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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.          )

Filed by the Registrant þ

Filed by a party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

Tactile Systems Technology, Inc.

(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):

þ

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)(1) and 0-11

Table of Contents

Graphic

Tactile Systems Technology, Inc.

3701 Wayzata Boulevard, Suite 300

Minneapolis, Minnesota 55416

Notice of Annual Meeting of Stockholders

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LOCATION:

Wells Fargo Center

90 South Seventh St., Ste 2200

Minneapolis, MN

We are pleased to take advantage of Securities and Exchange Commission rules that allow companies to furnish their proxy materials over the internet. We are mailing to many of our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of a paper copy of our proxy materials and our 2023 Annual Report to Stockholders. The Notice contains instructions on how to access those documents and to cast your vote via the internet. The Notice also contains instructions on how to request a paper copy of our proxy materials and our 2023 Annual Report to Stockholders. All stockholders who do not receive a Notice will receive a copy of the proxy materials and the 2023 Annual Report to Stockholders. This process allows us to provide our stockholders with the information they need on a more timely basis, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials.

By Order of the Board of Directors,

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Daniel L. Reuvers

Chief Executive Officer and Director

Minneapolis, Minnesota

March 27, 2024

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TIME AND DATE:

9:00 a.m., CDT, Monday,

May 8, 2024

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RECORD DATE:

March 13, 2024

ITEMS OF BUSINESS:

1.
To elect eight directors

2.
To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2024

3.
To approve, on an advisory basis, the 2023 compensation of our named executive officers as disclosed in the accompanying Proxy Statement

4.
To approve an amendment to our Amended and Restated Certificate of Incorporation to allow for exculpation of officers as permitted by Delaware law

5.
To transact such other business as may properly come before the meeting or at any and all adjournments or postponements thereof

PROXY VOTING:

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Over the Internet at www.proxyvote.com

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Sign, date, and return your proxy card in the enclosed envelope to vote by mail.

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Telephone by following the instructions on the proxy card.

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CAUTIONARY NOTE REGARDING FORWARD- LOOKING STATEMENTS

The statements included in this Proxy Statement regarding future performance and results, expectations, plans, strategies, priorities, commitments and other statements that are not historical facts are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are based upon current beliefs, expectations and assumptions and are subject to significant risks, uncertainties and changes in circumstances that could cause actual results to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. Readers of this Proxy Statement are cautioned not to place undue reliance on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL STOCKHOLDERS MEETING TO BE HELD ON MAY 8, 2024: This Proxy Statement and our 2023 Annual Report to Stockholders are available at www.proxyvote.com.

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PROXY STATEMENT

 PROXY SUMMARY

Our Board of Directors (the “Board of Directors” or “Board”) has made this Proxy Statement and related materials available to you on the internet, or at your request has delivered printed versions to you by mail, in connection with the Board of Directors’ solicitation of proxies for our 2024 Annual Meeting of Stockholders (the “Annual Meeting”). If you requested printed versions of these materials by mail, they will also include a proxy card for the Annual Meeting.

This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the information you should consider, and we urge you to read the entire Proxy Statement, as well as our 2023 Annual Report to Stockholders, before voting.

Date, Time and Place of the Annual Meeting

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Date and Time
May 8, 2024
9:00 a.m., Central time

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Location
Wells Fargo Center
Suite 2200, 90 South Seventh Street

Minneapolis, MN 55402

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Record Date
March 13, 2024

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Mail Date
March 27, 2024

Items of Business to be Considered at the Annual Meeting

Voting Matters

  

Board Recommendation

To elect eight directors

FOR each Nominee

To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2024

FOR

To approve, on an advisory basis, the 2023 compensation of our named executive officers

FOR

To approve an amendment to our Amended and Restated Certificate of Incorporation to allow for exculpation of officers as permitted by Delaware law

FOR

2024 Proxy Statement

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Proxy Statement

CURRENT BOARD OF DIRECTORS

Age

Director
Since

Committee Memberships

Audit

Compensation and
Organization

Compliance and
Reimbursement

Nominating and
Corporate
Governance

William W. Burke* Independent

President, Austin Highlands Advisors, LLC

64

2015

Valerie L. Asbury Independent

President and Chief Executive Officer,
LifeScan, Inc.

64

2022

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Sheri L. Dodd Independent

President, Medtronic Canada at Medtronic plc

58

2021

Raymond O. Huggenberger Independent

Former Chief Executive Officer,
Inogen, Inc.

65

2017

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Daniel L. Reuvers

President and Chief Executive Officer of the Company

61

2020

D. Brent Shafer Independent

Senior Advisor, Cerner Corporation

66

2022

Carmen B. Volkart Independent

Former Chief Financial Officer, NatureWorks, LLC

63

2023

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B. Vindell Washington Independent

Chief Clinical Officer and Director of Health Equity Center of Excellence, Verily

59

2023

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 Member    Graphic Chair    * Chairman of the Board

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Proxy Statement

DIRECTOR SKILLS AND EXPERIENCE

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Current or Prior CEO

5/8

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Senior Leadership Role

8/8

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Healthcare Industry

7/8

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Medical Device Industry

6/8

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Regulatory Matters

4/8

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M&A

7/8

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Strategic Planning

8/8

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Cybersecurity, Technology, Systems or IP

6/8

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Risk Management

4/8

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Sales & Marketing

5/8

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International

7/8

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Proxy Statement

Board Diversity Matrix (as of March 13, 2024)

Board Size:

    

Total Number of Directors

8

Gender:

Male

Female

Number of directors based on gender identity

5

3

Number of directors who identify in any of the categories below:

African American or Black

1

0

White

4

3

CORPORATE GOVERNANCE HIGHLIGHTS

7 of 8 Director Nominees are Independent
Supplemental Code of Ethics for Senior Financial Officers
Fully Independent Board Committees
No Supermajority Voting Requirements
Independent Chairman of the Board
No Shareholder Rights Plan (Poison Pill)
Annual Election of All Directors
Code of Business Conduct and Ethics Applicable to All Employees and Directors
Board Oversight of Environmental, Sustainability and Social Matters
Extensive Board Oversight of Risk Management
Annual Board and Committee Evaluations
Non-Employee Directors Regularly Meet Without Management Present

EXECUTIVE COMPENSATION HIGHLIGHTS

Pay for Performance
Require Restrictive Covenant Agreement for Participation in Severance Plan
Provide Limited Executive Perquisites
Prohibit Hedging or Pledging of Company Stock
Maintain Stock Ownership Guidelines for Our Directors and Executive Officers
Engage Independent Compensation Consultant
No Excise Tax Gross-Ups
Establish Challenging Performance Goals in Incentive Plans
Require Termination of Employment in Addition to a Change in Control for Accelerated Equity Vesting (Double Trigger)
Maintain a Required Clawback Policy for Restatements and a Supplemental Clawback Policy for Misconduct

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Proposal 1: election of directors

Our Board of Directors is not divided into classes and each director serves for a one-year term until the next annual meeting of stockholders. Our directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the votes that all our stockholders would be entitled to cast in an election of directors. Vacancies on the Board of Directors, resulting from any cause, and newly created directorships resulting from any increase in the number of directors, are filled exclusively by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, and not by stockholders. A director elected by the Board of Directors to fill a vacancy shall hold office for the remainder of that term and until the director’s successor is duly elected and qualified or until his or her earlier resignation, death, or removal.

Based on the recommendation of the Nominating and Corporate Governance Committee of the Board of Directors, the Board of Directors’ nominees for election by the stockholders at the Annual Meeting are the eight current directors: William W. Burke, Valerie L. Asbury, Sheri L. Dodd, Raymond O. Huggenberger, Daniel L. Reuvers, D. Brent Shafer, Carmen B. Volkart and B. Vindell Washington. If elected, each nominee will serve as a director until the Annual Meeting of Stockholders in 2025 and until his or her successor is duly elected and qualified, subject to his or her earlier death, resignation or removal. Proxies cannot be voted for a greater number of persons than eight, which is the number of nominees named in this Proxy Statement. All of the director nominees, other than Dr. Washington, were elected as directors at our 2023 Annual Meeting of Stockholders. Dr. Washington was elected as a director by our Board of Directors, effective as of October 2, 2023. Dr. Washington was identified by a third-party search firm.

The names of and certain information about the nominees for director are set forth below. There are no family relationships among any of our directors, nominees or executive officers.

It is intended that the proxy in the form presented will be voted, unless otherwise indicated, for the election of the director nominees to the Board of Directors. If any of the nominees should for any reason be unable or unwilling to serve at any time prior to the Annual Meeting, the proxies will be voted for the election of such substitute nominee as the Board of Directors may designate.

2024 Proxy Statement

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Proposal 1: Election of Directors

 Nominees for Director

Set forth below are the biographies of each nominee for director, as well as a discussion of the particular experience, qualifications, attributes, and skills that led our Board of Directors to conclude that each person nominated to serve should serve as a director. In addition to the information presented below, we believe that each director meets the minimum qualifications established by the Nominating and Corporate Governance Committee of our Board of Directors.

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William W. Burke

Chairman of the Board of Directors

Age: 64
Director Since: 2015

Board Committees: Nominating and Corporate Governance Committee

Professional Background and Experience

Austin Highlands Advisors, LLC.

Since November 2015, has served as President of Austin Highlands Advisors, LLC, a provider of corporate advisory services.

IDEV Technologies

Served as Executive Vice President and Chief Financial Officer of IDEV Technologies, a peripheral vascular devices company, from November 2009 until the company was acquired by Abbott Laboratories in August 2013.

ReAble Therapeutics

From August 2004 to December 2007, served as Executive Vice President and Chief Financial Officer of ReAble Therapeutics, a diversified orthopedic device company that was sold to The Blackstone Group in a going private transaction in 2006 and subsequently merged with DJO Incorporated in November 2007. Mr. Burke remained with ReAble until June 2008.

Cholestech Corporation

From 2001 to 2004, served as Chief Financial Officer of Cholestech Corporation, a medical diagnostic products company.

Mr. Burke has served on the board of directors of numerous public and private companies. He currently serves on the boards of Adtalem Global Education Inc. (NYSE: ATGE), and Ceribell, Inc. He previously served on the board of directors of EQ Health Acquisition Corp. (NYSE: EQHA), Invuity, Inc. (acquired by Stryker Corporation in October 2018), LDR Holding Corporation (acquired by Zimmer Biomet in July 2016) and Medical Action Industries (acquired by Owens & Minor in October 2014).

