Senior Vice President and General Manager, Dental; and

 

•

Cary L. Majors, Senior Vice President, Americas Commercial Operations.

In portions of the remainder of this Compensation Discussion and Analysis we will discuss compensation paid and awarded to our named executive officers and the basis for the decisions that were made with respect thereto.

 

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		Executive Compensation: Compensation Discussion and Analysis

 

 

General Compensation Philosophy

Our management compensation programs are designed to align management’s interests with the long-term interests of shareholders and to support and promote the achievement of our goals and objectives by helping to recruit and retain executive talent required to successfully manage our business. Our management compensation programs also seek to align compensation with individual and Company performance to achieve the goals and objectives of the business by providing and balancing incentives for annual financial performance as well as the generation of long-term value.

Our general compensation philosophy includes the following principles:

 

•  Be performance based, with variable pay constituting a significant portion of total compensation,

•  Create commonality of interest between our executives and shareholders by aligning realized compensation with changes in shareholder value,

•  Encourage growth in the setting and attainment of our short and long-term objectives,

•  Reward our executives for long-term improvement in shareholder value,

•  Attract, retain and motivate highly skilled executives,

•  Build a strong talent base to reinforce our succession planning objectives,

•  Be competitive with companies in our peer group,

•  Maximize the financial efficiency of the overall program,

•  Ensure that corporate governance practices and the impact of our say on pay proposals are upheld, and

•  Avoid incentive compensation designs that may lead to excessive risk taking.

The Committee also believes that it must maintain flexibility in establishing compensation practices to allow it to address compensation trends, competitive issues, business needs, industry and the broader economic environment, and special situations that will be encountered in the recruitment, retention, and promotion of employees. Therefore, the compensation practices approved by the Committee will likely vary from year to year and from person to person, depending on the particular circumstances.

 

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Compensation Governance Practices

The Company maintains several best practices in compensation governance, some of which are summarized in the table below. A more detailed discussion of certain of these practices appears subsequently in the “Compensation Governance” section of this Compensation Discussion and Analysis and other of these practices are mentioned in other portions of this Proxy Statement.

 

What the Company Does				What the Company Does Not Do
•  Hold an annual say on pay advisory vote for shareholders.   •  Engage independent outside compensation consultants and utilize market and industry data to ensure we compensate fairly and competitively, but not excessively.   •  Mitigate undue risk-taking by using multiple performance metrics, imposing caps on payouts, employing clawback policies for annual incentive and equity awards, making annual incentive awards subject to complete Committee discretion, and performing annual compensation risk assessments.   •  Utilize only “double trigger” vesting of equity awards for change in control situations.   •  Provide multiyear vesting for equity awards, with vesting requirements generally more stringent than peers.   •  Regularly review compensation, especially incentive design, to ensure continued alignment with company strategy and shareholder interests.   •  Set meaningful stock ownership guidelines for the Chief Executive Officer (6 times base salary) and other executives (4 times base salary for CFO, 3 times base salary for other SVPs, and 2 times base salary for all other corporate VPs).   •  Use an appropriate mix of cash and non-cash compensation, with an emphasis on variable (at risk) compensation.   •  Use premium stock options as part of the non-cash variable incentive compensation program.				•  Provide employment agreements to U.S. executives.   •  Permit hedging or pledging or short sales of Company shares.   •  Reprice underwater stock options.   •  Provide discretionary accelerated vesting of equity awards.   •  Provide excessive benefits or perquisites to executives.   •  Provide gross-ups for Code Section 280G excise taxes that may be imposed on severance or similar payments made in connection with a change in control.

 

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		Executive Compensation: Compensation Discussion and Analysis

 

 

Consideration of 2021 Say on Pay Vote Results

The Committee reviewed the results of our 2021 “say on pay” vote, in which our named executive officer compensation was supported by more than 96% of the shares voted on the matter. After taking into consideration the strong support for our executive compensation program reflected in our annual say on pay vote results, the Committee decided to continue to apply the same philosophy, compensation objectives, and governing principles as it has used in recent years when making subsequent decisions or adopting subsequent policies regarding named executive officer compensation. Also, after taking into consideration this strong support, the Committee decided to continue using the same executive pay structure of base salary, cash bonus and a mix of restricted stock and stock options, subject to the changes in option exercise prices described herein.

We received feedback in prior years that our equity award program could be enhanced by making modifications regarding performance-based equity awards. After undertaking a lengthy review of potential performance-based equity award designs, we decided to modify our stock option award program beginning in fiscal 2019 with the May 2018 awards by providing stock options with a premium exercise price equal to 10% above grant date market value. Also beginning with fiscal 2019 awards, options comprised at least 50% in value of each executive officer’s equity awards. For fiscal 2022 options comprised 67% of the value of the CEO’s (Mr. Carestio’s) awards and 75% of the value of the CFO’s awards. Additionally, the Committee decided to eliminate a significant portion of benefits and perquisites provided to U.S. based executive officers effective beginning with the 2020 fiscal year.

The Committee has solicited the input of our shareholders regarding our executive compensation program at every Annual Meeting since the 2010 Annual Meeting of Shareholders through a non-binding advisory “say on pay” proposal and will continue to seek shareholder input on our executive compensation in accordance with the provisions of the Dodd-Frank Act, at the Annual Meeting. The following table shows the results of the “say on pay” vote by the Company’s shareholders (and the shareholders of Old STERIS, in respect of periods prior to the Redomiciliation) for fiscal 2017 through 2021.

 

		2021				2020				2019				2018				2017
% of Shares voting on proposal in favor			96.59%				96.35%				98.41%				97.91%				96.30%
Votes for			70,427,202				71,550,687				71,956,904				73,785,206				71,343,570
Votes against			2,486,333				2,713,406				1,160,520				1,573,621				2,744,812
Abstentions			86,921				107,870				259,498				157,991				161,901
Broker non-votes			2,668,460				2,628,272				3,000,447				2,521,095				2,778,675

Recent Activity

Some of the recent executive compensation or related matters approved, decided, or supported by the Committee include:

 

•

Reviewing Employee Engagement survey results and causing such surveys to be conducted on an annual basis;

 

•

Including reviews of market trends and compensation education at each regular Committee meeting;

 

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		Executive Compensation: Compensation Discussion and Analysis

 

 

•

Expanding the Committee’s Charter authority to include responsibility for overseeing the Company’s human capital and work environment (including diversity, HR-related ethics complaints, management development, succession planning, and other related areas of focus);

 

•

Assuming responsibility for the administration of the Cantel Medical equity plans. See “Cantel Plans” on page 68;

 

•

Approving a change in the strike price of stock option grants for executives, including the CEO, to require that option exercise prices be 110% of grant date fair market value; and

 

•

Eliminating for all U.S. based executive officers most benefits and perquisites not available generally to employees.

