VREX Varex Imaging Corporation

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 ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

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Preliminary Proxy Statement

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

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

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VAREX IMAGING CORPORATION

(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):

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No fee required.

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Fee paid previously with preliminary materials.

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

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December 27, 2023​

Dear Stockholder:

You are cordially invited to attend Varex Imaging Corporation’s 2024 Annual Meeting of Stockholders on Thursday, February 8, 2024 at 4:30 p.m. Mountain Time. The meeting will be a virtual meeting of stockholders, which will be conducted via a live audio webcast. You will be able to attend the meeting, submit your questions, and vote online during the meeting by visiting www.virtualshareholdermeeting.com/VREX2024. Specific instructions for accessing and participating in the meeting are provided in the notice, proxy card, or voting instruction form you received. The Secretary’s formal notice of the meeting and the Proxy Statement appear on the following pages and describe the matters to be acted upon at the Annual Meeting.

We hope that you can join us. However, whether or not you plan to attend, please vote your shares as soon as possible so that your vote will be counted.

Sincerely,

Walter M Rosebrough, Jr
Chair of the Board

 

Varex Imaging Corporation
1678 S. Pioneer Road
Salt Lake City, Utah 84104

December 27, 2023​

NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT

Varex Imaging Corporation will hold its 2024 Annual Meeting of Stockholders on Thursday, February 8, 2024 at 4:30 p.m. Mountain Time. The meeting will be a virtual meeting of stockholders, which will be conducted via a live audio webcast. You will be able to attend the meeting, submit your questions, and vote online during the meeting by visiting www.virtualshareholdermeeting.com/VREX2024.

This Annual Meeting is being held for the following purposes:

1.

to elect seven directors to serve until the 2025 Annual Meeting of Stockholders;

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2.

to approve, on an advisory basis, the compensation of our named executive officers as described in the accompanying Proxy Statement;

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3.

to approve the Varex Imaging Corporation 2020 Omnibus Stock Plan, as Amended and Restated (the “Amended and Restated 2020 Plan”);

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4.

to ratify the appointment of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for fiscal year 2024; and

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5.

to transact any other business that properly comes before the Annual Meeting or any adjournment or postponement thereof.

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The Board of Directors has selected December 11, 2023 as the record date for determining stockholders entitled to vote at the Annual Meeting. A list of stockholders as of that date will be available for inspection during ordinary business hours at our principal executive offices at 1678 S. Pioneer Road, Salt Lake City, Utah 84104 for 10 days before the Annual Meeting. If you would like to view the list, please contact us to schedule an appointment by calling (801) 978-4186 and leaving a message.

Except for those stockholders that have already requested printed copies of our proxy materials, we are furnishing our proxy materials for this Annual Meeting to you through the Internet. On or about December 27, 2023, we mailed or emailed to stockholders as of the record date a Notice of Internet Availability of Proxy Materials (the “Notice”). If you received a Notice by mail or email, you will not receive a printed copy of the proxy materials unless you specifically request one. Instead, the Notice explains how to access and review on the Internet all of the important information contained in our Proxy Statement and in our Annual Report on Form 10-K for the fiscal year ended September 29, 2023 (sometimes also referred to herein as the “Annual Report”), as well as how to submit your proxy over the Internet. We believe that mailing or emailing the Notice and posting other materials on the Internet allows us to provide you with the information you need more quickly while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting. If you received the Notice and would still like to receive a printed copy of our proxy materials, you may request a printed copy of the proxy materials through the Internet at www.proxyvote.com; by telephone at 1-800-579-1639; or by sending an email to sendmaterial@proxyvote.com.

Whether or not you plan to attend the Annual Meeting, please vote your shares as soon as possible in accordance with the instructions provided to you to ensure that your vote is counted at the Annual Meeting.

By Order of the Board of Directors,

Kimberley E. Honeysett
Corporate Secretary

 

 

TABLE OF CONTENTS

 

 

 

 

​	​	​	Annual Meeting of Stockholders	​	​	Meeting Agenda	​
Date:	​	​	Thursday, February 8, 2024	​	​	• Election of seven directors to serve until the 2025 Annual Meeting of Stockholders ​ • Advisory vote on executive compensation ​ • Approval of the Amended and Restated 2020 Plan ​ • Ratification of Deloitte as our independent registered public accounting firm for fiscal year 2024 ​ • Transact any other business that properly comes before the Annual Meeting or any adjournment or postponement ​	​
Time:	​	​	4:30 p.m. Mountain Time	​
Place:	​	​	The 2024 Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/VREX2024 and following the instructions found in the Notice of Internet Availability of Proxy Materials and this Proxy Statement.	​
Record Date:	​	​	December 11, 2023	​
Voting:	​	​	Stockholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on.	​

​	​	​	​	Voting Matter	​	​	Board vote recommendation	​
​	1.	​	​	Election of directors	​	​	For each director nominee	​
​	2.	​	​	Advisory vote to approve executive compensation	​	​	For	​
​	3.	​	​	Approval of the Amended and Restated 2020 Plan	​	​	For	​
​	4.	​	​	Ratification of Deloitte as our independent registered public accounting firm for fiscal year 2024	​	​	For	​

Name

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Age

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Director since

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Occupation

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Other public boards

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AC

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CC

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NC

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Kathleen L. Bardwell(FE)(I)

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67

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2022

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Former Senior Vice President, Regulatory Affairs and Compliance at STERIS Corporation

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—

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M

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M

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—

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Jocelyn D. Chertoff, M.D.(I)

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68

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2017

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Chair of Radiology, Dartmouth Hitchcock Medical Center

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—

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M

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—

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C

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Timothy E. Guertin(I)

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74

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2020

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Former CEO of Varian Medical

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1

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—

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C

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M

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1

 

Name

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Age

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Director since

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Occupation

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Other public boards

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AC

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CC

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NC

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Systems, Inc.

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Jay K. Kunkel(I)

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64

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2017

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Former President Asia, Executive Vice President, Tenneco Inc.

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—

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M

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—

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M

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Walter M Rosebrough, Jr.(I)(CB)

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69

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2018

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CEO Emeritus and Senior Advisor, STERIS plc

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—

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—

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M

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M

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Sunny S. Sanyal

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59

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2017

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President and CEO, Varex

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—

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—

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—

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—

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Christine A. Tsingos(FE)(I)

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65

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2017

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Former Executive Vice President and CFO, Bio-Rad Laboratories

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3

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C

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M

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—

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2

 

3

 

GENERAL INFORMATION

Q:

Who is soliciting my proxy?

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A:

The Company’s Board is sending you this Proxy Statement in connection with the Board’s solicitation of proxies for use at the 2024 Annual Meeting of Stockholders or any adjournment or postponement thereof (the “Annual Meeting”). Certain of our directors, officers, and employees also may solicit proxies on the Board’s behalf by mail, telephone, email, or fax, or in person. We have hired Georgeson LLC to assist in soliciting proxies from brokers, bank nominees, and other stockholders.

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Q:

Who is paying for this solicitation?