We believe Mr. Burke is qualified to serve on our Board of Directors because of his business experience with other medical technology companies and his experience as Chief Financial Officer of other companies, including other publicly traded companies.

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Proposal 1: Election of Directors

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Valerie L. Asbury

Age: 64
Director Since: 2022

Board Committees: Audit Committee/
Nominating and Corporate Governance Committee (Chair)

Professional Background and Experience

LifeScan, Inc.

Has served as President and Chief Executive Officer of LifeScan, Inc., a diagnostic systems manufacturer with products focusing on the diabetes market, since October 2018.

Johnson & Johnson

Prior to October 2018, LifeScan was a subsidiary of Johnson & Johnson. Ms. Asbury held various positions at Johnson & Johnson beginning in 1998, serving in various leadership roles of increasing responsibility across five different medical device and pharmaceutical divisions, including 10 years in the diabetes consumer medical device space, where she focused on strategic growth and talent development. Her most recent positions at Johnson & Johnson were Global President, Diabetes Solutions from 2013 to 2018, including the Global LifeScan subsidiary until its sale in October 2018.

We believe Ms. Asbury is qualified to serve on our Board of Directors because of her extensive industry and leadership experience.

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Sheri L. Dodd

Age: 58
Director Since: 2021

Board Committees: Compliance and Reimbursement Committee

Professional Background and Experience

Medtronic Canada at Medtronic, plc

Serves as President, and is responsible for all commercial activities related to the sale and distribution of the Medtronic portfolio in Canada.
Joined Medtronic in March 2010 and has served in Vice President positions, including healthcare economics and market access, clinical research, and general management for the non-intensive diabetes therapies business and the remote patient monitoring business.

Johnson & Johnson

From November 1997 until March 2010, held various positions in both pharmaceutical and medical devices, most recently as a Vice President of health economics and reimbursement for Ethicon, Inc.

Orthopedic Surgeons, plc

Served as an outcomes researcher from January 1995 until November 1997.

World Health Organization

Served as a project manager May 1988 until September 1993.

We believe Ms. Dodd is qualified to serve on our Board of Directors because of her business experience in clinical and healthcare economics, reimbursement and home-based remote patient monitoring.

2024 Proxy Statement

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Proposal 1: Election of Directors

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Raymond O. Huggenberger

Age: 65
Director Since: 2017

Board Committees: Compensation and Organization Committee (Chair)/
Compliance and Reimbursement Committee

Professional Background and Experience

Inogen, Inc.

Served as a member of the board of directors of Inogen, Inc. (Nasdaq: INGN) from 2008 to December 2021. Mr. Huggenberger served as Inogen’s Chief Executive Officer from 2008 to February 2017 and also served as Inogen’s President from 2008 until January 2016.

Sunrise Medical Inc.

Prior to joining Inogen, Mr. Huggenberger held various management positions with Sunrise Medical Inc., a global manufacturer and distributor of durable medical equipment, culminating as its President and Chief Operating Officer.

Mr. Huggenberger currently serves on the board of directors of private companies Sommetrics, a medical device company, and Avation Medical, a medical device company. Mr. Huggenberger previously served on the board of directors of Intricon Corporation (Nasdaq: IIN), a medical technology company.

We believe Mr. Huggenberger is qualified to serve on our Board of Directors because of his management experience and service on other boards.

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Daniel L. Reuvers

President and Chief Executive Officer of the Company

Age: 61
Director Since: 2020

Board Committees: N/A

Professional Background and Experience

Tactile Systems Technology, Inc.

Has served as President, Chief Executive Officer and a Director of the Company since June 2020.

Integra LifeSciences Corporation

Served as the Executive Vice President and President, Codman Specialty Surgical, from December 2016 until June 2020. His responsibilities there included global sales, marketing, product development, quality and regulatory, and service and repair.
Joined in 2008 as Vice President of Marketing & Product Development for the company’s surgical instrument business, and held a series of roles with progressively increased responsibility. Among his accomplishments there, he led the $1B acquisition and integration of the Codman business from Johnson & Johnson.

Advanced Respiratory and Omni-Tract Surgical

Served as President, both resulting in acquisitions by Hill-Rom and Integra, respectively.

Mr. Reuvers currently serves on the board of Etac Group. He served on the board of Respirtech, Inc. for 10 years, until their acquisition by Philips.

We believe Mr. Reuvers is qualified to serve on our Board of Directors because of his extensive commercial and general management experience in the medtech industry.

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Proposal 1: Election of Directors

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D. Brent Shafer

Age: 66
Director Since: 2022

Board Committees: Audit Committee/
Compensation and Organization Committee

Professional Background and Experience

Cerner Corporation

Has served as a Senior Advisor to Cerner Corporation (“Cerner”), which develops and sells software systems to the healthcare industry, since October 2021. Previously, Mr. Shafer was the Chairman and Chief Executive Officer of Cerner from February 2018 until October 2021.

Philips

Served as Chief Executive Officer of Philips North America, a health technology company, and the North American division of Koninklijke Philips N.V. ("Philips") from February 2014 until 2018. In that position, Mr. Shafer oversaw a health technology portfolio that included a broad range of solutions and services covering patient monitoring, imaging, clinical informatics, sleep and respiratory care as well as a group of market-leading consumer-oriented brands, and he played a key role in helping Philips develop and strengthen its health care focus. Prior to that, Mr. Shafer served as Chief Executive Officer of the global Philips' Home Healthcare Solutions business from May 2010 until May 2014, as Chief Executive Officer of the North America region for Royal Philips Electronics from January 2009 until May 2010, and as president and Chief Executive Officer of the Healthcare Sales and Service business for Philips North America from May 2005 until May 2010.

Mr. Shafer currently serves on the board of Baxter International, Inc. (NYSE:BAX), a healthcare company.

We believe that Mr. Shafer is qualified to serve on our Board of Directors because of his extensive industry and leadership experience.

Graphic

  

Carmen B. Volkart

Age: 63
Director Since: 2023

Board Committees: Audit Committee (Chair)/

Compensation and Organization Committee

Professional Background and Experience

NatureWorks, LLC

Served as the Chief Financial Officer of NatureWorks LLC, an advanced material company and developer of renewably-sourced polymers and chemicals, from October 2018 to September 2023. Her responsibilities included accounting, finance and information technology. She led a successful financing for a $600M capital project.

NxThera, Inc.

From October 2012 to July 2018, she served as Chief Financial Officer and, for a portion of that time, as Senior Vice President of Commercialization, for NxThera, Inc., a medical device company.

Tornier, N.V.

Served as Global Chief Financial Officer of Tornier, N.V., a medical device company, from June 2010 to July 2012. She led Tornier, N.V. through a successful initial public offering in 2011.

Ms. Volkart has served on the board of directors of numerous public and private companies. Ms. Volkart currently serves on the board of Modular Medical, Inc. (NASDAQ: MODD), a medical device company. She previously served on the board of Antares Pharma, Inc., Sonosite, Inc. and Memry Corporation.

We believe that Ms. Volkart is qualified to serve on our Board of Directors because of her extensive leadership experience and financial expertise.

2024 Proxy Statement

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Proposal 1: Election of Directors

Graphic

  

B. Vindell Washington

Age: 59
Director Since: 2023

Board Committees: Nominating and Corporate Governance Committee/
Compliance and Reimbursement Committee (Chair)

Professional Background and Experience

Verily Life Sciences, LLC

Serves as the Chief Clinical Officer for Care and Director of the Health Equity Center of Excellence of Verily providing clinical care leadership across research and care product suites.
Joined Verily, an Alphabet-backed health technology company focused on research, care and health financing, in January 2020 and has served as Chief Clinical Officer of Verily Health Platforms, as well as Chief Executive Officer of Verily Onduo, where he led the strategy, development and execution of Onduo, a virtual population health solution.

Blue Cross Blue Shield of Louisiana

From 2017 to 2019, served as Executive Vice President and Chief Medical Officer and was responsible for the organization’s health plan medical management, accreditation, pharmacy and provider network functions.

U.S. Department of Health and Human Services

Served as National Coordinator and Principal Deputy for the Office of the National Coordinator for Healthcare Information Technology, where he was responsible for national healthcare information technology policy from 2016 to 2017.

Franciscan Missionaries of Our Lady Health System

Held a series of roles from 2009 to 2016, culminating in his promotion to Medical Group President where he was responsible for the development and execution of the organization’s ambulatory strategies.

Piedmont Emergency Medicine Associates

Worked in various roles from 1997 to 2008, culminating in serving as the group’s Chief Executive Officer and President.

We believe that Dr. Washington is qualified to serve on our Board of Directors because of his extensive experience in medicine, technology and policy, as well as his expertise in advising healthcare companies on their clinical strategy.

Board of Directors’ Recommendation

The proposal for the election of directors relates solely to the election of the directors nominated by the Board of Directors.

The Board of Directors recommends that stockholders vote FOR the election of
each of the director nominees listed above.

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CORPORATE GOVERNANCE

 Director Independence

Our Board of Directors has determined that all members of the Board of Directors, except Daniel Reuvers, are independent, as determined in accordance with the rules of the Nasdaq Stock Market. In making such independence determination, the Board of Directors considered any relationships that each such non-employee director has with our Company and all other facts and circumstances that the Board of Directors deemed relevant in determining their independence.

 Board Leadership Structure

The positions of our Chairman of the Board and Chief Executive Officer are presently separated. Separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while allowing the Chairman of the Board to lead the Board of Directors in its fundamental role of providing advice to, and independent oversight of, management. Our Board of Directors recognizes the time, effort and energy that the Chief Executive Officer must devote to his position in the current business environment, as well as the commitment required to serve as our Chairman, particularly as the Board of Directors’ oversight responsibilities continue to grow. Our Board of Directors also believes that this structure ensures a greater role for the non-management directors in the oversight of our Company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of our Board of Directors. Although our Amended and Restated Bylaws (“Bylaws”) and Corporate Governance Guidelines do not require our Chairman of the Board and Chief Executive Officer positions to be separate, our Board of Directors believes that having separate positions is the appropriate leadership structure for the Company at this time.

 Stockholder Communications

Any stockholder wishing to communicate with our Board of Directors or a particular director may do so by writing to the Board or a particular director in care of the Corporate Secretary of the Company at our principal executive offices. All communications will initially be received and processed by the Corporate Secretary, who will then refer the communication to the appropriate Board member.