Roles and Responsibilities

The roles and responsibilities of our Compensation Committee, Compensation Consultant, CEO and other members of management with respect to compensation decisions are discussed throughout this Proxy Statement and in particular within this Compensation Discussion and Analysis. This collaborative process is summarized below.

 

Responsible Party		Primary Role and Responsibilities Relating to Compensation Decisions
Compensation Committee (Composed solely of independent, non-employee Directors and reports to the Board)		•  Oversees our executive compensation program, policies and practices, taking into account business goals and strategies, legal and regulatory developments and evolving best practices;   •  Approves performance goals for purposes of compensation decisions for our named executive officers;   •  Conducts an annual evaluation of the CEO’s performance in consultation with the full Board and determines his compensation;   •  Reviews and approves the CEO’s recommendations for compensation for the other named executive officers and senior executives, making changes when deemed appropriate; and   •  Approves all changes to the composition of the peer group.
Independent Consultant to the Compensation Committee (FW Cook)		•  Provides the Compensation Committee with analysis and advice pertaining to CEO, executive compensation program design, including industry survey analysis, explanation of current and developing best practices and regulatory changes;   •  Recommends a relevant group of peer companies against which to benchmark the competitiveness and appropriateness of our CEO, executive and Director compensation;   •  Analyzes peer companies’ annual CEO and executive compensation to assist the Compensation Committee in determining the appropriateness and competitiveness of our CEO and executive compensation;   •  Reviews compensation disclosure materials;   •  Analyzes our compensation practices to assist the Compensation Committee in determining whether risks arising from such practices are reasonably likely to have a material adverse effect on the Company; and   •  Provides specific analysis and advice periodically as requested by the Compensation Committee.

 

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		Executive Compensation: Compensation Discussion and Analysis

 

 

Senior Management		•  The CEO recommends to the Compensation Committee annual compensation for the other named executive officers and senior executives based on his assessment of their performance and the Senior Vice President and Chief Financial Officer’s assessment of the performance of certain of such persons;   •  Our CEO; Senior Vice President, General Counsel and Company Secretary and Vice President and Chief Human Resources Officer, and other Human Resources and Legal personnel, work with the Compensation Committee Chair to set agendas, prepare materials for Compensation Committee meetings, and generally attend meetings, as appropriate, and prepare meeting minutes; and   •  Our Senior Vice President and Chief Financial Officer also works with Human Resources personnel in the preparation of some materials for Compensation Committee meetings.

Compensation Consultant

Frederic W. Cook & Co., Inc. (“FW Cook”) has served as the Compensation Committee’s compensation consultant since November 2016. For fiscal year 2022, as required by the NYSE listing standards, the Compensation Committee considered various independence factors and potential conflicts of interest with respect to the compensation consultant and found the compensation consultant to be independent and that no conflicts of interest existed.

 

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		Executive Compensation: Compensation Discussion and Analysis

 

 

Principal Components of Compensation for Named Executive Officers

For the named executive officers, our compensation program is designed to recruit and retain management and align compensation with individual and Company performance on both an annual and longer-term basis. In addition, compensation of our named executive officers is generally structured to provide a significant portion of the compensation opportunity on the basis of the long-term performance of STERIS stock, as well as business performance and other factors that influence shareholder value. Based on this general compensation philosophy, the Committee has established compensation for our named executive officers consisting of the following principal components:

 

Compensation Component		Description		Objectives
Base Salary		•  Fixed compensation that is reviewed annually and is based on performance, experience, responsibilities, skill set and market value.		•  Provide a base level of compensation that corresponds to the job function performed.
Annual Incentive Compensation		•  “At-risk” compensation earned based on performance measured against pre-established annual goals.   •  Goals are based upon Company-wide financial results as well as goals personal to the executive’s position.		•  Incentivize executives to achieve annual goals that ultimately contribute to long-term Company growth and shareholder return.
Equity Compensation		•  “At-risk” compensation in the form of restricted stock awards whose value fluctuates according to shareholder value and stock options with premium exercise prices whose value is solely dependent upon increases in share price.   •  Award vests based on continued service.   •  Service requirements generally exceed peers and market.		•  Align executive interests with those of shareholders.   •  Reward continuous service with the Company.   •  Incentivize executives to achieve goals that drive Company performance over the long-term.
Other Benefits and Perquisites		•  Broad-based benefits provided to Company employees (e.g., health and group insurance), a defined contribution plan and other personal benefits where appropriate.		•  Provide a total compensation package that is competitive with the marketplace and addresses unique needs and special situations.

The charts below illustrate the relative opportunities between fixed compensation, consisting of base salary, and variable compensation, consisting of bonus, stock options and restricted stock for fiscal 2022. The first chart shows the opportunity for the current CEO and the second shows the average opportunities for the other named executive officers, other than the former President and CEO. The compensation of Mr. Xilas only reflects compensation from the Company from and after acquisition of Cantel Medical by the Company on June 2, 2021, when Mr. Xilas joined the Company. Base salaries are those shown in the Fiscal 2022 Summary Compensation Table. Bonus amounts shown are for fiscal 2022. Values shown in the charts for restricted stock and stock option awards reflect the fair

 

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market value under Financial Accounting Standards Board Accounting Standards, Codification (“FASB ASC”) topic 718 as of the effective dates of grant. Differences in pay mix between the named executive officers are driven by market median pay levels that are used to determine named executive officer target pay opportunities, consistent with the Company’s pay philosophy and objectives, as well as other factors such as performance, experience and the complexity and responsibilities of the position.

 

Pay Mix of Named Executive Officers FY 2022

 

 

Amounts shown in the first pie chart are for Mr. Carestio, and in the second are for Messrs. Tokich, Zangerle, Majors and Xilas and are based upon figures appearing in the Fiscal 2022 Summary Compensation Table that begins on page 58, except that with respect to Mr. Xilas’s bonus, the pie chart only reflects incentive compensation received under the MICP (as hereinafter defined).

The realized value of variable compensation will depend upon actual Company performance.

Process for Determining Senior Management Compensation

In General

Senior management compensation is generally reviewed and established on an annual basis by the Committee. Our fiscal year ends on March 31. Therefore, Committee members typically begin the assessment of compensation for senior management during the second half of the fiscal year. The Committee typically meets again early in the new fiscal year to evaluate the performance of the Company and our named executive officers, and based on that evaluation of Company performance and individual evaluations, to determine bonus amounts, if any, for the recently completed fiscal year, and finalize base salaries, set bonus criteria, and approve equity awards for senior management for the new fiscal year.

