Kevin Lobo
STRYKERAbout Kevin Lobo
Kevin A. Lobo, age 59, is Chair, Chief Executive Officer and President of Stryker; he has served as CEO since 2012 and as Chair since 2014 (periodically holding combined titles), and has been a director since 2012 . Under his leadership, Stryker reported 2024 net sales of $22.595B (+10.2% YoY) and adjusted EPS of $12.19 (+15.0% YoY) . Over 2020–2024, Stryker’s cumulative TSR reached 181.15 vs. 146.87 for the S&P 500 Health Care Index, and 2024 reported net sales growth was 10.2% . Shareholders supported say‑on‑pay with ~91% approval in 2024, and pay is heavily performance-linked (variable/stock-based averaged ~89% of NEO total direct compensation in 2024) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Stryker | Group President, Stryker Orthopaedics | 2011–2012 | Operating leadership in core orthopaedics |
| Johnson & Johnson | Various leadership roles | 2003–2011 | Global healthcare operating leadership |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Parker‑Hannifin Corporation | Director | — | Public industrial board experience |
| AdvaMed (The Advanced Medical Technology Association) | Director | — | Industry policy/advocacy exposure |
| Valley Health System | Chair, Board of Trustees | — | Health system governance |
Fixed Compensation
- 2024 cash compensation settings (effective March 1, 2024): base salary $1,450,000 (+3.6% YoY) and target bonus $2,175,000 (+3.6% YoY) .
- 2024 pay mix for CEO (salary/bonus/PSUs/options): 7% / 14% / 41% / 38% .
Multi-year compensation (CEO)
| Year | Salary ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive ($) | All Other Comp ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2022 | 1,343,833 | 6,525,629 | 8,729,415 | 1,505,790 | 458,547 | 18,563,214 |
| 2023 | 1,391,667 | 6,652,884 | 8,410,645 | 3,780,000 | 532,651 | 20,767,847 |
| 2024 | 1,441,667 | 8,699,604 | 8,003,983 | 2,936,250 | 897,865 | 21,979,369 |
Notable perquisites/policies
- Personal aircraft use permitted for Mr. Lobo (up to 60 hours/year), with $321,957 incremental cost in 2024; imputed income at SIFL rates; he pays the taxes .
- Company avoids tax gross‑ups (except relocation/expatriate or isolated cases) .
Performance Compensation
2024 Annual Bonus (CEO) – Goals, outcomes, payout
| Metric | Weight | Threshold | Target | Actual | Payout contribution |
|---|---|---|---|---|---|
| Adjusted operating income | 20% | $5.045B; +1.8% | $5.606B; +13.1% | $5.826B | 20.0% |
| Adjusted operating income margin | 20% | 25.00%; +3.4% | 25.25%; +4.5% | 25.70% | 20.0% |
| Constant currency sales | 40% | $21.092B; +2.9% | $22.202B; +8.3% | $22.670B | 40.0% |
| Free cash flow ex‑recall | 20% | $2.656B; −15.4% | $3.320B; +5.7% | $3.552B | 20.0% |
| Overachievement: Adj. op income | 35% | $5.606B; +13.1% | $5.830B; +17.7% | $5.826B | 7.1% |
| Overachievement: CC sales | 35% | $22.202B; +8.3% | $22.868B; +11.6% | $22.670B | 24.6% |
| Overachievement: Adj. EPS | 30% | $11.87; +12.0% | $12.46; +17.5% | $12.19 | 3.3% |
| CR modifier | ±10% | — | — | 0.0% | 0.0% |
| Total payout as % of target | 135.0% |
- 2024 actual CEO bonus paid: $2,936,250 (135% of $2,175,000 target) .
Long‑Term Incentives (design and grants)
- 2024 PSUs (granted Feb 7, 2024): threshold requires 3‑yr avg adjusted EPS growth ≥6% for partial credit; payout based on 3‑yr avg adjusted EPS growth and relative avg reported net sales growth vs a 18‑company medtech/comps set; 0–200% payout; cliff-vest/settle March 2027 . CEO target 25,384 PSUs (0–50,768 at max) .
- 2024 stock options (granted Feb 7, 2024): 67,695 options @ $339.77; 10‑yr term; vest 20% annually over 5 years; no repricing without shareholder approval .
- 2022 PSU cycle (2022–2024) paid at 174% of target (EPS growth 10.4% → 147% on that half; relative sales growth 94th percentile → 200% on that half) .
Option exercises/vestings (liquidity indicators)
- 2024 activity: 156,890 options exercised by Mr. Lobo; value realized $43,295,364; 38,678 shares vested from stock awards; value realized $13,660,683 .
Equity Ownership & Alignment
- Beneficial ownership (Feb 28, 2025): 100,722 shares owned; right to acquire 1,111,481 shares within 60 days; total 1,212,203; <1% of outstanding .
- Unvested/uneartned equity at 12/31/24: 2022 PSUs earned but unvested 44,507 (vested 3/21/2025); 2023 PSUs unearned at max 50,332; 2024 PSUs unearned at max 50,768 .
- Stock ownership guidelines: CEO 5x salary (5 years to comply); compliance status: all NEOs and non-employee directors at or above or projected to meet by target date .