 Procedures for Selecting and Nominating‌ Director Candidates

Stockholders may directly nominate a person for election to our Board of Directors by complying with the procedures set forth in Section 2.4 of our Bylaws and with Securities and Exchange Commission (“SEC”) rules and regulations. Under our Bylaws, only persons nominated in accordance with the procedures set forth in the Bylaws will be eligible to serve as directors. In order to nominate a candidate for service as a director, you must be a stockholder at the time that you give the Board notice of your nomination, and you must be entitled to vote for the election of directors at the meeting at which your nominee will be considered. In accordance with our Bylaws, director nominations generally must be made pursuant to notice delivered to, or mailed and received at, our principal executive offices, not later than the 90th day, nor earlier than the 120th day, prior to the first anniversary of the prior year’s Annual Meeting of Stockholders. For further information, see “Questions and Answers About the Annual Meeting – What is the deadline for submitting a stockholder proposal for the 2025 annual meeting?” Your notice must set forth all information relating to the nominee that is required to be disclosed in solicitations of proxies for the election of directors in an election contest, or is

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otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the nominee’s written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected. Your notice also must set forth certain information for you and any beneficial owner on whose behalf you make a nomination, as described in the Bylaws.

As required by our Corporate Governance Guidelines, when evaluating the appropriate characteristics of candidates for service as a director, the Nominating and Corporate Governance Committee takes into account many factors. The Board of Directors selects and recommends to stockholders qualified individuals who, if added to the Board, would provide the mix of director characteristics and diverse experiences, perspectives and skills appropriate for us. Board candidates are considered based on various criteria, including breadth and depth of relevant business and board skills and experiences, judgment and integrity, reputation, diversity (including geographic, occupational, gender, race and age), education, leadership ability, independence, the ability to devote sufficient time to the Board and knowledge of the Company’s industry. These considerations are made in the context of an assessment of the perceived needs of our Board of Directors at the particular point in time.

The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders in the same manner that it considers all director candidates. Stockholders who wish to suggest qualified candidates should write to Tactile Systems Technology, Inc., 3701 Wayzata Boulevard, Suite 300, Minneapolis, Minnesota 55416, Attention: Corporate Secretary. Any such recommendation should include a description of the candidate’s qualifications for board service; the candidate’s written consent to be considered for nomination and to serve if nominated and elected; and addresses and telephone numbers for contacting the stockholder and the candidate for more information.

 Board Meetings and Committees

Our Board of Directors held six meetings during 2023. The independent directors regularly hold executive sessions at meetings of the Board of Directors. During 2023, each of the directors then in office attended at least 75% of the aggregate of all meetings of the Board of Directors and all meetings of the committees of the Board of Directors on which such director then served. Directors are expected to attend the annual meetings of stockholders of the Company, as provided in our Corporate Governance Guidelines. All continuing directors at that time attended the 2023 Annual Meeting of Stockholders.

Audit Committee

Our Board of Directors has determined that each member of the Audit Committee is “independent” for Audit Committee purposes as that term is defined in the rules of the SEC and the applicable Nasdaq Stock Market rules. Our Board of Directors has determined that Ms. Volkart is an Audit Committee financial expert, as defined under the applicable rules of the SEC. Each of the members of our Audit Committee meets the requirements for financial literacy and possesses the financial qualifications required under the applicable rules and regulations of the SEC and the Nasdaq Stock Market.

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# of Meetings

Committee Members

Primary Responsibilities

in 2023

Carmen B. Volkart (Chair)

Valerie L. Asbury

D. Brent Shafer

Appointing, compensating, retaining, replacing and overseeing our independent auditor;
Pre-approving all audit and permitted non-audit services to be provided by our independent auditor;
Assisting our Board of Directors in its oversight of our financial statements and other financial information to be provided by us;
Overseeing our compliance with legal and regulatory matters and aspects of our risk management processes;
Discussing with management and our independent auditors any major issues as to the adequacy of our internal controls, any actions to be taken in light of significant or material control deficiencies and the adequacy of disclosures about changes in internal control over financial reporting;
Overseeing our cybersecurity, information technology and data security risks and threats, the potential impact of those risks and threats on our business, operations and reputation, and management’s processes, procedures and actions to identify, assess, monitor, mitigate and remediate such risks and threats; and
Establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

5

The Audit Committee operates under a written charter approved by the Board, a copy of which is available in the “Investors—Corporate Governance” section of our website at www.tactilemedical.com.

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Compensation and Organization Committee

Our Board of Directors has determined that each member of the Compensation and Organization Committee is “independent” as that term is defined in the rules of the SEC and the applicable Nasdaq Stock Market rules.

# of Meetings

Committee Members

Primary Responsibilities

in 2023

Raymond O. Huggenberger (Chair)

D. Brent Shafer

Carmen B. Volkart

Determining the compensation of our Chief Executive Officer and other executive officers;
Providing oversight of our compensation policies, plans and benefit programs;
Overseeing and administering our equity compensation plans;
Recommending to our Board of Directors the compensation arrangements for our non-employee directors;
Overseeing and reviewing our executive team and management succession planning; and
Reviewing the Company’s human capital management programs, policies, initiatives and results, including with respect to: talent management; culture; employee recruitment, training, development, promotion and retention; diversity and inclusion, equal employment opportunity and nondiscrimination; pay equity; and anti-harassment matters.

6

The Compensation and Organization Committee operates under a written charter approved by the Board, a copy of which is available in the “Investors—Corporate Governance” section of our website at www.tactilemedical.com.

Nominating and Corporate Governance Committee

Our Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is “independent” as that term is defined in the applicable Nasdaq Stock Market rules.

# of Meetings

Committee Members

Primary Responsibilities

in 2023

Valerie L. Asbury (Chair)

William W. Burke

B. Vindell Washington

Identifying qualified individuals to become Board members;
Determining the composition of the Board and its committees;
Assessing and enhancing the effectiveness of the Board and individual directors; and
Developing and implementing our Corporate Governance Guidelines.

4

The Nominating and Corporate Governance Committee operates pursuant to a written charter approved by the Board, a copy of which is available in the “Investors—Corporate Governance” section of our website at www.tactilemedical.com. A copy of our Corporate Governance Guidelines is also available in the “Investors—Corporate Governance” section of our website at www.tactilemedical.com.

The Nominating and Corporate Governance Committee considers candidates for Board membership suggested by its members and the Chief Executive Officer. Additionally, in selecting nominees for directors, the Nominating and

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Corporate Governance Committee will review candidates recommended by stockholders in the same manner and using the same general criteria as candidates recruited by the Committee and/or recommended by the Board of Directors. Any stockholder who wishes to recommend a candidate for consideration by the Committee as a nominee for director should follow the procedures described above under “Procedures for Selecting and Nominating Director Candidates.” The Nominating and Corporate Governance Committee will also consider whether to nominate any person proposed by a stockholder in accordance with the provisions of our Bylaws relating to stockholder nominations as described earlier in this Proxy Statement under the heading “Questions and Answers About the Annual Meeting – What is the deadline for submitting a stockholder proposal for the 2025 annual meeting?

Compliance and Reimbursement Committee

Our Board of Directors has determined that each member of the Compliance and Reimbursement Committee is “independent” as that term is defined in the applicable Nasdaq Stock Market rules.

# of Meetings

Committee Members

Primary Responsibilities

in 2023

B. Vindell Washington (Chair)

Raymond O. Huggenberger

Sheri L. Dodd

Assisting the Board of Directors in overseeing our regulatory compliance activities;
Monitoring and evaluating our compliance with regulatory requirements to which we are subject; and
Overseeing our objectives, policies and efforts related to corporate responsibility matters, including sustainability, environmental, corporate citizenship, social, political and public policy issues and developments.

4

The Compliance and Reimbursement Committee operates under a written charter approved by the Board, a copy of which is available in the “Investors—Corporate Governance” section of our website at www.tactilemedical.com.

 Risk Oversight

Our Board of Directors oversees the management of risks inherent in the operation of our business and the implementation of our business strategies. Our Board of Directors performs this oversight role by using several different levels of review. In connection with its reviews of the operations and corporate functions of our Company, our Board of Directors addresses the primary risks associated with those operations and corporate functions. In addition, our Board of Directors reviews the risks associated with our Company’s business strategies periodically throughout the year as part of its consideration of undertaking any such business strategies.

Each of our Board committees also coordinates oversight of the management of our risk that falls within the committee’s areas of responsibility. In performing this function, each committee has full access to management, as well as the ability to engage advisors. Our Chief Financial Officer is responsible for identifying, evaluating and implementing risk management controls and methodologies to address any identified risks. In connection with its risk management role, our Audit Committee meets privately with representatives from our independent registered public accounting firm, and privately with our Chief Financial Officer. In addition, the Compensation and Organization Committee reviews the Company’s compensation program and risk elements to the Company in connection with the structure of the compensation plan.

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Corporate Governance

 Board Evaluations

On an annual basis, the Nominating and Corporate Governance Committee leads a comprehensive evaluation process of the Board. Each director completes questionnaires covering matters related to the performance of the full Board and each standing committee. At the request of the Chair of the Nominating and Corporate Governance Committee, outside counsel reviews and prepares a summary of the completed questionnaires. The Nominating and Corporate Governance Committee reviews and discusses the results of the questionnaires, and reports the results to the full Board, which further reviews and discusses the results of the evaluations. In 2024, the Board also engaged a third-party firm to conduct interviews and assessments to enhance the evaluation process.

 Environmental, Social & Governance Matters

At Tactile Medical, our mission is to reveal and treat people with underserved chronic conditions and help them care for themselves at home. As reflected in our Code of Business Conduct and Ethics, our company is customer-focused and mission-driven. Our unique offering includes advanced, clinically proven pneumatic compression and mobile airway clearance devices, as well as continuity of care services provided by a national network of product specialist and trainers, reimbursement experts, patient advocates and clinical staff. This combination of products and services ensures that every year tens of thousands of patients receive the at-home treatment necessary to better manage their chronic conditions. In addition to improving the quality of life for patients with chronic conditions, our solutions help increase clinical efficacy and reduce overall healthcare costs.

The Company’s core values are the foundation upon which we conduct our business and interactions with patients, healthcare professionals, caregivers, business partners, shareholders, communities, and one another. Guiding the work we do every day and influencing business aspirations, our people take pride in the fact that:

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Graphic

Tactile Medical is focused more than ever on continuous improvement and our active commitment to environmental, social, and corporate governance (“ESG”) matters. This dedication is exemplified in our corporate culture, starting at the top with our Board of Directors. Our Board is actively engaged in the oversight of the Company’s environmental and social initiatives. The Board reviews the Company’s performance and progress on each ESG objective and provides guidance to management with respect to significant sustainability and corporate responsibility initiatives. In addition, our Compensation and Organization Committee and our Nominating and Corporate Governance Committee have oversight and review responsibilities related to human capital management and corporate responsibility matters, respectively.