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A:

We will pay for the solicitation of proxies. Our directors, officers, and employees will not receive additional remuneration. We expect that we will pay Georgeson LLC not more than $10,000, plus reasonable out-of-pocket expenses, and also will reimburse banks, brokers, custodians, nominees, and fiduciaries for their reasonable charges and expenses to forward our proxy materials to the beneficial owners of our common stock.

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Q:

What am I voting on?

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A:

You will be voting on four proposals.

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Proposal One is for the election of Kathleen L. Bardwell, Jocelyn D. Chertoff, Timothy E. Guertin, Jay K. Kunkel, Walter M Rosebrough, Jr., Sunny S. Sanyal, and Christine A. Tsingos to the Board for a one-year term ending at the 2025 Annual Meeting of Stockholders.

Proposal Two is an advisory vote on the compensation of the executive officers listed in the Summary Compensation Table (the “Named Executive Officers” or “NEOs”) as described in this Proxy Statement.

Proposal Three is the approval of the Amended and Restated 2020 Plan.

Proposal Four is the ratification of the appointment of Deloitte as our independent registered public accounting firm for fiscal year 2024.

Q:

Who can vote?

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A:

Only our stockholders of record at the close of business on December 11, 2023 may vote. Each share of common stock outstanding on that date is entitled to one vote for each director nominee and one vote on each other matter to come before the meeting.

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Q:

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials this year instead of a full set of proxy materials?

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A:

Pursuant to rules adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials (consisting of the Notice of Annual Meeting, this Proxy Statement, the corresponding proxy form, and our Annual Report on Form 10-K for the fiscal year ended September 29, 2023 (“fiscal year 2023”)) over the Internet. Therefore, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders. Starting on the date of distribution of the Notice, all stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request printed copies may be found in the Notice. If you request printed versions of the proxy materials by mail, the materials will also include a proxy card or other voting instruction form.

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As permitted by SEC rules, we will deliver one Annual Report or Proxy Statement to multiple stockholders sharing the same address unless we have received contrary instructions. We will, upon written or oral request, undertake to promptly deliver a separate copy of our Annual Report or Proxy Statement to a stockholder at a shared address to which a single copy of our Annual Report or Proxy Statement was delivered and will include instructions as to how the stockholder can notify the Company that the stockholder wishes to receive a separate copy of our Annual Report or Proxy Statement in the future. Stockholders wishing to receive a separate Annual Report or Proxy Statement

 

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in the future or stockholders sharing an address wishing to receive a single copy of our Annual Report or Proxy Statement in the future may contact us at investor.relations@vareximaging.com or at:

Varex Imaging Corporation
Attention: Investor Relations
1678 South Pioneer Road
Salt Lake City, Utah 84104
(801) 972-5000

Q:

Can I receive proxy materials for future annual meetings by email rather than receiving a paper copy of the Notice?

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A:

Yes, and doing so will help us further reduce the cost and environmental impact of our stockholder meetings. If you are a holder of record, you may elect to receive the Notice or other future proxy materials by email by logging into www.proxyvote.com and entering your email address before you vote if you are voting by Internet or any other time at www.computershare.com/investor. If your shares are registered in street name, please check with your broker, bank, or other nominee about how to receive future proxy materials by email. If you choose to receive proxy materials by email, next year you will receive an email with instructions on how to view those materials and vote before the next annual meeting. Your choice to obtain documents by email will remain in effect until you notify us otherwise.

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Q:

What is the difference between a stockholder of record and a “street name” holder?

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A:

If your shares are registered directly in your name with Computershare Trust Company, N.A., our stock transfer agent, you are considered the stockholder of record for those shares.

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If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of the shares and your shares are said to be held in “street name.” Street name holders generally cannot vote their shares directly and must instead instruct the broker, bank or other nominee how to vote their shares using the method described under “How do I vote and how do I revoke my proxy?” below.

Q:

How do I vote and how do I revoke my proxy?

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A:

If you hold your shares in your own name as a stockholder of record, you may vote your shares either online at the virtual meeting or by proxy. To vote at the meeting, please visit www.virtualshareholdermeeting.com/VREX2024 and vote when indicated. To vote by proxy, please vote in one of the following ways:

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1.

Via the Internet.   You may vote through the Internet at www.proxyvote.com by following the instructions provided in the Notice.

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2.

Via Telephone.   If you received your proxy materials or request printed copies by mail, stockholders located in the United States may vote by calling the toll-free number found on the proxy card.

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3.

Via Mail.   If you received your proxy materials or request printed copies by mail, you may vote by mail by marking, dating, signing, and mailing the proxy card in the envelope provided.

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Voting by proxy will not affect your right to vote your shares if you attend the Annual Meeting and want to vote — by voting online at the virtual meeting, you automatically revoke your proxy. You also may revoke your proxy at any time before the applicable voting deadline (11:59 p.m. Eastern Time on February 7, 2024) by giving our Secretary written notice of your revocation, by submitting a later- dated proxy card or by voting again using the telephone or Internet (your latest telephone or Internet proxy is the one that will be counted).

If you vote by proxy, the individuals named as proxyholders will vote your shares as you instruct. If you vote your shares over the telephone, you must select a voting option — “For,” “Withhold Authority,” or “Abstain” ​(for Proposal One) and “For,” “Against,” or “Abstain” ​(for Proposals Two, Three and Four) — for your proxy to be counted on that matter. If you validly vote your shares over the Internet

 

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or by mail but do not provide voting instructions on all or any voting proposal, the individuals named as proxyholders will vote your shares FOR each of the director nominees, FOR Proposal Two, FOR Proposal Three, and FOR Proposal Four. In that case, the proxyholders will have full discretion and authority to vote in the election of directors.

If your shares are registered in street name, you must vote your shares in the manner prescribed by your broker, bank, or other nominee. In most instances, you can do this over the telephone or Internet, or if you have received or request a hard copy of the Proxy Statement and accompanying voting instruction form, you may mark, sign, date, and mail your voting instruction form in the envelope your broker, bank, or other nominee provides. The materials that were sent to you have specific instructions for how to submit your vote and the deadline for doing so. If you hold shares in street name and would like to revoke your proxy, you must follow the broker, bank, or other nominee’s instructions on how to do so. If you wish to vote online at the virtual meeting, you must obtain a legal proxy from the broker, bank, or other nominee holding your shares.

Q:

What is the deadline for submitting a proxy?

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A:

Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day. To be counted, proxies submitted by telephone or the Internet must be received by 11:59 p.m. Eastern Time on February 7, 2024. Proxies submitted by mail must be received prior to the start of the Annual Meeting.

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Q:

What constitutes a quorum?

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A:

On the record date, we had 40,529,573 shares of common stock, $0.01 par value, outstanding. Voting can take place at the Annual Meeting only if stockholders owning a majority of the issued and outstanding stock entitled to vote at the Annual Meeting are present online at the virtual meeting or represented by proxy.

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Q:

What are abstentions and broker non-votes and how do they affect voting?

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A:

Abstentions — If you specify that you wish to “abstain” from voting on an item, your shares will not be voted on that item. Abstentions are counted toward establishing a quorum. Abstentions have no effect on the election of directors but are included in the shares entitled to vote on Proposals Two, Three, and Four. On Proposals Two, Three, and Four, abstentions have the effect of a vote against the proposal.