- Hedging/pledging: Hedging prohibited; pledging prohibited except for pre-existing pledges at policy effective date; no pledging by Mr. Lobo is disclosed .
Ownership snapshot (CEO)
| Item | Amount |
|---|---|
| Shares owned directly | 100,722 |
| Right to acquire within 60 days (options/RSUs/PSUs) | 1,111,481 |
| Total beneficial (as defined) | 1,212,203 |
| % of outstanding | <1% |
| 2022 PSUs (earned, unvested at 12/31/24) | 44,507 |
| 2023 PSUs (unearned, max) | 50,332 |
| 2024 PSUs (unearned, max) | 50,768 |
Employment Terms
- No employment or severance agreement; no contractual change‑in‑control (CIC) payment arrangements .
- CIC equity treatment: Committee discretion to accelerate/waive conditions; 60‑day post‑CIC cash-out right for options (FMV minus exercise price) if so determined; options otherwise 10‑year term .
- Non‑compete: Mr. Lobo has signed a version that does not contemplate Company payments to enforce restrictions (no paid garden leave); separate non‑compete payment provisions apply only to Mr. Pierce, not Lobo .
- Clawbacks: 2015 recoupment policy for misconduct/restatements; separate 2023 Dodd‑Frank/NYSE-compliant mandatory clawback for erroneously awarded incentive-based compensation (3 prior fiscal years) .
- Hedging/pledging prohibited; ownership guidelines enforced (CEO 5x salary) .
- Perquisites: aircraft personal use permitted for CEO subject to 60‑hour cap; $321,957 incremental cost in 2024; imputed income, taxes paid by CEO .
- Tax gross‑ups: No gross‑ups (except relocation/expatriate/isolated cases) .
Board Governance
- Roles: Mr. Lobo is combined Chair/CEO/President; Board periodically reassesses structure; Stryker uses a robust Lead Independent Director (LID) model (LID: Sherilyn S. McCoy) to provide independent leadership, including agenda setting and CEO evaluation facilitation .
- Independence: All directors are independent except the Chair/CEO/President (Mr. Lobo) .
- Committees: Audit; Compensation & Human Capital; Governance & Nominating—all independent membership .
- Meetings/attendance: Board held 7 meetings in 2024; each director attended at least 75% of Board and Committee meetings .
- Director compensation: Executive directors (Mr. Lobo) receive no additional director pay .
Compensation Structure Analysis
- Strong pay-for-performance: Variable and equity compensation averaged ~89% of NEO total direct compensation in 2024; CEO 2024 bonus paid at 135% on over-target company performance .
- Long-term alignment: PSUs (0–200% payout) tied to 3‑yr EPS growth and relative sales growth vs a large medtech peer set; 2022 PSUs paid 174% on strong EPS and top-quartile sales growth .
- Options remain significant: CEO granted 67,695 options in 2024 (20%/yr vest, 10yr term); no option repricing is allowed without shareholder approval .
- Risk controls: Clawbacks; hedging/pledging ban; ownership guidelines; capped incentive payouts; independent comp consultant (Semler Brossy) .
- Say‑on‑pay support: ~91% approval in 2024; no benchmarking to a fixed percentile, but extensive comp market studies; peer group updated in 2024 (added GE HealthCare, removed Agilent) .
Director/Peer/Shareholder Context
- Comparison/peer group for benchmarking and PSU relative performance spans leading medtechs and adjacent firms; 2024 update added GE HealthCare and removed Agilent for size fit .
- Advisory vote (say‑on‑pay): Board recommends and received favorable support; 2024 approval ~91% .
Deferred Compensation and Retirement
- Supplemental Savings & Retirement Plan (nonqualified): 2024 CEO executive contributions $2,919,833; Company contributions $538,733; aggregate 2024 earnings $4,121,585; year‑end aggregate balance $21,137,023 .
- No defined benefit pension for NEOs; broad-based 401(k) with match and 7% discretionary contribution .
Investment Implications
- Alignment and pay mix: CEO pay is predominantly at‑risk and equity‑linked (2024 mix 7% salary, 14% bonus, 41% PSUs, 38% options), with rigorous three‑year PSU metrics and capped payouts—supporting long‑term alignment and reducing windfalls absent performance .
- Potential selling pressure markers: Large in‑the‑money option portfolio (right to acquire 1.11M shares within 60 days) and sizeable 2024 option exercise ($43.3M realized) suggest monitoring for incremental exercises around vesting/expiry windows and tax events .
- Governance checks on dual role: Combined Chair/CEO is balanced by a strong LID structure and fully independent committees; prior say‑on‑pay support and robust clawback/anti‑hedging/pledging policies mitigate governance risk .
- Limited severance/CIC overhang: No employment or severance agreement and no contractual CIC payments; equity treatment is at Committee discretion with an option cash‑out window—a comparatively shareholder‑friendly structure that limits automatic payouts .
- Execution track: 2024 financials (10.2% sales growth; adjusted EPS +15.0%) and 2022–2024 PSU payout at 174% reflect strong growth vs peers; 5‑yr TSR outperformed the S&P 500 Health Care Index, reinforcing pay‑performance alignment .