Set forth below are the principal components of our Corporate Responsibility and Sustainability Strategy:

Human Capital Management

Attract top quality talent by expanding recruitment efforts and utilizing a Human Resource platform with enhanced capabilities to report, track and administer programs and initiatives

Present opportunities for real world learning experiences and mentorship through our Summer Internship Program

Recognize excellence, create opportunities for personal and professional growth and know that retaining our talented employees is a mission critical component of success

Evaluate employee salaries to ensure fair and competitive compensation

Offer a comprehensive benefits package to promote the health, productivity, and happiness of our employees

Foster a culture of passion for our patients, and drive to excel in our market

Encourage employee engagement and input

Provide a work environment free from harassment, intimidation, and discrimination

Drive employee growth and development through education and training, supervisory coaching, and annual performance reviews

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Diversity, Equity & Inclusion

Embrace diversity and continue to create a culture of inclusion by elevating employee engagement and seeking feedback on diversity, equity, and inclusion specific to our organization

Recruit diverse applicants with various experiences, perspectives, and ideas to facilitate innovation and a well-rounded Company
Create a fair and inclusive environment by enforcing our anti-discrimination policy and prohibiting retaliation for reporting incidents
Uphold the values of equality, dignity, and respect in business operations consistent with our Human Rights Policy
Promote the principals of diversity, equity, and inclusion and human rights through our employee training program
Further advance diversity, equity, and inclusion in the workplace and encourage systemic change through self-evaluation, improvement, and transparency

Community Involvement & Social Responsibility

Champion the communities in which we live and work by supporting our employee volunteerism and desire to engage in and improve our communities through local initiatives and charities
Support awareness of chronic lymphatic, vascular, and pulmonary conditions and enhance access to care in underserved communities by providing charitable and educational grants to organizations and healthcare professionals consistent with our mission, values, and policies
Fund and support continued clinical research to advance the treatment of chronic lymphatic, vascular, and pulmonary conditions treated by our devices, improve the lives of our patients, and lessen the financial burden on the healthcare system
Support access to care for patients experiencing financial hardship with our patient assistance consideration program discounted and donated devices

Ethics & Compliance

Live our Code of Business Conduct and Ethics which is the foundation for our compliance program, business operations, and employee behavior
Identify, analyze, prioritize, and mitigate business risks through our enterprise risk assessment process
Supply training, resources, tools, and support to engage our employees and foster an ethical and open business culture rooted in our core values
Empower our employees, vendors, customers, and other stakeholders to hold us accountable without fear of retaliation by promoting open communication, requesting feedback, and providing multiple avenues to report potential issues and concerns including a designated email account, online reporting platform and an anonymous hotline available 24/7

Privacy & Data Security

Maintain a robust data security program supported by regular security audits, with dedicated oversight by the Information Security Director, and regular reports to the Board
Uphold privacy policies, management oversight, accountability structures, security awareness training, and technology processes designed to protect privacy and personal data
Notify patients of their rights and use of personal information through our Notice of Privacy Practices provided at our first patient interaction and included in each order shipment as well as available on our website

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Sustainable Sourcing

Prohibit human trafficking, exploitation, forced labor and slavery in our business operations, including our supply chain
Survey and audit our suppliers in accordance with our Quality Management System and supplier agreements to confirm suppliers are operating in conformity with our Supplier Code of Conduct
Work with our suppliers to meet standards and requirements in the event gaps are identified

Responsible Operations

Integrate safety into all we do to reduce illness and injuries through the establishment of well-defined safety, health, and environmental policies and procedures supported by ongoing training
Review post market product quality to ascertain opportunities for advancement as well as new product development
Identify areas of development during performance improvement assessments for continuous product and service enhancement
Protect our business by maintaining a robust Business Continuity and Disaster Recovery Plan to minimize risk of business disruption and instill confidence
Monitor and assess local conditions across the country that may impede the ability of our patients to receive their device timely and educate our patients on how to plan for an emergency as part of our patient welcome materials
Identify an environmental objective and target annually through the Environmental Management System to reduce our impact
Maintain appropriate focus on our environmental footprint, including providing suitable climate-related disclosures and educating stakeholders to support informed decision making

We understand the importance of being a responsible corporate citizen and the value of providing transparency to our employees, patients, business partners, and shareholders. Further information on our ESG initiatives can be found in our Corporate Responsibility and Sustainability Report, which is available in the “Investors – Corporate Governance” section of our website at www.tactilemedical.com.

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DIRECTOR COMPENSATION

The following table presents the compensation for each person who served as a member of our Board of Directors during 2023, other than Mr. Reuvers. Mr. Reuvers, who is also our Chief Executive Officer, receives no compensation for his service as a director. The compensation received by Mr. Reuvers during 2023 is presented in the 2023 Summary Compensation Table.

 2023 Director Compensation Table

Fees Earned or Paid in Cash

Stock Awards

Total

Name

($)(1)

($)(2)

($)

William W. Burke

105,000

    

144,991

    

249,991

Valerie L. Asbury

70,000

144,991

214,991

Sheri L. Dodd

64,375

144,991

209,366

Raymond O. Huggenberger

70,000

144,991

214,991

D. Brent Shafer

71,250

144,991

216,241

Carmen B. Volkart

71,354

144,991

216,345

B. Vindell Washington(3)

16,250

87,000

103,250

Deepti Jain(4)

26,613

26,613

(1)During 2023, each non-employee director could elect to receive between 10% and 100% of their aggregate cash retainers in the form of restricted stock units (“RSUs”), with the number of RSUs calculated by dividing the amount of the retainer payable on a certain date by the closing sale price per share of our common stock on the date of grant. During 2023, no director elected to receive RSUs, and there were no RSUs issued to non-employee directors, in lieu of their quarterly cash retainer amount.
(2)Amounts shown represent the aggregate grant date fair value, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, of awards of RSUs granted in 2023. On May 8, 2023, the date of our 2023 Annual Meeting of Stockholders, we granted each non-employee director at the time 7,737 RSUs. On November 8, 2023, Dr. Washington was granted 8,700 RSUs, which had a value equal to the pro rata portion of the annual grant based on the length of Dr. Washington’s service on the board until the 2024 Annual Meeting. The RSUs granted to our non-employee directors in 2023 will vest in full on the earlier of one year from the grant date or the date of the 2024 Annual Meeting.
(3)Dr. Washington was elected as a director effective as of October 2, 2023.
(4)The service of Ms. Jain as director ended on May 8, 2023, the date of the 2023 Annual Meeting of Stockholders.

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The aggregate number of RSUs and shares subject to stock options outstanding at December 31, 2023 for each non-employee director was as follows:

Name

    

Aggregate Number of RSUs Held as of December 31, 2023

    

Aggregate Number of Stock Options Held as of December 31, 2023(1)

William W. Burke

7,737

3,713

Valerie L. Asbury

7,737

Sheri L. Dodd

7,737

Raymond O. Huggenberger

7,737

7,175

D. Brent Shafer

7,737

Carmen B. Volkart

7,737

B. Vindell Washington

8,700

(1)All of the stock options are exercisable.

In 2023, our non-employee directors received cash compensation as follows:

Non-Employee Director Compensation Element

    

Payment

Board Service (Annual Cash Retainer)

All Members

$50,000

Additional Amount for the Chairman of the Board

$50,000

Committee Service (Annual Cash Retainer)

Member

Chair

Audit Committee

$10,000

$20,000

Compensation and Organization Committee

$7,500

$15,000

Nominating and Corporate Governance Committee

$5,000

$10,000

Compliance and Reimbursement Committee

$5,000

$10,000

Non-employee directors may elect to receive between 10% and 100% of their aggregate annual cash retainers in the form of RSUs, with the number of RSUs calculated by dividing the amount of the retainer payable on a certain date by the closing sale price per share of our common stock on the date of grant. These RSUs are fully vested upon grant and represent the right to receive one share of our common stock for each RSU upon the earlier of the director’s separation from service as a director of ours or the occurrence of a change in control of our Company.

We also reimburse our directors for their reasonable out-of-pocket expenses incurred in connection with attending our board and committee meetings.

In addition, on the date of the 2023 Annual Meeting of Stockholders, each of our non-employee directors received an annual equity award of RSUs that had a value of $145,000, with the number of RSUs calculated by dividing $145,000 by the closing sale price per share of our common stock on the date of grant.

These RSUs will vest in full on the earlier of one year after the date of grant or the date of the next year’s annual meeting of stockholders, provided the director remains a member of the board as of the vesting date.

Our Stock Ownership Guidelines (the “Guidelines”) apply to our non-employee directors, as well as our executive officers. For a description of the provisions of the Guidelines applicable to our executive officers, see “Executive Compensation—Compensation Discussion and Analysis—Stock Ownership Guidelines”. Under the Guidelines, each non-employee director is expected to own shares of our common stock with a value at least equal to five times the annual Board cash retainer (not including any chair or committee retainers). Shares owned directly and indirectly, as

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well as full-value equity awards (such as RSUs) with only a time-based vesting condition, count toward the ownership level under the Guidelines, but shares subject to vested or unvested stock options and equity awards with a performance-based vesting condition do not count toward the ownership level under the Guidelines.

The applicable ownership level is to be achieved by our directors within the later of December 9, 2026 or five years of when he or she becomes subject to the Guidelines. Until a director has achieved the applicable ownership level, he or she must retain at least 50% of the “net profit shares” resulting from any stock option exercise or from the exercise, vesting or settlement of any other form of equity-based compensation award. “Net profit shares” refers to that portion of the number of shares subject to the exercise, vesting or settlement of an award that the director would receive had he or she authorized us to withhold shares otherwise deliverable in order to satisfy any applicable exercise price. Each of our non-employee directors either complies with, or is making progress within the permitted time period to comply with, the stock ownership level applicable to him or her under the Guidelines.

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PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2024. Our Board of Directors recommends that stockholders vote for ratification of this appointment. If this proposal is not approved at the Annual Meeting, the Audit Committee will reconsider its appointment, but may decide not to direct the appointment of a different independent registered public accounting firm. Even if the appointment is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in our stockholders’ best interests.

Grant Thornton LLP has audited our financial statements for each year since the year ended December 31, 2015. We expect representatives of Grant Thornton LLP to be present at the Annual Meeting and available to respond to appropriate questions. They will have the opportunity to make a statement if they desire to do so.