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Broker Non-Votes — If your broker holds your shares in its name and does not receive voting instructions from you, your broker has discretion to vote these shares on certain “routine” matters, such as the ratification of the appointment of the independent registered public accounting firm. However, on non- routine matters such as the election of directors and the advisory vote to approve executive compensation, your broker must receive voting instructions from you, as your broker does not have discretionary voting power for those particular items. So long as the broker has discretion to vote on at least one proposal, these “broker non-votes” are counted toward establishing a quorum but will have no effect on the proposal because they are not “entitled to vote” on the matter. When voted on “routine” matters, broker non-votes are counted toward determining the outcome of that “routine” matter.

Q:

What vote is needed?

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A:

For Proposal One, the election of directors, a majority of the votes cast at the Annual Meeting at which a quorum is present shall elect the nominees for director. For purposes of the election of directors, a “majority of votes cast” means that the number of shares voted “for” a director’s election exceeds 50% of the number of votes cast with respect to that director’s election. Votes cast shall include direction to “withhold” authority in each case and exclude “abstentions” with respect to that director’s election.

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For Proposals Two, Three, and Four, an affirmative vote of the majority of shares present online at the virtual meeting or represented by proxy at the Annual Meeting and entitled to vote is required.

 

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Q:

Is cumulative voting permitted for the election of directors?

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A:

No, in accordance with our certificate of incorporation, you may not cumulate your votes for the election of directors.

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Q:

What happens if the director nominees do not receive a majority of votes cast at the Annual Meeting?

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A:

In an uncontested election, if a nominee for director who is an incumbent director is not elected and no successor has been elected at the Annual Meeting, our Bylaws indicate that the director is to promptly tender his or her resignation to the Board. The Nominating Committee will then make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. After considering the Nominating Committee’s recommendation, the Board will decide to act on the tendered resignation and publicly disclose its decision. Any director who tenders his or her resignation will not participate in the recommendation of the Nominating Committee or the decision of the Board with respect to his or her resignation. If the director’s resignation is not accepted by the Board, the director will continue to serve until the next annual meeting and until his or her successor is duly elected, or his or her earlier resignation or removal. If the director’s resignation is accepted by the Board, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board, in its sole discretion, may fill any resulting vacancy or decrease the size of the Board pursuant to the provisions of our Bylaws.

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Q:

Can I vote on other matters?

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A:

You are entitled to vote on any other matters that are properly brought before the Annual Meeting. Our Bylaws limit the business conducted at any annual meeting to (1) business in the notice of the annual meeting, (2) business directed by the Board and (3) business brought by a stockholder of record entitled to vote at the meeting so long as the stockholder has met the requirements for submitting stockholder proposals provided in our Bylaws. Under our Bylaws, a stockholder must notify our Secretary in writing (at our Salt Lake City, Utah headquarters) of the proposal not less than 90 days nor more than 120 days before the anniversary of the prior year’s annual meeting, which for the 2025 Annual Meeting of Stockholders will be no earlier than October 11, 2024 and no later than November 10, 2024. The notice must give a brief description of the business to be brought before the annual meeting, the reasons for conducting the business and the text of the proposal, as well as the name and address of the stockholder giving the notice and the beneficial owner on whose behalf the proposal is made, the number of shares owned and information about that beneficial ownership, all as detailed in our Bylaws. The notice must also describe any material interest the stockholder or beneficial owner has in the business and arrangements between such stockholder or beneficial owner and any other person in connection with the proposal and must include certain representations, all as detailed in our Bylaws.

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We do not currently expect any matters other than those listed in this Proxy Statement to come before the Annual Meeting. If any other matter is presented, your proxy gives the individuals named as proxyholders the authority to vote your shares to the extent authorized by Rule 14a-4(c) under the Securities Exchange Act of 1934 (the “Exchange Act”).

Q:

When must I submit a proposal to have it considered for presentation in next year’s proxy materials?

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A:

To have your stockholder proposal be considered for presentation in the proxy statement and proxy card for our 2025 Annual Meeting of Stockholders, rather than just voted upon at the meeting without inclusion in the proxy statement and proxy card, a stockholder must submit to our Secretary (at our Salt Lake City, Utah headquarters) a written proposal no later than August 29, 2024. The submission must contain the information required under Rule 14a-8 under the Exchange Act.

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Q:

How do I suggest potential candidates for director positions?

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A:

A stockholder may suggest one or more potential candidates for consideration by the Board as nominees for election as one of our directors at an annual meeting of stockholders. This can be done by notifying our Corporate Secretary in writing (at our Salt Lake City, Utah headquarters) not less than 90 days nor more than 120 days before the anniversary of the prior year’s annual meeting, which for the 2025 Annual Meeting of Stockholders will be no earlier than October 11, 2024 and no later than

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November 10, 2024. The notice must include all information about the potential candidate that must be disclosed in proxy solicitations pursuant to Regulation 14A under the Exchange Act (including the potential candidate’s written consent to being named as a nominee and serving as a director) and a description of all material monetary agreements during the past three years and any other material relationships, between such stockholder and a beneficial owner on whose behalf the potential candidacy is made and their affiliates and associates, or others acting in concert, on the one hand, and each potential candidate, and his/her affiliates and associates, or others acting in concert, on the other hand, including all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if the stockholder were a “registrant,” all as described in our Bylaws. The notice must also include certain additional information about and representations by, the stockholder and/or the beneficial owner, all as detailed in our Bylaws.

In addition to satisfying the foregoing requirements under our Bylaws, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must comply with the additional requirements of Rule 14a-19(b).

Q:

How does the Board select nominees for election to the Board?

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A:

The Nominating Committee will consider potential candidates for directors submitted by stockholders, in addition to those suggested by other Board members and members of our management, and does not evaluate potential candidates differently based upon the source of the potential candidate. The Nominating Committee considers and evaluates each properly submitted potential candidate for director in an effort to achieve a balance of skills and characteristics on the Board, as well as to ensure that the composition of the Board at all times adheres to the independence requirements applicable to companies listed on the Nasdaq Global Select Stock Market (“Nasdaq”) and other regulatory requirements applicable to us. Please refer to “Proposal One — Election of Directors” and our Corporate Governance Guidelines for additional details on our policy, process, and membership criteria. A stockholder may recommend potential candidates for director by notifying our Corporate Secretary in writing (at our Salt Lake City, Utah headquarters) as detailed in the question and answer above.

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Q:

How may I communicate with the Board?

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A:

Stockholders and other interested parties may communicate directly with the Board, the Board’s Chair or any other director or with the independent directors as a group or any other group of directors through the Board’s Chair by sending an email to boardofdirectors@vareximaging.com. Messages received will be forwarded to the appropriate director or directors.

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Q:

When and where is the Annual Meeting being held?

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A:

Our Annual Meeting will be a virtual meeting only and will be conducted via live audio webcast, available at www.virtualshareholdermeeting.com/VREX2024, beginning at 4:30 p.m. Mountain Time on Thursday, February 8, 2024. There will be no physical meeting location. Although our Annual Meeting will be held online as a virtual meeting only, stockholders who held shares as of the record date for the meeting can still participate in the virtual meeting (see below for additional details). If you have any questions about attending the Annual Meeting, please contact our Investor Relations department at investor.relations@vareximaging.com.