For fiscal year 2022, the Company’s compensation consultant assisted with the annual compensation reviews for all named executive officers other than Mr. Xilas, providing historical and prospective views regarding total compensation for our executive officers. The consultant reports to the Committee for senior management compensation matters and is charged with providing the Committee with competitive pay data and compensation trends, analysis and recommendations. Base salaries, cash bonus levels, equity compensation, and total compensation of senior management are examined against data from multiple sources and surveys developed and provided by the consultant, as

 

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described below. The Committee targets the payment of base salaries, cash bonuses and equity compensation and total direct compensation within a general range of 10% above or below the market median of those components, with equity compensation migrating to a level somewhat above median over time. Actual bonus payments and realized equity values will vary based upon Company performance. This is a guideline around which there is likely to be variation, depending on individual factors and business results. Factors used in the process of assessing and determining senior management compensation include individual and team performance, scope of responsibilities and accountability, competitive and other industry compensation data, special circumstances and expertise, business performance, and comparison with compensation of our other senior managers. The CEO also provides recommendations to the Committee for compensation adjustments for the other senior managers.

Peer Group and Survey Data

The Committee and the Committee’s compensation consultant review market data relating to compensation to help assess the compensation of our senior executives, including each of the named executive officers. This review includes the consultant’s analysis of proxy data from certain healthcare equipment and healthcare supply companies and other companies in similar businesses to those of the Company in a size range of roughly one-third to three times that of the Company (see peer listing below), information derived from compensation surveys, including companies from healthcare and technology industries, and other executive compensation data obtained by the consultant. This data is adjusted by the consultant to reflect the Company’s relative size. Peer group data is used for executive pay benchmarking purposes for the Company’s CEO and CFO. The survey data also is utilized for executive pay benchmarking purposes for all of the other named executive officers. We did not select the constituent companies included in the survey data, and the component companies’ identities were not a material factor in the applicable compensation analysis. The Committee evaluates this data with the assistance of its compensation consultant to develop for each executive position target ranges for base salary, incentive compensation (cash bonus), and long-term equity compensation, as well as total direct compensation. These target ranges reflect market median pay consistent with the Company’s pay philosophy.

In the third quarter of fiscal year 2021, FW Cook reviewed with the Committee the peer group proposed to be used for executive pay benchmarking purposes for the Company’s CEO and CFO for fiscal year 2022. The compensation consultant regularly reviews the group with the Committee to ensure that the companies comprising the peer group continue to be appropriate. In selecting recommended peers, the compensation consultant focused on companies that are in the health care equipment and health care supplies industries and to a lesser extent, life sciences tools and services, markets reflective of the Company’s primary business and where we often compete for senior executive talent. Also, size measures considered to construct the peer group for fiscal year 2022 included:

 

•

Revenue between approximately $2.0 billion and $5.3 billion

 

•

Market capitalization between approximately $4.0 billion and $33.5 billion

 

•

Employees between 6,500 and 19,500

No specific relative weighting was given to any one of these factors in determining peers, although revenue and market capitalization are considered the most important.

 

 

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As a result of this analysis, the consultant recommended that Bruker and Stericycle be removed from the peer group because of size, and that Varian Medical Systems be removed from the peer group due to its acquisition and the resulting absence of compensation disclosure. The consultant also recommended that Baxter International and Zimmer Biomet be added due to size. The proposed peer group for fiscal 2022 otherwise remained unchanged from that approved for fiscal year 2021. These recommendations were considered and approved by the Committee. As a consequence, the Company’s peer group for fiscal 2022 was comprised of the following:

 

•  Agilent Technology		•  Hill-Rom Holdings, Inc.		•  ResMed, Inc.
•  Baxter International		•  Hologic, Inc.		•  Teleflex Incorporated
•  Bio-Rad Laboratories, Inc.		•  IDEXX Laboratories, Inc.		•  Varian Medical Systems, Inc.
•  The Cooper Companies, Inc.		•  Mettler Toledo		•  Waters Corporation
•  Dentsply International, Inc.		•  PerkinElmer, Inc.		•  Zimmer Biomet

All of the peer group companies operate businesses generally similar to STERIS and to varying degrees met the Company’s peer group size criteria. On balance, STERIS’s actual or projected financial and other criteria at September 30, 2020 generally fell within a reasonable range around the peer group’s medians in terms of annual revenue (STERIS: $3.0 billion or 69^th percentile), market cap (STERIS: $15.0 billion or 41^st percentile) and employees (STERIS: $13,000 or 64^th percentile).

The following table, which is based upon information provided by FW Cook, shows the metrics and the rankings of the Company relative to its fiscal 2022 peer group at the end of September 2020 (market cap is at September 15, 2020), that was utilized for the selection of the fiscal 2021 peer group:

 

Revenues (Trailing Twelve Months)

Market Cap (9/15/2019)

Employee Numbers

Median

$3.0 billion

$15.7 billion

10,062

Company

$3.0 billion

$15.0 billion

13,000

Company Percentile Rank

69%

41%

64%

It is expected that due to further increases in the Company’s size, as a result of the Cantel Medical acquisition and otherwise, there will be additional peer group changes for future fiscal years.

 

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2022 Compensation Decisions

The Committee’s consideration of the primary elements of compensation (base salary, incentive compensation (cash bonus) and equity compensation) for all of the named executive officers is generally based upon a combination of common criteria and measures applicable to all of the officers, as well as individual goals and objectives applicable specifically to each officer. For fiscal 2022, the Committee considered and applied a number of common criteria and measures to evaluate the named executive officers other than Mr. Xilas and Mr. Rosebrough, including:

 

•  Consolidated Company as well as business unit financial performance;

•  Prior individual performance and compensation;

•  The complexity and scope of responsibilities of the officer’s position, as well as any changes in the officer’s role, responsibilities or duties;

•  The officer’s overall experience as well as experience with STERIS; and

•  Market and survey data provided by the consultant.

•  In the case of Mr. Carestio, as incoming CEO, the Committee’s evaluation of his individual performance after receiving input from Committee members and the other non-executive Directors; and

•  In the case of the other named executive officers, the CEO’s assessments and recommendations regarding individual performance.

Individual goals and objectives varied for each named executive officer based on his area of responsibility. Although these goals and objectives are all considered important, they are not assigned any particular weight for incentive compensation purposes. In fiscal year 2022:

 

•  Mr. Carestio’s individual goals and objectives related to acquisitions and divestitures and integration, legal and regulatory compliance, Customer relations, quality, new product introduction employee relations and retention, organizational development, safety performance, process improvement, investor relations, profit, cash flow, and return on invested capital (“ROIC”).

•  Mr. Rosebrough’s individual goals and objectives related to transitioning the new CEO, return to office and flexible work policies, market compensation for executives, legal and regulatory compliance, trade/industry group representation, acquisitions and divestitures, and integration.

•  Mr. Tokich’s individual goals and objectives related to financial reporting and compliance, working capital initiatives, investor relations, cost management, regulatory compliance, acquisitions and divestitures and integration, information technology initiatives, employee relations and retention, business strategy initiatives, profit, cash flow and ROIC, and safety performance.