Board of Directors’ Recommendation

The Board of Directors recommends that stockholders vote FOR ratification of the appointment of
Grant Thornton LLP as our independent registered public accounting firm
for the year ending December 31, 2024.

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AUDIT MATTERS

 Auditor Fees

The following table sets forth fees billed for professional audit services and other services rendered to the Company by Grant Thornton LLP and its affiliates for our fiscal years ended December 31, 2023 and 2022.

Year Ended

December 31,

    

2023

    

2022

Audit Fees

$

690,560

$

592,800

Audit-Related Fees

 

2,080

 

Tax Fees

All Other Fees

 

 

Total

$

692,640

$

592,800

Audit Fees. Audit fees consist of fees billed for professional services performed by Grant Thornton LLP for the audit of our annual financial statements, the review of interim financial statements and the audit of the effectiveness of our internal control over financial reporting. Audit fees for 2023 also include fees of $78,000 for services provided in connection with our equity offering. Audit fees for 2022 also include $20,800 for professional services rendered in connection with the audit of Provider Relief Fund financial statements, which related to the requirements of acceptance of the CARES Act funding received in 2019.

Audit-Related Fees. Audit-related fees in 2023 consisted of a fee for professional services rendered in connection with training on understanding and preparing disclosures as it pertains to greenhouse gas emissions.

Tax Fees.  There were no such fees incurred in 2023 or 2022.

All Other Fees. There were no such fees incurred in 2023 or 2022.

 Pre-Approval of Audit and Non-Audit Services

It is the policy of our Audit Committee that all services to be provided by our independent registered public accounting firm, including audit services and permitted audit-related and non-audit services, must be approved in advance by our Audit Committee. Under the policy, the Chairman of the Audit Committee has also been delegated the authority to approve services up to a specified fee amount. The Chairman of the Audit Committee will report, for informational purposes only, any interim pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the independent registered public accounting firm to our management.

All Grant Thornton LLP services and fees were pre-approved in accordance with the policy described above. The fees for the year-end audit for the year ended December 31, 2023 were also approved by the Audit Committee.

 Audit Committee Report

The Audit Committee assists the Board of Directors with the oversight of the Company’s financial reporting process. Management is responsible for the Company’s internal controls, financial reporting process, and compliance with laws

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and regulations and ethical business standards. Grant Thornton LLP is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), as well as auditing the effectiveness of the Company’s internal control over financial reporting. The Audit Committee’s main responsibility is to monitor and oversee this process.

The Audit Committee reviewed and discussed the Company’s audited financial statements for the year ended December 31, 2023, with management. The Audit Committee discussed with Grant Thornton LLP the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited 2023 financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, for filing with the SEC.

 

THE AUDIT COMMITTEE

Carmen B. Volkart, Chair

Valerie L. Asbury

D. Brent Shafer

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PROPOSAL 3: ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS

We are providing our stockholders the opportunity to cast an advisory (non-binding) vote to approve the compensation of our named executive officers as disclosed in this Proxy Statement (commonly referred to as the “say-on-pay” vote), as required pursuant to Section 14A of the Exchange Act. As described in the Compensation Discussion and Analysis (“CD&A”), we have designed the compensation arrangements for our named executive officers to provide compensation in overall amounts and in forms that attract and retain talented and experienced individuals and motivate our executive officers to achieve the goals that are important to our growth. Our Board and Compensation and Organization Committee believe that our executive compensation program is tied to performance, aligns with shareholder interests and merits stockholder support. Accordingly, the Board recommends that stockholders vote in favor of the following resolution:

“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the narrative discussion contained in this Proxy Statement.”

Because your vote is advisory, it will not be binding on the Board of Directors or the Compensation and Organization Committee. However, the Board of Directors and the Compensation and Organization Committee will carefully review the voting results. To the extent there is any significant negative vote on this proposal, we may consult directly with stockholders to better understand the concerns that influenced the vote. We currently hold our say-on-pay vote every year, so the next advisory vote on the compensation of our named executive officers will occur at our 2025 Annual Meeting of Stockholders. The next advisory vote regarding the frequency of future say-on-pay votes will also occur at our 2025 Annual Meeting of Stockholders.

Board of Directors’ Recommendation

The Board of Directors recommends that stockholders vote FOR the approval of the
compensation of our named executive officers.

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EXECUTIVE COMPENSATION

 Compensation Discussion and Analysis

This section discusses the material components of the executive compensation program for our named executive officers identified below. For 2023, our named executive officers were:

Daniel L. Reuvers, Chief Executive Officer;
Elaine M. Birkemeyer, Chief Financial Officer;
Kristie T. Burns, Senior Vice President, Marketing and Clinical Affairs;
Sherri L. Ferstler, Senior Vice President, Sales; and
Brent A. Moen, Chief Financial Officer until March 19, 2023.

Effective March 20, 2023, Ms. Birkemeyer was appointed our Chief Financial Officer, replacing Mr. Moen, who had previously announced his retirement. Mr. Moen did not receive any severance or similar payments or benefits as a result of his retirement. Further, Mr. Moen did not receive any salary adjustments or equity awards in 2023, and he did not participate in the 2023 annual cash incentive program. As a result, this section does not include Mr. Moen when discussing 2023 compensation determinations and actions since they were not applicable to him.

Compensation Objectives and Process

Our compensation programs are designed to:

attract and retain individuals with superior ability and managerial experience;
align executive officers’ incentives with our corporate strategies, business objectives and the long-term interests of our stockholders; and
increase the incentive to achieve key strategic performance measures by linking incentive award opportunities to the achievement of performance objectives and by providing a portion of total compensation for executive officers in the form of ownership in the Company.

Our Compensation and Organization Committee is primarily responsible for establishing and approving the compensation for all of our executive officers. The Compensation and Organization Committee oversees our compensation and benefit plans and policies, oversees and administers our equity incentive plans and reviews and approves annually all compensation decisions relating to all of our executive officers, including our Chief Executive Officer. The Compensation and Organization Committee considers recommendations from our Chief Executive Officer regarding the compensation of our executive officers other than himself. Our Compensation and Organization Committee has the authority under its charter to engage the services of a consulting firm or other outside advisor to assist it in designing our compensation programs and in making compensation decisions.

Our Compensation and Organization Committee also values the opinions of our stockholders, and it reviews and considers the outcome of our annual say-on-pay vote, along with other relevant factors, in evaluating the compensation program for the named executive officers. At our 2022 annual meeting, stockholders showed strong

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support for our executive compensation program, with approximately 97% of votes cast approving our advisory say-on-pay resolution. The Compensation and Organization Committee considered the strong level of stockholder support and made no material changes in our executive compensation program for 2023 as a result of the 2022 say-on-pay vote.

01    

NO TAX GROSS-UPS

OUR NAMED EXECUTIVE
OFFICERS ARE NOT
ENTITLED TO ANY TAX
GROSS-UP TREATMENT
ON ANY SEVERANCE
OR CHANGE IN CONTROL
BENEFITS.

  02  

NO EXCESSIVE RISK

OUR COMPENSATION AND
ORGANIZATION COMMITTEE
REVIEWED OUR COMPENSATION
PROGRAM AND DETERMINED
THAT IT DOES NOT CREATE
INAPPROPRIATE OR EXCESSIVE
RISK THAT IS LIKELY TO HAVE A
MATERIAL ADVERSE EFFECT
ON OUR COMPANY.

  03  

STANDARDIZED EQUITY GRANT
TIMING

WE GENERALLY GRANT EQUITY
AWARDS ON THE
SECOND TRADING DAY
FOLLOWING THE
ISSUANCE OF OUR
EARNINGS RELEASE FOR A
COMPLETED FISCAL
QUARTER.

    04

INDEPENDENT
COMPENSATION CONSULTANT

OUR COMPENSATION AND
ORGANIZATION COMMITTEE
ENGAGES AN
INDEPENDENT COMPENSATION
CONSULTANT TO ASSIST THE
COMMITTEE WITH
DETERMINING COMPENSATION
FOR OUR NAMED EXECUTIVE
OFFICERS AND TO PROVIDE THE
COMMITTEE

WITH MARKET DATA AND
GUIDANCE ON BEST PRACTICES.

COMPENSATION POLICIES AND PRACTICES

08    

STOCK OWNERSHIP
GUIDELINES

WE MAINTAIN STOCK
OWNERSHIP GUIDELINES
WHICH REQUIRE OUR
NAMED EXECUTIVE
OFFICERS TO
BENEFICIALLY OWN
SHARES OF OUR COMMON
STOCK.

    05

NO HEDGING OR
PLEDGING TRANSACTIONS

OUR INSIDER TRADING
POLICY PROHIBITS OUR
DIRECTORS AND
EXECUTIVE OFFICERS
FROM PURCHASING OUR
SECURITIES ON MARGIN,
OR OTHERWISE
PLEDGING OR
HEDGING OUR
SECURITIES.

  07  

MULTI-YEAR PERFORMANCE
PERIODS

THE ANNUAL EQUITY AWARDS
GRANTED TO OUR NAMED
EXECUTIVE OFFICERS VEST OR
ARE EARNED OVER A MULTI-YEAR
PERIOD.

  06  

PERFORMANCE-BASED
COMPENSATION

OUR COMPENSATION PROGRAM IS
DESIGNED SO THAT A SIGNIFICANT
PORTION OF COMPENSATION IS
“AT RISK” BASED ON CORPORATE
PERFORMANCE, AS WELL AS EQUITY-
BASED, ALIGNING THE INTERESTS OF
OUR NAMED EXECUTIVE OFFICERS
AND OUR STOCKHOLDERS.

Graphic

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Use of Compensation Consultant and Market Comparisons

In connection with the Compensation and Organization Committee’s review of our 2023 executive compensation program, the Compensation and Organization Committee directly engaged Coda Advisors LLC (“Coda”) to act as its outside compensation consultant to perform a review of executive compensation, including a market benchmarking assessment. Coda assisted the Compensation and Organization Committee with evaluating our compensation philosophy and providing guidance in administering our compensation program. Coda does not provide any other services to the Company. The Compensation and Organization Committee has determined that the work of Coda has not raised any conflict of interest.