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Q:

How can I attend the Annual Meeting?

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A:

Stockholders who owned shares as of the close of business on December 11, 2023 are entitled to attend and vote at the Annual Meeting. To participate in the meeting, including to vote, ask questions, and view the list of registered stockholders as of the record date during the meeting, stockholders of record should:

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•

Navigate to www.virtualshareholdermeeting.com/VREX2024; and

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enter the 16-digit control number found on your proxy card or the Notice and follow the instructions on the website.

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If your shares are held in street name and your voting instruction form or the Notice indicates that you may vote those shares through www.proxyvote.com, then you may access, participate in, and vote at

 

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the meeting with the 16-digit access code indicated on that voting instruction form or the Notice. Otherwise, stockholders who hold their shares in street name should contact their bank, broker, or other nominee (preferably at least five days before the annual meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at the meeting. You will be allowed to log in as early as 30 minutes before the start time on Thursday, February 8, 2024.

The virtual meeting platform is supported across internet browsers and devices (e.g., desktops, laptops, tablets, and cell phones). If you intend to join the live webcast, you should ensure that you have a strong Wi-Fi or internet connection. We encourage you to access the virtual meeting before it begins, and you should give yourself plenty of time to log in and ensure that you can hear streaming audio prior to the start of the meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual meeting login page.

In the event technical issues or other events delay or disrupt our ability to convene the meeting for longer than 30 minutes, we will make an announcement on the Investors page of our website at www.vareximaging.com regarding a date and/or time for reconvening the Annual Meeting. In the event of disorder, technical malfunction or other significant problem that disrupts the Annual Meeting, the chair of the meeting may adjourn, recess, or expedite the 2024 Annual Meeting, or take such other action as the chair of the meeting determines is appropriate in light of the circumstances.

Q:

How can I ask a question at the Annual Meeting?

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A:

If you have a question about one of the matters on the agenda at the Annual Meeting, such question may be submitted in the field provided on the meeting website at or before the time the matters are before the Annual Meeting for consideration. We will answer questions related to any matters in the agenda to be voted on before the voting is closed.

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Following adjournment of the formal business of the Annual Meeting, we will address appropriate general questions from stockholders regarding the Company. Such questions may be submitted into the field provided on the meeting website during the Annual Meeting. In the event that questions of general concern that meet the Board’s guidelines are not answered during the Annual Meeting, answers to such questions will be posted on the Investors page of our website at www.vareximaging.com promptly after the Annual Meeting.

If there are any matters of individual concern to a stockholder and not of general concern to all stockholders, such matters may be raised separately before or after the Annual Meeting by contacting Investor Relations at investor.relations@vareximaging.com.

Q:

How can I find the results of the Annual Meeting?

​

A:

Preliminary results will be announced at the Annual Meeting. Final results will also be published in a Current Report on Form 8-K to be filed with the SEC within four business days after the Annual Meeting. If the official results are not available at that time, we will provide preliminary voting results in the Form 8-K and will provide the final results in an amendment to the Form 8-K as soon as they become available.

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VIRTUAL MEETING PHILOSOPHY

We will hold our Annual Meeting as a virtual meeting via the Internet. The Board believes that holding the annual meeting of stockholders in a virtual format provides the opportunity for participation by a broader group of stockholders and reduces the costs associated with planning, holding and arranging logistics for in-person meeting proceedings. The Board welcomes stockholder participation in the virtual meeting and desires an experience as close as possible to the traditional in-person meeting format and takes the following steps to ensure such an experience:

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providing stockholders with the ability to submit appropriate questions in advance of the meeting to ensure thoughtful responses from management and the Board;

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providing stockholders with the ability to submit appropriate questions real-time during the meeting;

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•

answering as many questions submitted in accordance with the meeting rules of conduct as possible in the time allotted for the meeting without discrimination;

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publishing all questions submitted in accordance with the meeting rules of conduct with answers following the meeting, including those not addressed directly during the meeting; and

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offering separate engagement opportunities with stockholders on appropriate matters of governance or other relevant topics as outlined above under the General Information section in this Proxy Statement.

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PROPOSAL ONE
ELECTION OF DIRECTORS

Our Board; Selection of Nominees

At this Annual Meeting, you and the other stockholders will elect seven individuals to serve as directors. Our entire Board is subject to election at each annual meeting of stockholders, and each director will serve until his or her successor has been elected, unless such director dies, resigns, retires or is disqualified or removed.

Our Nominating Committee is charged with identifying, evaluating, and recommending director nominees to the full Board. There are no minimum qualifications for director nominees. The Nominating Committee generally seeks individuals who have or provide some, or all, of the following characteristics:

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knowledge about our industries and technologies;

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international business experience;

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cultural, gender, ethnic or age diversity (although we do not maintain a formal diversity policy);

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experience in financial oversight, and a strong reputation with the financial community;

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experience in business management and the potential to succeed top management in the event of unexpected necessary Board intervention;

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broad experience at the policy making level in business, government, education, technology, or public interest; or

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business contacts, knowledge or influence useful to our business and product lines.

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We believe that all of our directors should be committed to enhancing stockholder value, representing the interests of all stockholders, and dedicating sufficient time to carry out their duties and to provide insight and practical wisdom based on their experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform and carry out all director duties in a responsible manner. The Board believes that directors who are full-time employees of other companies should not serve on more than three public company boards at one time, and that directors who are retired from full-time employment should not serve on more than four public company boards. Additionally, a director who is a member of the Audit Committee cannot sit on more than three public company audit committees without the approval of the full Board and unless such member is a retired certified public accountant, chief financial officer, or controller or held a similar position. A director may not serve on a board of a competitor or a company with a significant competitive line of products to those offered by Varex. Further, our Board and Nominating Committee are committed to actively seeking highly qualified women and individuals from minority groups to include in the pool from which new candidates are selected.

When seeking new director candidates, the Nominating Committee will consider potential candidates for directors submitted by Board members, members of our management and our stockholders. The Nominating Committee does not evaluate candidates differently based upon the source of the nominee.

To ensure we stay responsive to evolving shareholder needs, we hold annual director elections and we continually strive to maintain the optimal mix of skills and perspectives for effective stewardship. In fiscal year 2022, we appointed a new Board member with deep knowledge of the medical sector’s ethical regulatory and compliance landscape. As of the end of fiscal year 2023, four of our seven Board members were women or ethnically diverse.

The individuals named as proxyholders will vote your proxy for the election of the nominee directors unless you direct them to withhold your vote. If any nominee becomes unable to serve as a director before the Annual Meeting (or decides not to serve), the individuals named as proxyholders may vote for a substitute.

 

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Each of the nominees have been recommended by the Nominating Committee and nominated by the Board for election by the stockholders to a one-year term ending at the 2025 Annual Meeting of Stockholders. Set forth below are the names and ages as of December 11, 2023 of these nominees, the years they became directors, their principal occupations or employment for at least the past five years, and the names of other public companies for which they serve as a director or have served as a director during the past five years. Also set forth are the specific experience, qualifications, attributes, or skills that led our Nominating Committee to conclude that each person should serve as a director. All our directors have held high-level positions in their fields and have experience in dealing with complex issues. We believe that each is an individual of high character and integrity and exercises sound judgment.