•  Mr. Zangerle’s individual goals and objectives related to acquisitions and divestitures and integration, legal and regulatory compliance, Customer relations, employee relations and retention, cost of legal and regulatory compliance, and safety performance.

•  Mr. Majors’s individual goals and objectives related to acquisitions and divestitures and integration, regulatory compliance, business unit financial performance, business unit organizational leadership, Customer relations, employee relations and retention, service quality leadership, profit, cash flow and ROIC, and safety performance.

•  Mr. Xilas’s individual goals and objectives related to integration of the Dental Segment into the Company and regulatory compliance, business unit financial performance, business unit organizational leadership, Customer relations, employee relations and retention, service quality leadership, profit, cash flow and ROIC, and safety performance.

 

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Mr. Xilas became a part of the Company as a result of the Company’s acquisition of Cantel Medical in June 2021. Because the Company’s 2022 regular fiscal planning process and formal Committee assessments had already been completed for the year, Mr. Xilas’s fiscal 2022 salary and target bonus percentage were not modified, with only his incentive individual goals and objectives being determined subsequent to the acquisition. He subsequently received in October of 2021 an equity award in roughly the same amount as was expected that he would have been awarded by Cantel Medical had the acquisition of Cantel Medical not occurred.

The terms of Mr. Rosebrough’s and Mr. Carestio’s 2022 fiscal year compensation were determined by the Committee in January 2021 when Mr. Rosebrough announced his intention to retire, and the Board determined that Mr. Carestio would replace Mr. Rosebrough. Mr. Rosebrough’s Transition Agreement (see page 54) was approved by the Committee at that time, and Mr. Rosebrough’s compensation for the duration of his employment was reflected therein. At the same time, the Committee approved Mr. Carestio’s compensation for fiscal 2022 (other than his October 2021 equity awards), based upon recommendations of FW Cook.

As CEO, Mr. Carestio has the broadest complexity and scope of responsibilities, as he has oversight for all aspects of our operations. Our other named executive officers, as well as certain other senior managers, report directly to Mr. Carestio. As a result of these various factors, individual performance against these factors, the individual’s roles and scope of responsibilities, and the Company’s performance, each element of compensation will necessarily vary between the named executive officers.

For fiscal year 2022, the Committee evaluated the performance of the named executive officers, applying in each case the common criteria and measures and individual goals and objectives described above, as well as the Company’s actual performance against the targeted financial performance for payment of the incentive compensation. As a result, the Committee approved the fiscal year 2022 compensation described in the following pages (other than the October 2021 equity awards) for each of the named executive officers.

The Committee believes that our underlying executive compensation program has been appropriate to reflect annual financial performance as well as rewarding and motivating behaviors that can create long-term shareholder value but will need to be enhanced for fiscal 2023 to reflect the changes in Company size and complexity as a result of recent acquisitions.

Base Salary

The payment of base salary is not directly tied to achievement of pre-established financial goals. The Committee considers a number of factors in determining base salary, including previous individual performance, the consultant’s data regarding compensation trends and practices, base salaries paid by other medical device, hospital supply, and other public operating companies, the complexity and responsibility of the executive’s position, and the executive’s overall experience and achievements against objectives, as well as the general and industry market for executive talent. While the market median may serve as a general guideline, other factors such as experience, time in position, complexity of functions, competitive environment, special skills and past performance are also considered. The Committee believes that base salaries for executives with significant experience and strong past performance should generally fall within the range of plus or minus 10% of the market median for similar positions of public operating companies based on survey data. Based on these considerations and the Company’s fiscal year operating plan (including the Company’s planned merit

 

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increase budget), information from the consultant, and recommendations of the CEO with respect to compensation adjustments for the other named executive officers, the Committee determines the appropriate salary level for the named executive officers. Changes in salary levels are generally effective at the end of the first fiscal quarter or beginning of the second fiscal quarter, with some exceptions for situations involving promotional increases. The Board of Directors also reviews the compensation actions of the Committee.

Mr. Carestio’s base salary for fiscal 2022 was well below the median of peer companies, due in part to his service in the CEO position for only a portion of the year and his introduction to the position. Mr. Rosebrough’s base salary for fiscal 2022 remained unchanged for the period he continued as President and CEO and then was reduced when he ceased to be President and CEO on a prorata basis to reflect his part-time status per his Transition Agreement. With respect to the other named executive officers, other than Mr. Xilas, the Committee applied the common criteria and results of individual performance objectives described above under Executive Compensation Overview, including the evaluation and recommendation of the CEO regarding individual performance results as well as peer and other survey data from the consultant, to assess base salaries for each officer.

The following table reflects fiscal 2021 and 2022 base salaries earned by the named executive officers and paid by the Company and the percentage change in base salary earned by each named executive officer for fiscal 2022.

 

Name		Fiscal 2021 Base Salary		Fiscal 2022 Base Salary		Percentage Change
Daniel A. Carestio		$542,385		$767,280		41.46%
Walter M Rosebrough, Jr.		$925,000		$473,780		-48.78%
Michael J. Tokich		$536,125		$555,800		3.67%
J. Adam Zangerle		$422,820		$445,180		5.29%
Andrew Xilas		N/A		$332,055(1)		N/A
Cary L. Majors		$392,105		$415,180		5.88%

 

(1)	Reflects salary earned subsequent to the Cantel Medical acquisition.

STERIS Annual Incentive Compensation (cash bonus)

The Company’s Management Incentive Compensation Plan (“MICP” or “Plan”) is generally designed to set target bonus opportunities to reflect the market median for comparable positions and to produce median cash bonus compensation if target results are achieved. Bonus opportunities also are structured to be sufficient to produce top quartile cash compensation when maximum goals are achieved.

In general, if threshold levels of performance are not exceeded, executives earn no bonus and their resulting compensation levels are in the bottom quartile. The foregoing performance to compensation relationships are all consistent with the Company’s pay-for-performance philosophy.

In fiscal 2022, all executive officers of the Company were selected by the Committee for participation in the MICP at or prior to the beginning of the fiscal year, except for Mr. Xilas, whose participation was approved by the Committee subsequent to the Company’s acquisition of Cantel Medical. Also at the beginning of the fiscal year, the Committee approved general metrics for the MICP for fiscal 2022

 

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participants. These metrics are described below and were essentially the same measures as those utilized by the Company in prior years. An individual’s annual incentive compensation target (target bonus level) was expressed as a percentage of base salary received during the fiscal year, except that in the case of Mr. Xilas, only base salary received after July 31, 2021 (the end of Cantel’s former 2021 fiscal year) was included. The incentive compensation target bonus level was based upon each participant’s level of responsibility.