The Compensation and Organization Committee reviewed a report prepared by Coda reflecting a benchmarking review of our executive compensation program, including base salary, cash incentive and equity award levels for our executives, compared to competitive practice for companies in related businesses of similar size and market value. In connection with making 2023 executive compensation determinations, the competitive compensation data was analyzed for an 18-company peer group of publicly traded medical device and technology companies using the most recent annual meeting proxy statements, annual reports and 8-K filings. The 18 companies included in the peer group were:

AngioDynamics, Inc.
Cutera, Inc.
Nevro Corp.
Artivion, Inc.
Glaukos Corporation
Outset Medical, Inc.
AtriCure, Inc.
Inogen, Inc.
SI-BONE, Inc.
Axogen, Inc.
iRhythm Technologies, Inc.
STAAR Surgical Company
Axonics, Inc.
LeMaitre Vascular, Inc.
Surmodics, Inc.
Cardiovascular Systems, Inc.
MiMedx Group, Inc.
Zynex, Inc.

Although the Compensation and Organization Committee does not rely solely on benchmarking to determine any element of compensation or overall compensation, the Compensation and Organization Committee does believe that compensation data is important to the competitive positioning of the Company’s compensation levels. The Committee utilized this data to assess whether our executive compensation falls within a competitive range against industry norms. For 2023, the Committee generally targeted the 50th percentile of our peer group for benchmarking purposes.

Executive Compensation Components and 2023 Determinations

Our executive compensation program in 2023 consisted of base salary, cash incentive bonuses, long-term incentive compensation in the form of performance stock units (“PSUs”) and RSUs, and a broad-based benefits program. We have not adopted any formal guidelines for allocating total compensation between long-term and short-term compensation, cash compensation and non-cash compensation, or among different forms of non-cash compensation. The Compensation and Organization Committee considers a number of factors in setting compensation for our executive officers, including Company performance, as well as the executive’s performance, experience and responsibilities, and the compensation of executive officers in similar positions at comparable companies.

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Base Salary

Our named executive officers receive a base salary to compensate them for the satisfactory performance of duties to our Company. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. Base salaries for our named executive officers have generally been set at levels deemed necessary to attract and retain individuals with superior talent. Base salaries for 2023 for the named executive officers were set based on market competitiveness utilizing the compensation data of the peer group provided by the Compensation and Organization Committee’s compensation consultant.

In December 2022, the Compensation and Organization Committee approved increases for each named executive officer at the time, as shown below, effective January 1, 2023, based on its review of the base salaries of executives in similar positions at the companies in our peer group. In connection with the hiring and appointment of Ms. Birkemeyer as Chief Financial Officer effective March 20, 2023, and Ms. Ferstler as Senior Vice President, Sales effective July 31, 2023, the Compensation and Organization Committee established their annual base salaries, as shown below, based on its review of the base salaries of executives in similar positions at the companies in our peer group.

The following table sets forth the annual base salary of each of the named executive officers for 2023, as well as the percentage increase over 2022 base salary amounts:

Name

    

2023 Base Salary

    

2022 Base Salary

    

Percentage Increase

Daniel L. Reuvers

$

650,000

$

625,000

 

4.0

%

Elaine M. Birkemeyer

$

400,000

N/A

N/A

Kristie T. Burns

$

376,000

$

362,000

 

3.9

%

Sherri L. Ferstler

$

340,000

N/A

 

N/A

Cash Incentive Compensation

Our Compensation and Organization Committee has adopted a Management Incentive Plan (the “MIP”) pursuant to which annual cash incentive opportunities may be provided to our executive officers and other employees. The MIP provides that any of our employees is eligible to participate, and that the Compensation and Organization Committee will designate which employees will participate in the MIP and be granted an award for each calendar year performance period. When an award is made, the Compensation and Organization Committee will specify the terms and conditions of the award, which will include the performance goals and period under which the award may be earned. The performance measures specified in the MIP involve a variety of financial and operational measures, and performance goals based on these measures may relate to Company, subsidiary, business unit or individual performance. 

In connection with establishing or applying the performance goals applicable to any performance period, the Compensation and Organization Committee may adjust the performance goals or the performance measures on which they are based to equitably reflect, in the Compensation and Organization Committee’s judgment, the impact of events during the performance period that are unusual in nature or infrequently occurring (such as acquisitions, divestitures, restructuring activities or asset write-downs), changes in applicable tax laws or accounting principles, equity restructurings, reorganizations or other changes in corporate capitalization. 

Following the completion of each performance period, the Compensation and Organization Committee will determine the degree to which the applicable performance goals were attained and the corresponding award amounts that would be payable to participants based on such attainment. The Compensation and Organization Committee retains the discretion, based on factors it deems relevant, to increase or decrease (including to zero) the amount of an award that

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would otherwise be payable to any participant based on attainment of applicable performance goals. The amount of any award determined by the Compensation and Organization Committee to be payable will be paid to the participant in a lump sum cash payment no later than March 15 of the calendar year immediately following the applicable performance period. A participant must continue to be employed by us on the date of payment to receive payment of an award under the MIP.

In March 2023, the Compensation and Organization Committee, pursuant to the MIP and with respect to the 2023 performance period, selected the applicable performance measures, specified the performance goals based on those performance measures, and specified the method for calculating the amount payable to our named executive officers if and to the extent the performance goals are satisfied. As in the prior year, the Committee selected revenue and net income before interest, taxes, depreciation and amortization, stock-based compensation expense and other adjustments (“Adjusted EBITDA”) as the performance measures, which are among the performance measures set forth in the MIP.

Target bonus amounts for these named executive officers were split 65% based on our achievement of 2023 revenue goals and 35% based on our achievement of 2023 Adjusted EBITDA goals.

The following payout levels associated with the degree to which the revenue and Adjusted EBITDA goals were attained for 2023 were as follows:

Revenue (In millions)

    

Threshold

    

Target

    

Maximum

Results

$249.7

$273.7

 

$297.7

Percentage Payout Level

50%

100%

 

150%

Adjusted EBITDA (In millions)

    

Threshold

    

Target

Maximum

Results

$22.4

$27.4

 

$32.4

Percentage Payout Level

50%

100%

 

150%

The Compensation and Organization Committee provided that payout levels would be interpolated for results between the threshold and maximum levels.

In March 2023, the Compensation and Organization Committee also established the target amounts to which the resulting percentage payout level would be applied. The target dollar amount as a percentage of base salary for each participating named executive officer at the time was:

Name

    

Target Dollar Amount as a Percentage of Base Salary

Daniel L. Reuvers

    

100%

Kristie T. Burns

50%

With respect to Ms. Birkemeyer, the Compensation and Organization Committee established the target amount of her 2023 bonus at 55% of her base salary prorated for the time she served in her role in 2023, which was from March 20, 2023 through December 31, 2023.

With respect to Ms. Ferstler, the Compensation and Organization Committee established the target amount of her 2023 bonus at 50% of her base salary prorated for the time she served in her role in 2023, which was from July 31, 2023 through December 31, 2023, but with a minimum guarantee of $85,000.

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The MIP for 2023 also provided that if the aggregate amount to be paid to all employees of the Company under the MIP for 2023 would cause the Company’s Adjusted EBITDA for 2023 to fall below $22.4 million, the Company would reduce the amounts paid to all employees on a pro rata basis based on each employee’s potential bonus award payout amount such that the aggregate amount to be paid to all employees of the Company under the MIP for 2023 would not cause the Company’s Adjusted EBITDA to fall below $22.4 million.

In February 2024, our Compensation and Organization Committee determined the degree to which the 2023 revenue and Adjusted EBITDA goals were attained, and the resulting payout level relative to the target amount for each metric. For 2023, revenue was $274.4 million, and therefore the Committee determined that the resulting percentage payout level relative to the target amount for that metric was 101.8%. For 2023, Adjusted EBITDA was $29.7 million, and therefore the Committee determined that the resulting percentage payout level relative to the target amount for that metric was 122.0%. Adjusted EBITDA is a non-GAAP financial measure. Refer to Appendix A to this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure. The weightings applicable to each of the revenue metric (65%) and the Adjusted EBITDA metric (35%) were then applied to the percentage payout level for each metric, resulting in a weighted payout percentage of 109.0% of the target dollar amount. 

The Committee did not exercise any discretion to increase or decrease the amounts payable pursuant to the MIP for 2023 as calculated pursuant to the terms as described above. As a result, based on the results as applied to the MIP for 2023 as described above, the Compensation and Organization Committee’s approval resulted in the payment of the following amounts to our named executive officers under the MIP for 2023:

Name

    

2023 MIP Payment

Daniel L. Reuvers

    

$

708,500

Elaine M. Birkemeyer

$

187,898

Kristie T. Burns

$

204,920

Sherri L. Ferstler(1)

$

77,674

(1)As noted above, Ms. Ferstler had a minimum guaranteed 2023 bonus amount of $85,000, and therefore received an additional bonus payment of $7,326.

Equity-Based Compensation

Equity Awards Granted in 2023

With respect to the 2023 annual equity awards to the named executive officers, the Compensation and Organization Committee reviewed various factors, including the total compensation package of our executives, its focus on pay for performance and its compensation consultant’s recommendation to provide a mix of equity-based compensation for 2023. The Compensation and Organization Committee determined to continue to grant RSUs and PSUs to our executive officers as the forms of equity compensation awards. The Compensation and Organization Committee believes that this mix emphasizes performance, further aligning with our stockholders’ interests, and promotes retention. The Compensation and Organization Committee determined that the mix of RSUs and PSUs would be 50% RSUs and 50% PSUs for Mr. Reuvers and 60% RSUs and 40% PSUs for the other named executive officers.

In February 2023, under our 2016 Equity Incentive Plan (the “2016 Plan”), the Compensation and Organization Committee approved the grant of RSUs and PSUs (the “2023 PSUs”) to our then named executive officers, as the long-term incentive component of our compensation program. For Mr. Reuvers and Ms. Burns, the RSUs and 2023 PSUs had an effective grant date of February 22, 2023, which was the second trading day following the issuance of our earnings release for the fourth quarter and full year 2022. In connection with the appointment of Ms. Birkemeyer as Chief

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Financial Officer, the Compensation and Organization Committee approved the grant of the RSUs and the 2023 PSUs to her as her annual grant of equity awards.

The number of RSUs and the target number of 2023 PSUs granted to our named executive officers in 2023 as part of their annual grants were as follows:

Name

    

Restricted Stock Units (#)

    

Target Performance Stock Units (#)

Daniel L. Reuvers

52,613

52,613

Elaine M. Birkemeyer

17,155

11,436

Kristie T. Burns

16,724

11,149

In addition, in connection with Ms. Birkemeyer’s appointment, the Compensation and Organization Committee approved a sign-on grant of 11,913 RSUs to her. The RSUs granted to Ms. Birkemeyer in 2023 had an effective grant date of May 10, 2023, which was the second trading day following the issuance of our earnings release for the first quarter of 2023.