 

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Director Qualifications Matrix

The following matrix is provided to illustrate the skills and qualifications of the nominated members of our Board and demonstrate our commitment to inclusiveness and diversity.

Board Diversity Matrix

The following matrix is provided in accordance with applicable Nasdaq listing requirements and each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f)(1).

Governance of the Company

Overview

We are committed to strong corporate governance. Our governance policies and practices include:

Ethical Conduct and Strong Governance

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The Board’s Corporate Governance Guidelines articulate clear corporate governance policies, which include basic director duties and responsibilities.

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The fundamental responsibility of the Board is to represent the interests of our stockholders. However, in carrying out this responsibility, the Board may take into consideration the interests of other stakeholders. In fulfilling its responsibilities, the Board performs the following principal functions: (i) selecting, evaluating, compensating and, where necessary, replacing our Chief Executive Officer and other executive officers; (ii) approving corporate strategy, annual operating budgets, mergers and acquisitions over a certain threshold and significant financings; (iii) providing general oversight of our business; (iv) evaluating and establishing Board processes, performance and compensation; (v) selecting directors; and (vi) monitoring legal and ethical conduct.

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•

The Board has adopted a Code of Conduct applicable to all our employees, including our executive officers, and to our directors.

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We have a hotline for employees to report concerns regarding ethics and financial matters, including accounting, internal controls, and audit concerns, and have established procedures for anonymous submission of these matters.

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Each director is responsible for disclosing to the Nominating Committee and Chief Legal Officer situations that he or she reasonably believes give rise to a potential conflict of interest or related person transaction. The Board, upon recommendation of the Nominating Committee and after consultation with legal counsel, determines on a case-by-case basis or where it deems appropriate by specific category whether such a conflict of interest or related person transaction exists. Please refer to the discussion under “Certain Relationships and Related Transactions” for more information.

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The Board conducts an annual assessment of its effectiveness and the effectiveness of each of its committees.

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Directors are expected to attend all stockholder meetings.

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The Board encourages directors to participate in developmental continuing education programs applicable to their position as a director of the Company, including, but not limited to, those recommended by the Nominating Committee.

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Director Independence

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We have an independent non-employee director as Chair, and our Bylaws mandate that the roles of Chair and Chief Executive Officer must be separated.

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Other than Mr. Sanyal, our Chief Executive Officer, all our Board members are independent of the Company and our management. The definition of “independent” is included in our Corporate Governance Guidelines, which can be found through the “Corporate Governance” link on the Investors page on our website at www.vareximaging.com.

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All members of our Board committees — the Audit Committee, the Compensation Committee, and the Nominating Committee — are independent.

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Majority Voting

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Our Bylaws and Corporate Governance Guidelines include a majority voting standard for uncontested director elections. Under this standard, if the number of nominees timely nominated for an annual meeting does not exceed the number of directors to be elected, each director shall be elected if the number of shares voted “for” a director’s election exceeds 50% of the number of votes cast with respect to that director’s election. Votes cast shall include direction to withhold authority in each case and exclude abstentions with respect to that director’s election. Any incumbent director who is not re- elected by the majority voting standard will be required to tender his or her resignation promptly following the certification of the stockholders’ vote. The Nominating Committee will consider such resignation and recommend to the Board whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Nominating Committee’s recommendation at the next regularly scheduled Board meeting following receipt of such recommendation and will promptly disclose publicly its decision regarding whether to accept the director’s resignation.

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Board Structure

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Our entire Board is elected annually.

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Our Board is committed to inclusiveness and diversity, and more than 50% of our Board is diverse.

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Our Board has adopted a guideline for director retirement that provides that nominees for directors should be 75 years or younger at the time of their election or re-election. This guideline may be waived if the Board deems it appropriate.

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Our Board does not believe that rotating committee members at set intervals should be mandated as a policy since there may be reasons at a given point in time to maintain an individual Board

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member’s committee membership for a longer period. However, for the Board’s standing committees, our guidelines state that the Nominating Committee should consider recommending a new member to each committee every three years and rotating the Chair of a committee as appropriate.

•

The annual cycle of agenda items for Board and committee meetings reflects Board and committee requests and changing business and legal issues. The Board receives regularly scheduled presentations from our finance, legal and compliance departments and major business units and operations, and reviews enterprise risk at least annually. The Board’s and committees’ annual agendas include review of, among other items, our long-term strategic plans and periodic reports on progress against these plans, emerging and disruptive technologies, potential acquisition or investment targets, capital projects, the evaluation of our Chief Executive Officer and management, and Board succession.

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Director and Executive Compensation

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The Board has adopted stock ownership guidelines for our directors and executive officers. Each non-employee director is expected to own shares valued at five times the directors’ annual retainer fee. Our Chief Executive Officer is expected to own shares valued at six times base salary, our Chief Financial Officer at three times base salary, and each of our other executive officers at one times base salary. Individuals who become subject to these stock ownership guidelines are generally required to achieve the applicable ownership level within five years of first becoming subject to the guidelines.

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The Board has adopted a Compensation Recovery Policy to recover certain cash and equity incentive payments made to executives in the event of a restatement of our financial statements.

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Director Independence

The Board has determined that Ms. Bardwell, Dr. Chertoff, Mr. Guertin, Mr. Kunkel, Mr. Rosebrough, and Ms. Tsingos, and Dr. Ruediger Naumann-Etienne, who served until the 2023 Annual Meeting, are “independent” for purposes of SEC regulations, Nasdaq listing requirements, and under our Corporate Governance Guidelines. Mr. Sanyal, our President and Chief Executive Officer, is an employee and therefore not “independent.” The Board considered transactions and relationships (such as Ms. Tsingos’ service on the board of Envista Holdings Corporation, the parent company to a customer of the Company), both direct and indirect, between each director (and his or her immediate family) and the Company and its subsidiaries and affirmatively determined that none of Ms. Bardwell, Dr. Chertoff, Mr. Guertin, Mr. Kunkel, Mr. Rosebrough, or Ms. Tsingos have any material relationship, either direct or indirect, with us other than as a director and stockholder.

Board Meetings

The Board met five times in fiscal year 2023. Each of the regularly scheduled Board meetings included executive sessions of either the independent directors or the non-management directors, or both, with Mr. Rosebrough or, prior to Mr. Rosebrough’s election as Chair, Dr. Naumann-Etienne, presiding at such meetings. We have three standing committees of the Board: the Audit Committee, the Compensation Committee, and the Nominating Committee. Each current director attended at least 75% of the total Board meetings and meetings of the committees on which such director served that were held in fiscal year 2023. Directors are encouraged to attend meetings of committees on which they do not serve as members. All our directors are strongly encouraged to attend our annual meetings of stockholders. All the directors then serving on the Board were present at our 2023 Annual Meeting, except Mr. Guertin who was unable to attend due to illness.