Target bonus levels as a percentage of base salary received for fiscal 2022 were as follows for each named executive officer:

 

Name		Fiscal 2022     Target Level
Daniel A. Carestio			103.5%
Walter M Rosebrough, Jr.			120.0%
Michael J. Tokich			75.0%
J. Adam Zangerle			70.0%
Andrew Xilas			60.0%
Cary L. Majors			70.0%

For fiscal 2022, the target bonus for Mr. Carestio was 103.5% of base salary received, reflecting a blend of his target bonus as COO (90%) and as CEO (110%) and the relative periods in each position. The target bonus for Mr. Rosebrough was 120% of base salary received, which remained unchanged from his fiscal 2021 percentage (per his Transition Agreement, described on page 54). The target bonus percentages for the other named executive officers (other than Mr. Xilas) were unchanged from fiscal 2021, and Mr. Xilas’s target bonus was consistent with his target bonus at Cantel Medical. The fiscal 2022 bonuses for each named executive officer were based on performance against full fiscal year 2022 financial objectives and could range from 0% to a maximum of 200% of target bonus based on actual performance. Per the MICP provisions, the Committee also had the ability to modify the bonuses of each named executive officer based upon performance against individual objectives.

Financial targets were based on our operating plan financial metrics for the 2022 fiscal year, as reviewed with the Committee and approved by the Board. The Committee and the Board evaluate the annual operating plan and consider financial metrics important to shareholder value and that support the overall strength and success of the Company’s business. After consideration of the consultant’s compensation data, the recommendation of management, and approval of the Company’s operating plan, the Company financial performance metrics described below were identified and approved by the Committee to establish criteria for calculating bonus compensation targets under the Company’s incentive compensation plans.

Consistent with STERIS’s practices for the past several years, for fiscal year 2022 the Committee determined applicable financial metrics and weighting to be:

 

•

Earnings before interest and taxes (“EBIT”)—75% weighting, and

 

•

Free cash flow (which we define as cash flow from operating activities less purchases of property, plant, equipment and intangibles, plus proceeds from the sale of property, plant, equipment and intangibles)—25% weighting,

 

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excluding in each case the effect of amounts related to the following special items that the Committee considers not representative of ongoing operations: impairment and restructuring charges, goodwill impairment charges, amortization and impairment of purchased intangible assets, loss from fair value adjustment of acquisition related consideration, gains or losses on sales of assets outside the ordinary course of business, gain or loss on sales or divestiture of a subsidiary, costs associated with divestiture of discontinued operations, acquisition-related transaction and integration expenses, pandemic related charges, costs or expenses, and other special or one-time regulatory, tax, litigation, settlement, pension, benefit, or governmental charges, costs or expenses, and the effects of other such items. We chose the two metrics, EBIT and free cash flow, because we believe these two operating metrics are the most representative short-term measure of long-term shareholder value creation; we view EBIT as the key driver of our ultimate bottom line earnings and utilization of a free cash flow objective is intended to incent management to appropriately manage “non-income” cash/balance sheet items (in addition to earnings) like inventory, accounts receivable, accounts payable and capital spending.

Under the MICP, the fiscal year 2022 financial performance objectives were as follows: target performance for EBIT and free cash flow for 100% payout under the approved targets for the MICP for the year were $1,031.5 million and $594.0 million, respectively. Spending lower than planned capital expenditures was limited to $10 million to increase free cash flow for bonus purposes. Free cash flow payout percentage was limited to the EBIT payout percentage until EBIT exceeded $876.8 million.

The incentive compensation payable was capped at 200% of target, regardless of performance above the maximum performance level. To achieve the maximum performance level, EBIT of $1,186.2 million and free cash flow of $683.1 million would have been required.

The following table shows achievement of financial objectives for fiscal 2021, as adjusted, as well as fiscal 2022 performance objectives (dollars in millions):

 

		Achievement for Prior Year Ending March 31, 2021				Performance Objectives for Year Ending March 31,  2022
						0% Threshold				100% Target				200% Maximum
Total Company EBIT		$	697.6			$	0				1,031.5				1,186.2
Free Cash Flow		$	461.6			$	0				594.0				683.1

Actual financial performance against Plan criteria for fiscal year 2022 was EBIT of $425.6 million on a U.S. GAAP basis and free cash flow of $399.0. Actual financial performance against the MICP criteria for fiscal year 2022, as such criteria were adjusted for the special items discussed above, was EBIT of $1,076.8 million and free cash flow of $552.5 million. This performance resulted in a weighted aggregate performance achievement of 109.2% against targeted Plan criteria for the year. The following table shows the financial metrics for the year and Plan financial attainment percentages for the same period for named executive officers (the EBIT financial metrics largely consistent with the adjusted metrics contained in the Company’s announcement of its financial results for its fiscal 2022 fourth quarter and full fiscal year):

 

Year Ending March 31, 2022
		0% Threshold				100% Target				200% Maximum				Weighting				Twelve Months Adjusted				Attainment %				Weighting Attainment %
Total Company EBIT			$0			$	1,031.5			$	1,186.2				75%			$	1,076.8				127.8				95.8
Free Cash Flow			$0			$	594.0			$	683.1				25%			$	552.5				53.5				13.4
Total																											109.2

 

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A reconciliation of the EBIT and free cash flow used to determine the targets and actual achievement for the year ending March 31, 2021 is provided below:

 

Year Ending March 31, 2021		Total Company EBIT - Actual (in millions)				Free Cash Flow  - Actual (in millions)
Metric, as reported		$	425.6			$	399.0
Adjustments for comparability:
Inventory and property “step up” to fair value		$	81.8				—
Amortization of acquired intangible assets		$	366.4				—
Acquisition and divestiture related transaction and integration expenses		$	205.8			$	159.3
Tax restructuring costs		$	0.3			$	0.3
Restructuring			—				—
Net gain divestiture		$	(0.8	)			—
Gain on fair value adjustment of acquisition related contingent consideration		$	(2.3	)			—
Less: capital expenditure savings limit			—			$	(6.1	)
Metric on comparable basis to target		$	1,076.8			$	552.5

Following the end of the fiscal year, the Committee reviewed the incentive compensation plan terms and criteria and approved bonuses calculated using an aggregate 109.2% financial achievement level based upon the adjusted financial metrics described above. After also considering individual performance (including business unit performance where applicable) against the objectives for each named executive officer described above in the “2022 Compensation Decisions” section of this Compensation Discussion and Analysis, the Committee approved the following incentive compensation awards for fiscal year 2022:

 

•

Daniel Carestio—payment of $854,729, based on performance against applicable plan criteria and personal goals and objectives for fiscal 2022 (109.2% of target bonus opportunity); and

 

•

Five other named executive officers—an aggregate payment of $1,938,767, based on performance against the applicable plan criteria and individual goals and objectives (individual bonus payouts were all 109.2% of bonus opportunity. For Mr. Xilas, these numbers do not include incentive compensation received by Mr. Xilas in respect of commitments made to Mr. Xilas by Cantel Medical prior to its acquisition by the Company.