In connection with the appointment of Ms. Ferstler as Senior Vice President, Sales, the Compensation and Organization Committee approved a sign-on grant of 18,701 RSUs to her. The RSUs granted to Ms. Ferstler in 2023 had an effective grant date of August 9, 2023, which was the second trading day following the issuance of our earnings release for the second quarter of 2023.

The RSUs granted to our named executive officers in 2023 will vest one-third on each of the first three anniversaries of the grant date, subject to continued service on each vesting date.

The 2023 PSUs have three separate performance periods, and one-third of each grant will be earned if and to the extent performance goals based on revenue growth and Adjusted EBITDA as a percentage of revenue (“Adjusted EBITDA Margin”) are achieved in each of 2023 and 2024 (ranging from 25% to 175% of target), and one-third will be earned if and to the extent performance goals based on revenue growth and Adjusted EBITDA growth are achieved in 2025. The revenue growth performance factor will be weighted at 65% and the Adjusted EBITDA Margin performance factor will be weighted at 35%.

If and to the extent any 2023 PSUs are determined by the Compensation and Organization Committee to be earned based on the level of achievement of the performance goals, the earned 2023 PSUs with respect to the 2023 performance year and the earned 2023 PSUs with respect to the 2024 performance year will vest on the date on which the Committee certifies the number of PSUs earned with respect to the 2024 performance year, and the remaining earned 2023 PSUs with respect to the 2025 performance year will vest on the on the date on which the Committee certifies the number of 2023 PSUs earned with respect to the 2025 performance year.

Earned PSU Awards for 2023 Performance Period

2022 PSUs

On February 24, 2024, the Compensation and Organization Committee determined the degree to which the performance goals under the PSUs granted to the named executive officers in 2022 (the “2022 PSUs”) were satisfied, and the resulting number of PSUs that had been earned during the performance period of 2023 under the terms of the 2022 PSUs.

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The 2022 PSUs provided that they would have been earned if and to the extent the performance goals based on revenue change and Adjusted EBITDA Margin in 2023 were achieved, where the revenue performance factor was weighted at 80% and the Adjusted EBITDA Margin performance factor was weighted at 20%.

The 2022 PSU performance goals based on revenue change and Adjusted EBITDA Margin achieved in 2023 were as follows:

Performance Level

Revenue Change (2023 Revenue Compared to 2022 Revenue) (80% Weighting)

Revenue Change Payout Factor

2023 Adjusted EBITDA Margin (20% Weighting)

Adjusted EBITDA Margin Payout Factor

Threshold

102%

50%

9.5%

50%

Target

120%

100%

10.5%

100%

Maximum

137%

150%

11.5%

150%

The 2022 PSUs provided that if the revenue or Adjusted EBITDA Margin amount achieved by the Company during 2023 was between performance levels specified in the table, the corresponding payout factor would be determined by linear interpolation. Further, if actual results are below the threshold performance level specified in the table, the corresponding payout factor will be zero.

On February 24, 2024, our Compensation and Organization Committee determined the degree to which the 2023 revenue and Adjusted EBITDA Margin goals under the 2022 PSUs were attained, and the resulting payout level relative to the target amount for each metric. For 2023, revenue was $274.4 million, and therefore the Committee determined that the resulting payout factor relative to the target amount for the revenue change metric was 75.5%. For 2023, Adjusted EBITDA Margin was 10.8%, and therefore the Committee determined that the resulting payout factor relative to the target amount for that metric was 114.4%. Adjusted EBITDA Margin is a non-GAAP financial measure. Refer to Appendix A to this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure.

The weightings applicable to each of the revenue change metric (80%) and the Adjusted EBITDA Margin metric (20%) were then applied to the percentage payout level for each metric, resulting in a weighted payout percentage of 83.3% of the target number of PSUs. 

Based on these determinations, the Compensation and Organization Committee approved the following number of PSUs earned for each named executive officer that held 2022 PSUs:

Name

    

Target Number of 2022 PSUs

    

Actual Number of 2022 PSUs Earned

Daniel L. Reuvers

53,937

44,930

Kristie T. Burns

10,787

8,986

One-third of the earned PSUs shown in the table above vested on February 24, 2024, the date on which the Committee certified the number of PSUs earned, and the remaining two-thirds of the earned PSUs will vest on the first anniversary of that certification date.

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2023 PSUs – 2023 Performance Year

On February 24, 2024, the Compensation and Organization Committee determined the degree to which the performance goals for the 2023 performance year under the 2023 PSUs were satisfied, and the resulting number of PSUs that had been earned with respect to the 2023 performance year under the terms of the 2023 PSUs.

The 2023 PSUs provide that one-third of the target number of 2023 PSUs would have been earned if and to the extent the performance goals based on revenue change and Adjusted EBITDA Margin in 2023 were achieved, where the revenue change performance factor was weighted at 65% and the Adjusted EBITDA Margin performance factor was weighted at 35%.

The 2023 PSU performance goals based on revenue and Adjusted EBITDA Margin achieved in 2023 were as follows:

Performance Level

Revenue Change (2023 Revenue Compared to 2022 Revenue) (65% Weighting)

Revenue Change Payout Factor

2023 Adjusted EBITDA Margin (35% Weighting)

Adjusted EBITDA Margin Payout Factor

Threshold

105%

25%

8.25%

25%

Target

120%

100%

10.5%

100%

Maximum

135%

175%

12.75%

175%

The 2023 PSUs provided that if the revenue change or Adjusted EBITDA Margin amount achieved by the Company during 2023 was between performance levels specified in the table, the corresponding payout factor would be determined by linear interpolation. Further, if actual results are below the threshold performance level specified in the table, the corresponding payout factor will be zero.

On February 24, 2024, our Compensation and Organization Committee determined the degree to which the 2023 revenue change and 2023 Adjusted EBITDA Margin goals under the 2023 PSUs were attained, and the resulting payout level relative to the target amount for each metric. For 2023, revenue was $274.4 million, and therefore the Committee determined that the resulting payout factor relative to the target amount for the revenue change metric was 56.0%. For 2023, Adjusted EBITDA Margin was 10.8%, and therefore the Committee determined that the resulting payout factor relative to the target amount for that metric was 109.6%. Adjusted EBITDA Margin is a non-GAAP financial measure. Refer to Appendix A to this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure.

The weightings applicable to each of the revenue change metric (65%) and the Adjusted EBITDA Margin metric (35%) were then applied to the percentage payout level for each metric, resulting in a weighted payout percentage of 74.7% of the target number of PSUs for the 2023 performance year. 

The Compensation and Organization Committee approved the following number of PSUs earned for each named executive officer who holds 2023 PSUs pursuant to the 2023 performance year under 2023 PSUs:

Name

    

Target Number of 2023 PSUs for the 2023 Performance Year

    

Actual Number of 2023 PSUs Earned for the 2023 Performance Year

Daniel L. Reuvers

17,537

13,100

Elaine M. Birkemeyer

3,812

2,848

Kristie T. Burns

3,716

2,776

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The earned PSUs with respect to the 2023 performance year shown in the table above will vest on the date on which the Committee certifies the number of 2023 PSUs earned with respect to the 2024 performance year.

Executive Severance Arrangements

On November 1, 2018, the Compensation and Organization Committee of our Board of Directors approved and adopted the Tactile Systems Technology, Inc. Executive Employee Severance Plan (the “Severance Plan”). Employees who are designated by our Board of Directors or a committee thereof are eligible to be participants in the Severance Plan. Each of Mr. Reuvers and Mses. Birkemeyer, Burns and Ferstler are current participants in the Severance Plan. In connection with their designation as a participant in the Severance Plan, each of the participants entered into a Confidentiality, Assignment of Intellectual Property and Restrictive Covenants Agreement (each, a “Restrictive Covenants Agreement”) with us. See “Potential Payments Upon Termination or Change in Control – Severance Plan” for a description of the terms of the Severance Plan. The Compensation and Organization Committee adopted the Severance Plan in lieu of the employment agreements to provide for standardization of the severance terms for all of our executive officers.

Retirement, Health, Welfare and Additional Benefits

Our named executive officers are eligible to participate in our employee benefit plans and programs, including medical and dental benefits, flexible spending accounts and short- and long-term disability and life insurance, to the same extent as our other full-time employees, subject to the terms and eligibility requirements of those plans. Our named executive officers are also eligible to participate in a tax-qualified 401(k) defined contribution plan to the same extent as all of our other full-time employees. Our 401(k) plan permits, but does not require, the Company to make discretionary contributions. The Company made contributions to named executive officers under the 401(k) plan in 2023, as shown in the ”2023 Summary Compensation Table.”

We have an Employee Stock Purchase Plan (“ESPP”) in which all of our employees who have been employed for at least 60 days are eligible to participate. The ESPP permits employees to acquire shares of our common stock through periodic payroll deductions of up to 15% of their eligible compensation, subject to certain limitations. The purchase price of our common stock acquired on each purchase date under the ESPP will be no less than 85% of the lower of the closing market price per share of our common stock on (i) the first trading day of the applicable purchase period or (ii) the last trading day of the applicable purchase period.

Clawback Policy

We previously maintained a clawback policy covering recovery of certain incentive compensation received by executive officers under certain circumstances. In light of the incentive compensation recovery rules and listing standards that were finalized in 2023, effective October 2, 2023, we adopted a revised clawback policy pursuant to, and in compliance with, Rule 10D-1 of the Exchange Act, as amended, SEC regulations promulgated thereunder, and applicable Nasdaq listing standards (the "Required Clawback Policy"), as well as a supplemental clawback policy consistent with our prior clawback policy (the "Supplemental Clawback Policy").

The Required Clawback Policy applies to all incentive-based compensation, which is any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a financial reporting measure, received by officers of the Company, as defined under Rule 16a-1(f) of the Exchange Act (“executive officers”). The Required Clawback Policy applies in the case of an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result

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in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. The Required Clawback Policy provides that promptly following such an accounting restatement, the Compensation and Organization Committee will determine the amount of the erroneously awarded compensation, which is the excess of the amount of incentive-based compensation received by current and former executive officers during the three completed fiscal years immediately preceding the required restatement date over the amount of incentive-based compensation that otherwise would have been received had it been determined based on the restated amounts. The Company will provide each such executive officer with a written notice of such amount and a demand for repayment or return. If such repayment or return is not made within a reasonable time, the Required Clawback Policy provides that the Company will recover the erroneously awarded compensation in a reasonable and prompt manner using any lawful method, subject to limited exceptions as permitted by Nasdaq listing standards.