Board Leadership Structure

The Board has adopted Corporate Governance Guidelines designed to promote the functioning of the Board and its committees. The Corporate Governance Guidelines and our Bylaws address Board composition, Board functions and responsibilities, qualifications, leadership structure, committees, and meetings.

Our Bylaws require that the Chair of the Board be chosen from among the directors and may not be the Chief Executive Officer. The Board has determined that having a director who is “independent” within the meaning of the Nasdaq listing standards serve as Chair and Mr. Sanyal serve as Chief Executive Officer is in

 

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the best interests of the stockholders. At this time, we have separated the roles of Chief Executive Officer and Chair in recognition of the differences between the two roles, and we believe the separation of roles improves Board engagement and oversight. The duties of the Chair of the Board and the Chief Executive Officer are set forth in the table below:

The Board believes that this overall structure of a separate Chair of the Board and Chief Executive Officer results in an effective balancing of responsibilities, experience and independent perspectives that meets the current corporate governance needs and oversight responsibilities of the Board. The Board also believes that this structure benefits our Company by enabling our Chief Executive Officer to focus on strategic matters while the Chair of the Board focuses on Board process and governance matters.

The Board’s Role in Risk Oversight

We face many risks, including operational, economic, financial, legal, regulatory, and competitive risks. Our management is responsible for the day-to-day management of the risks we face. While our Board, as a whole, has ultimate responsibility for the oversight of risk management, it administers its risk oversight role in part through the Board committee structure, with the Audit Committee, the Compensation Committee, and the Nominating Committee responsible for monitoring and reporting on the material risks associated with their respective subject matter areas.

The Board’s role in our risk oversight process includes receiving regular reports from members of senior management, as well as internal audit and external advisors, on areas of material risk to us, including operational, economic, financial, legal, regulatory and competitive risks. The full Board (or the appropriate committee in the case of risks that are reviewed by a particular committee) receives these reports from those responsible for the relevant risk in order to enable it to understand our risk exposures and the steps that management has taken to monitor and control these exposures. When a committee receives the report, the Chair of the relevant committee generally provides a summary to the full Board at the next Board meeting, unless all board members were present at the committee meeting. This enables the Board and its committees to coordinate the risk oversight role. The Audit Committee assists the Board in oversight and monitoring of principal risk exposures related to financial statements, legal, ethical compliance, information security, regulatory, and other matters, as well as related mitigation efforts. The Compensation Committee assesses, at least annually, the risks associated with our compensation policies. The Nominating Committee assists the Board in oversight of risks that we have relative to compliance with corporate governance standards. The Audit Committee, the Compensation Committee, and the Nominating Committee share oversight of different aspects of our ESG programs.

Cybersecurity Risk Oversight

In addition, the Audit Committee oversees the Company’s cyber risk management program. The Audit Committee receives regularly scheduled updates on cybersecurity and information systems from management at least twice per year. In addition to regularly scheduled presentations, management alerts the Audit Committee Chair of significant cybersecurity threats or incidents as they arise. In order to respond to the threat of security breaches and cyberattacks, we have developed a program that is designed to protect and preserve the confidentiality, integrity and continued availability of information owned by, or in the care of, the

 

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Company. This program includes a cyber incident response plan that provides controls and procedures for timely and accurate reporting of material cybersecurity incidents and the maintenance by the Company of insurance coverage to defray the cost in the event of an information security breach. In the last three fiscal years, we have not experienced any material information security breach incidences and the expenses we have incurred from information security breach incidences were immaterial. This includes penalties and settlements, of which there were none.

Board Committees and Committee Meetings

Each of our standing committees has a written charter approved by the Board that clearly establishes the committee’s roles and responsibilities. Copies of the charters for the Audit Committee, the Compensation Committee, and the Nominating Committee, as well as our Corporate Governance Guidelines, Code of Conduct, and Human Rights Policy can be found through the “Corporate Governance” link on the Investors page on our website at www.vareximaging.com.

Audit Committee
Chair: Ms. Tsingos
Additional Members: Ms. Bardwell, Dr. Chertoff, and Mr. Kunkel
Meetings in Fiscal Year 2023: 8

Committee Functions:

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Oversees our accounting and financial reporting process and audits of financial statements.

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Assists the Board in oversight and monitoring of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements and the effectiveness of related compliance programs, (iii) the independent registered public accounting firm’s qualifications and independence, (iv) the performance of our internal audit function and of the independent registered public accounting firm and (v) the principal risk exposures we face that are related to financial statements, legal, regulatory and other similar matters, such as risks related to cybersecurity, data privacy and other risks relevant to computerized information system controls and security, as well as our related mitigation efforts, including business continuity and disaster preparedness planning.

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Reviews and approves our foreign exchange exposure management policy.

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Prepares the Audit Committee Report included in our proxy statement.

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Reports to the Board the results of its monitoring and recommendations.

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Provides to the Board any additional information and materials as the committee may determine is necessary to make the Board aware of significant financial matters requiring the Board’s attention.

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Member Qualifications

Each member of the Audit Committee meets the additional requirements regarding independence for Audit Committee members under Nasdaq listing requirements. The Board has determined that Ms. Tsingos is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K under the Exchange Act based upon her experience as the chief financial officer of Bio-Rad Laboratories between 2002 and 2019 and as the chief financial officer of Attest Systems, Inc. between 2000 and 2002. The Board has also determined that Ms. Bardwell is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K under the Exchange Act based upon her experience as a Certified Public Accountant and serving as chief audit executive of and leading the internal audit group at STERIS Corporation from March 2008 to November 2019.

Compensation and Human Capital Management Committee
Chair: Mr. Guertin
Additional Members: Ms. Bardwell, Mr. Rosebrough, and Ms. Tsingos
Meetings in Fiscal Year 2023: 4

Committee Functions:

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Discharges the Board’s responsibilities relating to compensation of our executive officers.

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•

Provides advice on human capital management matters that have major implications for the development of our Company.

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Evaluates our compensation plan design, policies and programs for executive officers and recommends the establishment of policies dealing with various compensation and employee benefit plans.

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Reviews, not less than annually, our peer group for assessing the competitive range of compensation provided to individuals in similar positions at comparable companies.

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Oversees our stock and cash incentive plans.

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Reviews and discusses with management and recommends to the Board whether the disclosures under “Compensation Discussion and Analysis” should be included in our proxy statement.

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Reviews the compensation paid to directors for service on the Board and its committees.

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Ensures that reviews of plans for succession of executive officers occur at the Committee or Board level at least annually.

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Provides oversight on the development, implementation and effectiveness of our practices, policies, and strategies relating to human capital management as they relate to our workforce generally.

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Assesses, at least annually, the risks associated with our compensation policies, and reports to the Board and the Audit Committee whether our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on us.

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The Compensation Committee determines all compensation for our NEOs and certain other of our officers. Before making decisions on compensation for individuals other than our Chief Executive Officer, the Compensation Committee reviews with our Chief Executive Officer each individual’s performance and accomplishments over the prior year. Except for his own position, our Chief Executive Officer makes recommendations to the Compensation Committee about base salary increases, any changes to the incentive plan target awards, and the amount of equity awards for each executive. However, the Compensation Committee retains and does not delegate any of its exclusive power to determine and approve all matters of executive compensation and benefits for certain officers as designated in the charter. The Compensation Committee meets with its independent advisors and other independent members of the Board to determine the Chief Executive Officer’s compensation.