Additional Xilas Incentive Compensation Agreements

In addition to the payments made to Mr. Xilas by the Company in respect of its 2022 fiscal year pursuant to the Company’s MICP, Mr. Xilas received payments in fiscal 2022 subsequent to the acquisition of Cantel Medical pursuant to the three incentive arrangements established and maintained by Cantel prior to the acquisition. None of these arrangements remain in force.

Hu-Friedy Mfg. Co. Bonus

In conjunction with the sale (“Sale”) of Hu-Friedy Management Co., LLC and its holding company (collectively “Hu-Friedy”) to Cantel Medical in 2019, Mr. Xilas, as well as several other then Hu-Friedy

 

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employees, each entered into an Earnout Bonus Agreement with Hu-Friedy (“Earnout Agreement”). The Earnout Agreement for Mr. Xilas provided for a target bonus of $300,000 to be earned in full by Mr. Xilas if the Sale was consummated, certain earnout milestones were satisfied, and Mr. Xilas remained employed by Cantel or subsidiaries until the earnout amount became final and binding (with exceptions for termination by Mr. Xilas for Good Reason or by Cantel for lack of Cause). The milestones were based upon Net Sales and Gross Margins. Prior to the closing of the Company’s acquisition of Cantel, Cantel determined that Hu-Friedy would not meet the Margin and Net Sales milestones and that it was unlikely that the Company’s acquisition of Cantel would close before the expiration of the referenced earnout period (which would have accelerated payment of the bonus despite the milestones not having been satisfied). Consequently, Cantel and Mr. Xilas agreed to modify the Earnout Agreement to pay a special bonus in the same $300,000 amount, not contingent upon the closing of sale of Cantel Medical to the Company, and payable in two installments, 25% earned on June 30, 2021 and 75% earned on December 31, 2021. These payments were contingent only upon the continued employment through the relevant date earned. Mr. Xilas received both installments.

Profit-Based Incentive Bonus

Cantel also offered a Profit-Based Incentive Bonus to certain of its Dental Division employees, including Mr. Xilas, to incentivize them to achieve a quality of earnings target for the Dental Division during the fourth quarter of Cantel’s 2021 fiscal year (ending July 31, 2021) of 20.6%, which was roughly equal to the pre-Covid achievement results for the second quarter of fiscal 2020. Payout of this incentive was contingent upon Mr. Xilas remaining in the employ of Cantel and its subsidiaries through October 7, 2021, and this incentive was payable on or around October 15, 2021. The Division achieved 120% of target, and Mr. Xilas received a payment of $300,000 on October 15, 2021 pursuant to this arrangement.

Cantel Annual Incentive Plan

The Cantel Annual Incentive Plan (“AIP”) was maintained by Cantel Medical for management employees generally, including Mr. Xilas. There were two measurement periods under this Plan – one based on financial results for the first half of the Cantel 2021 fiscal year and the second for the full fiscal year. Payments for the full fiscal year were reduced by those made in respect of the first half. Mr. Xilas’s targets were based upon global Dental Division Net Sales and Adjusted Operating Profit, and both targets were exceeded. He received a bonus for the second measurement period (full year net of first half) of $251,571 under the AIP on October 8, 2021.

Long-Term Equity Incentive Compensation

Equity incentives are considered necessary to attract and retain employees critical to our continuing, long-term success, as well as providing employees significant alignment of interest with our shareholders. The Committee views nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units as a direct link between management and shareholders. Equity incentives are provided under the Company’s 2006 Long-Term Equity Incentive Plan (the “2006 Plan”). The 2006 Plan was initially approved by shareholders of STERIS Corporation in July of 2006. The Plan has since been approved by shareholders and amended and restated on several occasions.

Most recently, the Plan was assumed, amended and restated by the Company effective March 28, 2019 in conjunction with the Redomiciliation. Also, in connection with the Redomiciliation, all

 

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outstanding awards under the 2006 Plan in respect of Old STERIS ordinary shares were converted into equity awards for the same number of Ordinary Shares with the other terms and conditions of the awards remaining the same, except as otherwise required by law.

With respect to the amount and type of equity incentives provided to each recipient, the Committee generally considers its compensation consultant’s data regarding competitive trends and practices, the award recipient’s salary and level within our organization, the nature and complexity of the position, the recommendation of the CEO, and the Committee’s own evaluation of the performance of named executive officers, since the Committee members generally have an opportunity to observe their performance and have information on the level of past awards. The Committee ultimately decides the amount and mix of long-term compensation (stock options, stock appreciation rights, restricted shares, restricted share units and other types of equity awards) granted to each named executive officer, other corporate officers, and any other executives who report to the CEO, with input from the CEO.

For the past several years, long-term equity awards to each named executive officer have generally consisted of stock options and restricted stock. In keeping with the Company’s approach, the consultant has developed long-term equity awards guidelines for consideration by the CEO and Committee for senior management. The CEO and Committee also consider other factors in determining award mix, including retention concerns and the executive’s current equity holdings compared to the Officer Stock Ownership guideline requirements (discussed subsequently) for Company stock, since stock options do not count toward the Officer Stock Ownership guidelines.

The consultant’s long-term equity guidelines place more emphasis on options than restricted stock for the CEO and CFO, and equal or greater emphasis for other executives. This is consistent with the Company’s pay-for-performance philosophy as all value earned through stock options is solely dependent upon an increase of our stock price, which reflects investors’ views on the Company’s financial performance and long-term prospects. The Committee believes that options provide a strong linkage to the Company’s performance because the executive benefits only if and to the extent the Company’s stock price increases and the vesting provisions help prevent executives from fully capitalizing on near-term increases in stock values. The 2006 Plan provisions prohibit stock options from being granted at option prices less than 100% of fair market value of the underlying shares on the grant date and prohibit options from being re-priced. Beginning in fiscal 2019, option prices for all executive and other employee stock option awards have been fixed at 110% of the grant date fair market value of the underlying Ordinary Shares.

The Committee believes that the vesting requirements for Company equity awards are more restrictive than those required generally by other companies both in terms of the length of the vesting period (generally four years) and the use of cliff vesting for the majority of restricted stock awards. Restricted stock awards made to employees who have attained age 55 and have at least five years of service generally vest on a prorata basis over a four year period. Restricted stock awards to employees who have at least twenty-five years of service also will generally vest on a prorata basis over a four-year period.

The approval of long-term equity incentive compensation is typically made early in the fiscal year (April or May) and effective shortly after the date of filing of the Company’s 10-K filing for its prior fiscal year. This was the case for regular equity awards for fiscal 2022. The compensation consultant provides survey data for long-term incentives, reflecting market median data and provides the Committee with equity award guidelines in dollars based upon this data. Beginning with fiscal year 2020 pursuant to a

 

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new methodology approved by the Committee in fiscal 2019, share values to be utilized for annual awards were determined shortly before the grant date based upon Company share price averages over a predetermined period following the Company’s announcement of its prior year financial results. These values and the other information were then used in determining the number of options and restricted shares to be awarded to recipients, and values were not modified to reflect any subsequent increase or decrease in value of the Company’s stock between the end of the predetermined period and the effective date of the grant.

