Company: INSP
Filing Date: 2025-03-18
Form Type: DEF 14A
Source: 0001140361-25-009249
Chunk: 42

Company: Inspire Medical Systems, Inc.
Filing Date: 2025-03-18
Form: DEF 14A
Chunk 42
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 2018. |

Substantial Majority of Compensation is Variable and At-Risk; Continued to Utilize Performance Stock Units Compensation Philosophy Based on Pay for Performance. Our compensation philosophy is performance-based and focuses on aligning the financial interests of our executive officers with those of our stockholders. Generally, this is accomplished by placing a substantial portion of our executive officers’ total compensation “at risk.” We consider compensation to be “at-risk” if it is subject to achievement of meaningful pre-set, objective financial or operating goals, such as in our cash-based management incentive program, or if it depends on stock price appreciation or value, as in our long-term incentive program. Consistent with the market practice of similar public companies in our industry, and in order to focus executives on growth and increasing stockholder value, our long-term incentive (“LTI”) program historically consisted solely of stock options. In our view, stock options are simple and inherently performance-based, requiring stock price appreciation before there is any value earned. Performance Stock Units. As the Company has continued to evolve and mature following its IPO in 2018, the Organization and Compensation Committee has correspondingly sought to evolve the executive compensation program as appropriate for a company of our stage of development and size.

| Inspire Medical Systems, Inc. |     | 36 |     | 2025 Proxy Statement |

TABLE OF CONTENTS

| EXECUTIVE COMPENSATION |

In this regard, beginning in 2022, the Organization and Compensation Committee introduced performance stock units (“PSUs”) as a component of our LTI program. The performance-based metrics associated with these awards, in conjunction with the proportion of total compensation that was variable and at-risk, further enhanced the link between pay and performance for our executive officers, as well as strengthened the alignment of their interests with those of our stockholders. As shown in the graphic below, in fiscal 2024, approximately 91% of our CEO’s target total direct compensation was variable and at-risk compensation, and on average, approximately 84% of the target total direct compensation of our other NEOs was variable and at-risk.

| (1) | The total direct compensation of our NEOs as reflected in the above graphic differs from the total in the “Summary Compensation Table” because it (a) reflects base salaries approved by the Organization and Compensation Committee, including promotion adjustments, with respect to Mr. Weatherby, (b) only includes cash incentive opportunity at “target”, rather than actual payout, and (c) includes the aggregate grant date value