The Compensation Committee also reviews and provides oversight on the development, implementation and effectiveness of our practices, policies and strategies relating to human capital management as they relate to our workforce generally, including but not limited to policies and strategies regarding recruiting, selection, career development and progression, and diversity and employment practices.

Compensation Committee Advisors

To independently assist and advise the Compensation Committee, the Compensation Committee has retained Frederic W. Cook & Co., Inc. (“FW Cook”) as its compensation consultant since May 2018. The engagement with FW Cook is exclusively with the Compensation Committee, which has sole authority to retain and terminate any compensation consultant or other advisor that it uses. FW Cook does not have any relationship with the Company or management except as it may relate to performing services on behalf of the Compensation Committee. The Compensation Committee has assessed the independence of FW Cook pursuant to SEC rules and concluded that no conflict of interest exists that would prevent FW Cook from independently representing the Compensation Committee.

The compensation consultant reviews and analyzes our executive compensation programs, compensation strategy and effectiveness of pay delivery. The compensation consultant provides market information on compensation trends and practices and makes recommendations to the Compensation Committee based on competitive data. The compensation consultant advises the Compensation Committee chair on agenda items for Compensation Committee meetings, reviews management proposals and is available to perform special projects at the Compensation Committee chair’s request. The compensation consultant also periodically provides the Compensation Committee with updates on regulatory and legislative developments pertaining to executive compensation and compensation committee governance. The compensation

 

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consultant provides analyses and recommendations that inform the Compensation Committee’s decisions but does not decide or approve any compensation actions. As needed, the Compensation Committee also consults with the compensation consultant on program design changes.

Member Qualifications

In addition to being independent, each member of the Compensation Committee is a “non-employee director” for purposes of the Exchange Act.

Nominating and Corporate Governance Committee
Chair: Dr. Chertoff
Additional Members: Mr. Guertin, Mr. Kunkel, and Mr. Rosebrough
Meetings in Fiscal Year 2023: 4

Committee Functions:

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Develops and recommends to the Board corporate governance principles, including our Corporate Governance Guidelines, Code of Conduct, and Related Party Transaction Policy.

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Identifies, evaluates, and recommends to the Board potential nominees to the Board, including those received from stockholders.

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Reviews with the Board annually the independence, skills and characteristics of all individual members and the skills and characteristics of the Board as a whole in determining whether to recommend incumbent directors for re-election.

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Evaluates and makes recommendations to the Board concerning the size of the Board, the appointment of directors to Board committees, the qualifications of committee members and the selection of Board committee chairs.

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Reviews and determines whether to approve all related party transactions in accordance with the Related Party Transaction Policy.

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Oversees the annual review of director independence and evaluation of the Board’s performance.

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Assists the Board in exercising oversight with respect to our ESG programs, policies and practices and related disclosures, and makes recommendations to the Board regarding our overall general strategy with respect to ESG matters.

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Environmental, Social, and Governance Matters

Our ESG/Sustainability Strategy

Managing the environmental, social, and governance aspects of our business is the central focus of our ESG/Sustainability strategy. From innovating new products and services to building relationships with our customers and local communities, our ESG/Sustainability strategy guides us in operating a responsible and resilient business. It addresses four key areas:

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Inspiring Innovation

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Protecting the Environment

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Empowering People and Communities

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Acting with Integrity

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Our Board and its committees play important roles in creating sustainable value, developing ESG strategy and overseeing critical ESG matters.

 

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Compensation and Human Capital Management Committee Provides oversight on to the development, implementation and effectiveness of our practices, policies and strategies relating to human capital management as they relate to our workforce generally, including but not limited to policies and strategies regarding recruiting, selection, career development and progression, and diversity, and employment practices.

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Audit Committee Reviews our public disclosures with respect to sustainability accounting standards. Reviews cybersecurity, data privacy and other risks relevant to our computerized information system controls and security, as well as mitigation plans and relevant policies and programs. Reviews our business continuity and disaster preparedness planning.

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We maintain a management-level Executive Compliance Committee to oversee our ESG and compliance programs and activities. The Executive Compliance Committee was formed to assist the Nominating Committee in fulfilling its oversight responsibilities with respect to ESG matters, and to assist with promoting an organizational culture that encourages law abiding and ethical conduct. The members of the Executive Compliance Committee are our Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, Chief Human Resources Officer, Vice President of Sales & Marketing, Vice President of Software Solutions and Vice President of Regulatory and Quality.

For more information about our ESG efforts, please see https://www.vareximaging.com/about-us/​#sustainability.

 

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PROPOSAL TWO
ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION

Background to the Advisory Vote

Under Section 14A of the Exchange Act, stockholders are able to vote to approve, on an advisory (non-binding) basis (an “Advisory Vote on Compensation”), the compensation of the NEOs as disclosed in this Proxy Statement in the Compensation Discussion and Analysis section and the related executive compensation tables. Accordingly, we are asking stockholders to approve, on an advisory (non-binding) basis, the following advisory resolution at our Annual Meeting:

“RESOLVED, that the compensation of the Company’s named executive officers, as disclosed in the Annual Proxy Statement for the 2024 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Compensation Tables, and the other related tables and disclosure, is hereby APPROVED.”

The Board recommends a vote FOR this resolution because it believes that the policies and practices described in the Compensation Discussion and Analysis section of this Proxy Statement are effective in achieving our goals of attracting, retaining and motivating our executives, rewarding individual and Company performance and aligning the executives’ long-term interests with those of our stockholders.

We encourage stockholders to read the Compensation Discussion and Analysis beginning on page 43 of this Proxy Statement, as well as the related compensation tables and narrative, which provide detailed information on our compensation policies and practices and the compensation of our NEOs.

This “say-on-pay” vote is a non-binding advisory vote. The approval or disapproval of this proposal by stockholders will not require the Board or the Compensation Committee to take any action regarding our executive compensation practices. Nonetheless, the Board and the Compensation Committee will consider the outcome of the vote when making future compensation decisions for our NEOs.

Next “Say-On-Pay” and “Say-on-Frequency” Advisory Votes

At the 2019 Annual Meeting of Stockholders, the Company’s stockholders determined, on an advisory basis, that the say-on-pay vote should be held on an annual basis. In accordance with that determination, we conduct an annual Advisory Vote on Compensation, and the Board expects to hold the next Advisory Vote on Compensation at the 2025 Annual Meeting. In addition, the Board expects to hold the next Advisory Vote on Frequency of Advisory Vote to Approve Executive Compensation at the 2025 Annual Meeting of Stockholders.

