Company: ISRG
Filing Date: 2025-03-14
Form Type: DEF 14A
Source: 0001035267-25-000098
Chunk: 33

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-03-14
Form: DEF 14A
Chunk 33
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 critical retention value for our executives. By ensuring that our executives have a significant portion of their potential compensation tied to long-term stock price performance, we are able to closely align the interest of our executives with the interests of our stockholders.

As noted above, prior to 2024, our equity compensation program also provided for equity awards in the form of stock options. The Compensation Committee decided to eliminate stock options for all employees, including our executive officers, in part to better manage “overhang” in the long run while maintaining our corporate compensation philosophies. We define “overhang” as the shares subject to equity awards outstanding but not exercised, plus shares available to be granted (the “available shares”), divided by the total shares of common stock outstanding. The overhang measures the potential dilutive effect of outstanding equity awards and available shares. Also, the Compensation Committee’s decision was guided by the fact that RSUs had become the equity award preferred among the majority of our employees and is generally aligned with our industry’s practice. Additionally, we award PSUs to our executive officers, which continues to reinforce our performance-based culture in the absence of stock options, ensuring that their potential earnings remains directly linked to the Company’s performance over time.

In 2024, the majority of the total target direct compensation (base salary, target annual bonus, and the grant date fair value of equity awards) of Dr. Guthart, our CEO, and our other NEOs is long-term equity-based compensation with a mix of 50% PSUs and 50% RSUs. Linking most of our NEOs’ total target direct compensation to long-term equity emphasizes variable pay, which is consistent with the Company’s pay-for-performance philosophy. The charts below illustrate the mix of our NEOs’ total target direct compensation.

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#### Executive Compensation-Setting Process

#### Role of Compensation Committee
The Compensation Committee oversees our executive compensation program (including our executive compensation policies and practices), approves the compensation of our executives, including our NEOs (other than Dr. Guthart), and administers our various equity plans.

The Compensation Committee annually reviews the performance of Dr. Guthart to determine whether to make any changes to his compensation. Following its approval, the Compensation Committee presents such changes to the independent members of our Board for review and ratification.

#### Role of Executive Officers
Dr. Guthart makes recommendations to the Compensation Committee regarding the base salary, annual performance-based cash bonus award, and equity awards for our executive officers other than himself. At the Compensation Committee’s request