The Supplemental Clawback Policy provides that if any employee with the title of senior vice president or above (including executive officers) of the Company is determined by the Compensation and Organization Committee to have engaged in misconduct resulting in either a violation of the law or of Company policy that has caused significant financial or reputational harm to the Company, and either the individual committed the misconduct directly or failed in his or her responsibility to manage or monitor the applicable conduct or risks, then the Compensation and Organization Committee may determine to require recovery from such individual of any or all incentive compensation (which includes any annual or long-term incentive compensation, including equity-based compensation) that was awarded, vested or paid or is scheduled to be vested or paid during any fiscal year in which the misconduct occurred.

Compensation Risk Assessment

The Compensation and Organization Committee has reviewed the concept of risk as it relates to our compensation programs and believes that risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. The Compensation and Organization Committee believes that our compensation programs do not foster undue risk-taking, because they focus on performance of Company-wide annual goals that are aligned with the long-term interests of our stockholders and they include risk control and mitigation factors.

Stock Ownership Guidelines

Our Board of Directors has established Stock Ownership Guidelines applicable to our directors and executive officers. For a description of the provisions of the Guidelines applicable to our directors, see “Director Compensation.”

Under the Guidelines, our Chief Executive Officer is expected to own shares of our common stock with a value at least equal to three times his annual base salary, and our other executive officers are expected to own shares of our common stock with a value at least equal to one times their annual base salaries. Shares owned directly and indirectly, as well as the full-value equity awards (such as RSUs) with only a time-based vesting condition, count toward the ownership level under the Guidelines, but shares subject to vested or unvested stock options and equity awards with a performance-based vesting condition do not count toward the ownership level under the Guidelines.

The applicable ownership level is to be achieved by our executive officers within the later of December 9, 2026 or five years of when he or she becomes subject to the Guidelines. Until an executive officer has achieved the applicable ownership level, he or she must retain at least 50% of the “net profit shares” resulting from any stock option exercise or from the exercise, vesting or settlement of any other form of equity-based compensation award. “Net profit shares” refers to that portion of the number of shares subject to the exercise, vesting or settlement of an award that the officer would receive had he or she authorized us to withhold shares otherwise deliverable in order to satisfy any applicable

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exercise price or withholding taxes. The Compensation and Organization Committee is responsible for monitoring the application of the Guidelines.

Each of our executive officers either complies with, or is making progress within the permitted time period to comply with, the stock ownership level applicable to him or her under the Guidelines.

Prohibition on Pledging and Hedging

Under the terms of our Insider Trading Policy, our executive officers and directors are prohibited from: pledging our stock; engaging in short sales of our stock; buying or selling put or call options or other derivative securities based on our stock; purchasing any financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or otherwise engaging in transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of our stock; and engaging in limit orders or other pre-arranged transactions that execute automatically, except for same-day limit orders and approved 10b5-1 plans.

Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code (the “Code”) generally disallows a tax deduction to public companies for compensation of more than $1 million paid in any taxable year to each “covered employee.” Although a previous exception to this limit for “performance-based” compensation has since been eliminated, the Compensation and Organization Committee continues to believe that a significant portion of our executives’ compensation should be tied to the Company’s performance and that stockholder interests are best served if its discretion and flexibility in structuring and awarding compensation is not restricted, even though some compensation awards may have resulted in the past, and are expected to result in the future, in non-deductible compensation expenses to the Company.

The Compensation and Organization Committee also takes into account whether components of our compensation program may be subject to the penalty tax associated with Section 409A of the Code, and aims to structure the elements of compensation to be compliant with or exempt from Section 409A to avoid such potential adverse tax consequences.

 Compensation and Organization Committee Report

The Compensation and Organization Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon this review and discussion, the Compensation and Organization Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

THE COMPENSATION AND ORGANIZATION COMMITTEE

 

Raymond O. Huggenberger, Chair

D. Brent Shafer

Carmen B. Volkart

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 2023 Summary Compensation Table

The following table provides information regarding the compensation of our named executive officers for 2023, 2022 and 2021:

Salary(1)

Bonus(2)

Stock Awards(3)

Option Awards(4)

Non-Equity Incentive Plan Compensation(5)

All Other Compensation(6)

Total

Name and Principal Position

    

Year

    

($)

    

($)

    

($)

    

($)

    

($)

    

($)

    

($)

Daniel L. Reuvers

2023

650,000

1,509,993

708,500

6,100

2,874,593

Chief Executive Officer

2022

625,000

1,999,984

589,500

6,100

3,220,584

2021

571,154

1,124,931

374,999

5,800

2,076,884

Elaine M. Birkemeyer (7)

2023

315,385

849,976

187,898

1,353,259

Chief Financial Officer

Kristie T. Burns (7)

2023

376,000

399,978

204,920

6,100

986,998

SVP, Marketing and Clinical Affairs

2022

362,000

499,987

170,719

6,100

1,038,806

2021

262,500

483,276

116,653

7,269

869,698

Sherri L. Ferstler (7)

2023

143,846

7,326

339,984

77,674

3,923

572,753

SVP, Sales

Brent A. Moen (8)

2023

110,654

110,654

Former Chief Financial Officer

2022

411,000

899,987

236,900

6,100

1,553,987

2021

396,539

533,234

266,659

5,800

1,202,232

(1)Represents base salary earned during the year indicated.
(2)Represents, for Ms. Ferster in 2023, the excess of the cash bonus amount of $85,000 as provided for in her offer letter as a guaranteed bonus payment over the amount she earned and was paid as shown under the “Non-Equity Incentive Plan Compensation” column.
(3)Represents the aggregate grant date fair value of RSU and PSU awards granted during the given year, computed in accordance with FASB ASC Topic 718, which for RSUs was equal to the closing price of a share of our common stock on the date of grant, multiplied by the number of RSUs in the grant, and for PSUs was equal to the closing price of a share of our common stock on the date of grant, multiplied by the number of shares that would be earned based on the probable outcome of the applicable performance conditions.

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The following table presents the grant date fair value of the PSUs included in this column, the grant date fair value of the PSUs assuming that the highest level of performance conditions would be achieved, and the grant date fair value of the RSUs included in this column:

2023 PSUs

2023 RSUs

2022 PSUs

2022 RSUs

2021 PSUs

2021 RSUs

Grant Date Fair Value (Based on Probable Outcome)

Grant Date Fair Value (Based on Maximum Performance)

Grant Date Fair Value

Grant Date Fair Value (Based on Probable Outcome)

Grant Date Fair Value (Based on Maximum Performance)

Grant Date Fair Value

Grant Date Fair Value (Based on Probable Outcome)

Grant Date Fair Value (Based on Maximum Performance)

Grant Date Fair Value

Name

    

($)

    

($)

    

($)

    

($)

    

($)

    

($)

($)

    

($)

($)

    

Daniel L. Reuvers

754,997

1,321,233

754,997

999,992

1,499,979

999,992

749,954

1,124,932

374,977

Elaine M. Birkemeyer

239,984

419,973

609,992

Kristie T. Burns

159,988

279,969

239,989

199,991

299,977

299,996

116,640

174,959

366,636

Sherri L. Ferstler

339,984

(4)Represents the aggregate grant date fair value of the option awards granted during the given year, computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a description of the assumptions used in valuing these awards, see Note 13 to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
(5)Represents awards earned under the applicable bonus plan during the given year, related to performance objectives as to which the outcomes were substantially uncertain at the time the performance objectives were established. These amounts were earned related to performance in the year shown but paid in the following year. For additional information regarding our bonus programs, see the section titled “Executive Compensation Components and 2023 Determinations—Cash Incentive Compensation” above.
(6)Represents for each named executive officer for 2023, 2022 and 2021, the amount to be paid by the Company to match, in part, the contributions of each of them to their respective 401(K) plan account.
(7)Ms. Birkemeyer joined the Company in March 2023, Ms. Burns joined the Company in March 2021 and Ms. Ferstler joined the Company in July 2023.
(8)Mr. Moen retired from the Company in March 2023.

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 Grants of Plan-Based Awards in 2023

The following table sets forth information regarding grants of plan-based awards to our named executive officers during 2023. Mr. Moen did not receive any grants of plan-based awards in 2023.

Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)

Estimated Possible Payouts Under Equity Incentive Plan Awards

Name and Award Type

  

Grant Date

  

Date of Compensation Committee Approval

  

Threshold ($)

  

Target ($)

  

Maximum ($)

  

Threshold (#)

  

Target (#)

  

Maximum (#)

  

All Other Stock Awards: Number of Shares of Stock or Units (#)

  

Grant Date Fair Value of Stock and Option Awards ($)(2)

Daniel L. Reuvers

RSUs

2/22/2023

2/19/2023

52,613

754,997

PSUs

2/22/2023

2/19/2023

13,153

52,613

92,072

754,997

MIP

3/7/2023

325,000

650,000

975,000

Elaine M. Birkemeyer

RSUs

5/10/2023

3/7/2023

29,068

609,992

PSUs

5/10/2023

3/7/2023

2,859

11,436

20,013

239,984

MIP

3/7/2023

86,192

172,384

258,575

Kristie T. Burns

RSUs

2/22/2023

2/19/2023

16,724

239,989

PSUs

2/22/2023

2/19/2023

2,787

11,149

19,510

159,988

MIP

3/7/2023

94,000

188,000

282,000

Sherri L. Ferstler

RSUs

8/9/2023

7/17/2023

18,701

339,984

MIP

7/17/2023

35,630

71,260

106,890

(1)Amounts shown in this column represent the potential cash payout amounts under the 2023 MIP. The actual cash bonus payout amounts approved by the Compensation and Organization Committee are disclosed in the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column.
(2)Amounts represent the grant date fair value of the awards determined in accordance with FASB ASC Topic 718. Amounts related to PSUs represent the value at the grant date based upon the probable outcome of the performance conditions.

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 Outstanding Equity Awards at 2023 Fiscal Year-End

The following table sets forth certain information regarding equity awards that have been granted to our named executive officers and that were outstanding as of December 31, 2023. Mr. Moen did not hold any outstanding equity awards as of December 31, 2023.

Option Awards

Stock Awards

    

Number of Securities Underlying Unexercised Options Exercisable

    

Number of Securities Underlying Unexercised Options Unexercisable

    

Option Exercise Price