Later in fiscal 2022, a second series of equity awards was approved by the Committee for most of the named officers and certain other management employees. These awards were intended to compensate these employees for their success in conjunction with the Cantel Medical acquisition and related matters, and the resulting increase in size and complexity of the combined organization, as well as to serve as bridge awards until the making of the fiscal 2023 awards, at which time it was anticipated that larger awards would be granted due to a peer group that would include some larger peers.

The value of Mr. Carestio’s fiscal year 2022 equity grants was below the median of the peer group data and survey data provided by the consultant. Because of market factors and the broader complexity and scope of responsibilities of his position, Mr. Carestio’s long-term equity compensation is greater than the other named executive officers. Due to his transition status, Mr. Rosebrough did not receive any equity awards for fiscal 2022.

As part of its oversight of the long-term equity award program, the Committee and management annually review data from the compensation consultant regarding the cost of the equity award program in terms of share usage and value transfer. The Company’s overhang from outstanding grants was at the peer group median as of September 30, 2020, while total overhang, including overhang from shares available for future grant, was between the 25^th percentile and the median. The Company’s three-year average share usage approximated the peer group median. The Company’s three-year average fair value transfer was near or above the 25^th percentile of peers in absolute dollars as a percentage of market capitalization and as a percentage of revenue. On balance, the consultant and Committee believe the Company has prudently managed the equity program in support of the shareholders’ interests.

Fiscal 2022 awards to the named executive officers under the 2006 Plan were as follows:

 

Name		Number of Restricted Shares		Number of Stock Options		Aggregate Award Fair Values ($)
Daniel A. Carestio		7,212		78,236		4,268,559
Walter M Rosebrough, Jr.		N/A		N/A		N/A
Michael J. Tokich		2,868		45,756		2,333,837
J. Adam Zangerle		4,084		25,480		1,732,672
Andrew Xilas(1)		1,156		6,304		479,916
Cary L. Majors		2,656		14,152		1,039,081

 

(1)	Mr. Xilas also received certain equity awards from Cantel Medical that were granted prior to the acquisition of Cantel Medical and were converted into STERIS restricted stock units effective as of the acquisition date.

For a discussion of the 2006 Plan and Cantel Plans (as defined below), see pages 67 and 68.

 

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Benefit Programs and Perquisites

Our named executive officers are eligible to participate in a number of benefit programs, including health, disability and life insurance programs and a qualified 401(k) plan, all of which also are available generally to employees in the United States. None of our U.S. based executive officers have special retirement benefit arrangements such as supplemental retirement plans or excess or restoration retirement benefit plans.

Named executive officers and other senior employees may also participate in other benefit programs, including an employee relocation program and a Senior Executive Severance Plan (see page 66 for a description). The Company’s severance arrangements cover all of the named executive officers. Beginning with fiscal 2020, the Committee discontinued providing most allowances and other perquisites for executives.

Agreements Regarding Named Executive Officer Compensation

The Committee reviews and approves, or makes recommendations to the Board to approve, any agreements with the named executive officers relating to compensation or separation payments. The Company (including its subsidiaries) has no employment agreements with its current U.S. executive officers. However, Mr. Rosebrough and the Company’s STERIS Corporation subsidiary did enter into a Transition Agreement effective as of the date Mr. Rosebrough ceased to be President and CEO of the Company, providing for the continuation of his employment for a period of two years on a part-time basis of approximately five days per month as CEO Emeritus and Senior Advisor, with a base salary of $250,000 per year, a target bonus percentage of 120% and no equity awards.

The named executive officers are party to equity award agreements and covered by the Senior Executive Severance Plan and other plans described in the succeeding pages. These agreements and plans are discussed, in part, in the section of this Proxy Statement entitled “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.” The Committee believes that employment or other special agreements regarding senior management compensation for US-based executives should generally be limited to special circumstances.

Compensation Governance

We maintain several compensation governance best practices, some of which are summarized in the table that begins on page 37. A more detailed discussion of certain of these practices appears below and other of these practices are mentioned in other portions of this Proxy Statement.

Risk Assessment

The Committee has reviewed the Company’s employee compensation policies and practices and determined that the same are not reasonably likely to have a material adverse effect on the Company. This determination was based in part on a review of compensation practices and programs conducted by the Committee’s compensation consultant, FW Cook, and by management, with risk being evaluated from several perspectives, including pay mix, award time horizons, award limitations including caps, metric structure, metric alignment with business strategy, payout cliffs, and other practices or policies that mitigate risk-taking. Other risk mitigating factors reviewed included clawbacks, stock ownership guidelines, anti- hedging and pledging policies and equity grant practices, as well as more specific factors with respect to sales and service incentive plans.

 

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Clawback and Related Provisions for Annual Incentive Compensation and 2006 Plan Equity Awards

The MICP contains “clawback” provisions. Under these provisions, if the Company’s financial statements for any fiscal year are required to be restated due to material noncompliance with any financial reporting requirement as a result of intentional misconduct of a participant, the participant is required to forfeit or return, as applicable, at the request of the Board or Committee, all or a portion of the participant’s award. The amount to be recovered is the amount of the award in excess of that which would have been payable had the financial statements initially been filed as restated. The Company is entitled to obtain repayment by a variety of different methods.

The 2006 Plan (equity incentives) also contains forfeiture and recovery provisions for “Detrimental Conduct.” Detrimental Conduct includes acts of dishonesty intended to result in material personal gain or enrichment at the expense of the Company and other acts or conduct detrimental or prejudicial to the business, reputation, or other significant interest of the Company.

Restrictions on Securities Transactions

The Company maintains an Insider Trading Policy which restricts activities in or relating to Company stock by Directors, executive officers and employees and their respective related persons. These restrictions include advance clearance requirements for Directors, executive officers and certain other employees for all transactions as well as “blackout” provisions. The Insider Trading Policy also includes a blanket prohibition that prevents Directors, executive officers, employees and their respective related persons from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars or exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, decreases in the market value of the Company’s equity securities, whether granted as part of compensation to, or otherwise held directly or indirectly by, such Director, executive officer, employee or their respective related persons. The Insider Trading Policy further prohibits other types of speculative transactions in Company stock, including short-term trading, short sales, option trading and pledging (including margin purchases of Company stock).

Officer Stock Ownership Guidelines

One of the primary objectives of the Company’s equity incentives is to build stock ownership among executives, thereby aligning their interests more closely with those of the shareholders. To reinforce this objective, the Committee first established stock ownership guidelines for senior managers of STERIS Corporation in 2006. The guidelines have been subsequently revised on several occasions. The Committee believes the guidelines further align the interests of senior management with those of the shareholders. Senior managers (including the named executive officers) are required to maintain a significant equity interest in the Company through ownership of stock that they acquire either with their own funds or through certain long-term incentive awards. The Committee believes that stock ownership helps create economic alignment with shareholders and is a factor in motivating our senior management to enhance shareholder value. The stock ownership requirements are expressed as a multiple of salary rather than a fixed number of shares, as was the case at one time. The Committee believes that this approach, which is consistent with the approach used in the Director Stock Ownership Guidelines, reflects prevailing market practices, and also has the benefit of adjusting for changing circumstances that should influence shareholding requirements. The following table outlines

 

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the required officer share ownership values at various levels within the Company, as defined by multiples of base salary for each officer:

 

Position:		Shareholding Requirements:
CEO		6 times base salary
CFO		4 times base salary
Other Senior Vice Presidents		3 times base salary
Corporate Vice Presidents		2 times base salary

The following share types are included under these guidelines (stock options do not count toward share ownership):

 

•

Shares purchased/owned outright;

 

•

Shares acquired from exercised stock options (unexercised options are not counted);

 

•

Shares purchased through the STERIS Corporation 401(k) plan; and/or

 

•

Unvested restricted shares and restricted shares that have vested.

From the time a senior manager achieves a position subject to these guidelines, he or she has a five-year period to attain the applicable shareholding requirements. Likewise, if an officer already subject to the guidelines is promoted to a position with higher shareholding requirements, he or she has a five-year period in which to satisfy the higher requirements. A steady increase in share ownership over the five-year period is encouraged, subject to hardship exceptions. If the share ownership guideline is not achieved within the applicable five-year period, the CEO or the Committee is authorized to take into consideration the facts and circumstances with respect to that failure and take whatever action he or they consider appropriate, including restricting or eliminating future equity awards to the particular officer. Based on the closing price of the Company’s Ordinary Shares on the NYSE on March 31, 2022 and base salaries in effect at that date, the CEO and all of the other named executive officers, other than Mr. Xilas, satisfied these guidelines. As Mr. Xilas is a new Company executive officer, he has until June 2026 to satisfy the guidelines.

Tax Deductibility of Compensation

Prior to the passage of Tax Cuts and Jobs Act of 2017 (the “TCJA”) on December 22, 2017, Section 162(m) of the Internal Revenue Code of 1986, as amended the (“Code”) generally disallowed a tax deduction in publicly held companies for compensation paid to certain covered executive officers in excess of $1 million per officer, unless such compensation qualified as “performance-based.” Under the TCJA, the performance-based exception has been repealed with respect to taxable years beginning after December 31, 2017, subject to a special rule that “grandfathers” certain compensation paid pursuant to a written binding contract in effect as of November 2, 2017 that is not materially modified thereafter. As a result of TCJA, most of the compensation paid to our named executive officers in excess of $1 million per officer in a year will not be deductible. While the TCJA may limit the deductibility of compensation paid to our named executive officers, the Committee will—consistent with past practice—retain flexibility to design compensation programs and take such other actions it believes to be in the best long-term interests of the Company and our shareholders.

 

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		Executive Compensation: Report of the Compensation and Organization Development Committee

 

 

Report of the Compensation and Organization Development Committee

The Compensation and Organization Development Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation and Organization Development Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and in STERIS’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

Compensation and Organization Development Committee of the Board of Directors

Dr. Jacqueline B. Kosecoff, Chairman

Paul E. Martin

Christopher S. Holland

Dr. Nirav R. Shah

 

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		Executive Compensation: Compensation and Organization Development Committee Interlocks and Insider Participation

 

 

Compensation and Organization Development Committee Interlocks and Insider Participation

None of the members of the Board who served on the Compensation and Organization Development Committee during fiscal year 2022 was ever an officer or employee of the Company or of any of its subsidiaries. None of the members of the Board who served on the Compensation and Organization Development Committee during fiscal 2022 had any relationship requiring disclosure under any paragraph of Item 404 of Regulation S-K.

Tabular and Other Executive Compensation Disclosure

The persons named in the below table are referred to in this Proxy Statement as the “named executive officers.”

FISCAL 2022 SUMMARY COMPENSATION TABLE

 

Name and Principal Position		Fiscal Year					Salary ($)(1)					Bonus ($)					Stock Awards ($)(2)					Option Awards ($)(3)					Non-Equity Incentive Plan   Compensation   ($)(4)					All Other   Compensation   ($)(5)					Total ($)
Daniel A. Carestio
President and CEO				2022					767,280					—					1,397,772					2,870,787					854,729					12,600					5,903,168
				2021					542,385					—					734,161					734,701					891,377					10,145					2,912,769
				2020					521,750					—					669,469					669,524					555,461					9,638					2,425,842
Walter M Rosebrough, Jr.
Former President and   Chief Executive Officer and   Current CEO Emeritus and   Senior Advisor				2022					473,780					—					—					—					650,790					31,828					1,156,398
				2021					925,000					—					1,468,984					2,729,173					1,690,530					33,422					6,847,109
				2020					915,000					—					1,388,688					2,579,110					1,558,947					16,895					6,485,640
Michael J. Tokich
Senior Vice President   and Chief Financial Officer				2022					555,800					—					557,762					1,676,075					454,782					15,377					3,259,796
				2021					536,125					—					406,174					1,220,258					673,181					22,119					2,857,857
				2020					515,750					—					371,630					1,115,935					548,902					15,755					2,567,972
J. Adam Zangerle
Senior Vice President,   General Counsel, and   Secretary				2022					445,180					—					794,046					938,626					339,864					14,988					2,532,704
				2021					422,820					—					498,275					498,508					495,245					22,310					1,937,158
				2020					402,500					—					445,956					446,318					342,680					15,150					1,652,604
Andrew Xilas
Senior Vice President and   General Manager, Dental(6)				2022					332,055					300,000					239,986					239,930					727,970					11,810					1,851,751
Cary L. Majors
Senior Vice President,   Americas Commercial   Operations				2022					415,180					—					519,137					519,944					316,932					2,262					1,773,455
				2021					392,105					—					393,584					393,582					459,161					—					1,638,432
				2020					373,000					—					297,304					297,515					317,692					—					1,285,511

 

(1)	Regular base salary earned.

 

(2)

The dollar amounts reflect the closing sales price per share of the Company’s stock on the New York Stock Exchange Composite Tape on the effective date of the grant, representing the grant date fair value for purposes of FASB ASC topic 718. For a discussion of specific restricted stock awards granted in fiscal 2022, see “Grants of Plan-Based Awards in Fiscal 2022” below and the narrative discussion that follows. Restricted stock recipients can vote their restricted shares and will receive cash dividend equivalent payments at the same times and amounts per share as all other shareholders receiving dividend payments.

 

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