 

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PROPOSAL THREE
APPROVE THE VAREX IMAGING CORPORATION
2020 OMNIBUS STOCK PLAN, AS AMENDED AND RESTATED

We are asking our stockholders to approve the Varex Imaging Corporation 2020 Omnibus Stock Plan, as Amended and Restated (referred to elsewhere in this proxy statement as the “Amended and Restated 2020 Plan”), which was amended and restated to, among other things, increase the number of shares available for issuance under the current Varex Imaging Corporation 2020 Omnibus Stock Plan (referred to elsewhere in this Proxy Statement as the “2020 Plan”) by 3,588,982 shares to help us achieve our goals of furthering the growth and profitability of our company by encouraging ownership in the shares of our company by our employees, consultants who provide us significant services, and our non-employee directors. The Amended and Restated 2020 Plan also includes a number of other changes to the 2020 Plan. We have included a summary of the material changes below. If the Amended and Restated 2020 Plan is approved by our stockholders, it will become effective on the day immediately following the 2024 Annual Meeting of Stockholders (the “Restatement Date”).

If approved, the Amended and Restated 2020 Plan would make, among other things, the following changes to the 2020 Plan:

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Increase in Share Reserve.   Subject to capitalization adjustments and the share counting provisions described below, as of the Restatement Date, a total of 5,800,000 shares will be authorized for awards granted under the Amended and Restated 2020 Plan (which amount is equal to 3,588,982 new shares, plus 2,211,018 shares that were available for award under the 2020 Plan as of September 29, 2023), less one (1) share for every one (1) share that was subject to a stock option or stock appreciation right (“SAR”) granted after September 29, 2023 and prior to the Restatement Date and two and four one-hundredths (2.04) shares for every one (1) share that was subject to an award other than a stock option or SAR granted after September 29, 2023 and prior to the Restatement Date. See below for more information.

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Increase in Share Counting Ratio for Full Value Awards.   The share counting ratio for full value awards has been increased from 2.00 shares to 2.04 shares, such that following September 29, 2023, each share subject to a full value award will be counted as 2.04 shares for purposes of the share reserve and the other share counting provisions under the Amended and Restated 2020 Plan.

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Revised Share Recycling Provisions to Allow for Liberal Share Recycling on Full-Value Awards.   The following shares will be added back (or added, as applicable) to the shares authorized for grant under the Amended and Restated 2020 Plan:

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Shares subject to awards that expire, are forfeited or settled in cash;

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Shares withheld by the Company to satisfy any tax withholding obligations with respect to awards other than stock options or SARs ;

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Shares subject to SARs that in each case are not issued in connection with its stock settlement on exercise thereof; and

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Shares of restricted stock awards that are forfeited.

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The following shares will not be recycled and added to the shares authorized for grant under the Amended and Restated 2020 Plan:

•

Shares tendered by the participant or withheld by the Company in payment of the purchase price of a stock option; and

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Shares tendered by the participant to satisfy any tax withholding obligations with respect to awards;

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•

Shares withheld by the Company to satisfy any tax withholding obligations with respect to stock options or SARs;

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Shares subject to SARs that in each case are not issued in connection with its stock settlement on exercise thereof; and

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Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of stock options.

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Expand Performance Criteria.   Expands the list of potential performance criteria to also include additional performance goals measures including: EBIT percentage, EBITDA percentage, EBIT percentage growth, EBITDA percentage growth, gross margin, operating margin, total stockholder return, and any derivations of the measure outlined in the Amended and Restated Plan or any other subjective or objective measures determined by the Compensation Committee, in its sole discretion.

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Clarify Adjustments that can be Made to Performance Criteria.   Clarifies that the Compensation Committee will determine whether any significant element(s) should be included or excluded for the calculation of a performance goal with respect to any participant, regardless of whether it results in the performance goal being measured on a basis other than GAAP, and allows the Compensation Committee to provide for the adjustment of any applicable performance measure or performance results to reflect any unforeseeable, nonrecurring or infrequently occurring event, as the Compensation Committee deems appropriate in its sole discretion.

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Clarify Exercise Price of Substitute SAR Awards.   Clarifies that the exercise price of substitute SAR awards may be granted at a price less 100% of the fair market value of a share on the grant date.

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Clarify Methodology for Determining Fair Market Value of Share Withheld or Delivered.   Clarifies that the fair market value of shares to be withheld or delivered in respect of an award will be determined based on such methodology that the Company deems to be reasonable and in accordance with applicable law.

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Clarify Dividend or Dividend Equivalents Will Not be Paid with respect to Stock Options and SARs.    Clarifies that dividends or dividend equivalents will not be paid and/or accrue with respect to stock options and SARs.

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Clarify When Change in Service Status Constitutes a Termination of Service.   Clarifies that a change in status from employee to consultant or a change in status from non-employee director to consultant will not constitute a termination of service for purposes of the Amended and Restated 2020 Plan.

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Harmonized the Company’s Compensation Recovery Policy.   The recoupment provisions of the Amended and Restated 2020 Plan have been harmonized with the Company’s Compensation Recovery Plan, which was adopted by the Board in November 2023.

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Reasons to Approve the Amended and Restated 2020 Plan

As of September 29, 2023, a total of 2,211,018 shares of our common stock remained available for future grants under the 2020 Plan. We believe that the current share reserve of the 2020 Plan is insufficient to meet our future needs with respect to attracting, motivating and retaining key executives and employees and non-employee directors in a competitive market for talent. We believe that approval of the Amended and Restated 2020 Plan will enable us to grant stock awards for approximately the next three years, based on historical grant and forfeiture levels, the recent market prices of our common stock, and anticipated use of equity awards as an incentive and retention tool as we continue to compete for talent.

 

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Outstanding Awards Under the 2020 Plan and Shares Available for Future Issuance

The following includes aggregated information regarding the overhang and dilution associated with the 2020 Plan (the only shareholder approved equity plan pursuant to which we can currently grant equity awards) and the potential shareholder dilution that would result if the Amended and Restated 2020 Plan is approved. This information is as of September 29, 2023. As of that date, there were 40,529,573 shares of common stock outstanding:

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Outstanding full-value awards (restricted stock units, restricted stock awards, and deferred stock units): 1,277,000 shares (2.7% of our fully-diluted shares outstanding);

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Outstanding stock options: 2,862,000 shares (6.1% of our fully-diluted shares outstanding) (outstanding stock options have a weighted average exercise price of $28.08 and a weighted average remaining term of 4.8 years);

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Total shares of common stock subject to outstanding awards, as described above (restricted stock units, restricted stock awards, deferred stock units and stock options): 4,139,000 shares (8.8% of our fully-diluted shares outstanding);

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Total shares of common stock available for future awards under the 2020 Plan: 2,211,018 shares (4.7% of our fully-diluted shares outstanding);

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The total number of shares of common stock subject to outstanding awards (4,139,000 shares), plus the total number of shares available for future awards under the 2020 Plan (2,211,018 shares), represents a current fully-diluted overhang percentage of 13.5% (in other words, the potential dilution of our stockholders represented by the 2020 Plan); and

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If the Amended and Restated 2020 Plan is approved, the total shares of common stock subject to outstanding awards as of September 29, 2023 (4,139,000 shares), plus the proposed shares available for issuance under the Amended and Restated 2020 Plan (5,800,000 shares, which is equal to 3,588,982 new shares plus 2,211,018 shares that are available for award under the 2020 Plan), represent a total fully-diluted overhang of 9,939,000 shares (19.7%) under the Amended and Restated 2020 Plan.

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In fiscal years 2021 through 2023, we granted awards under the 2020 Plan as follows:

The Amended and Restated 2020 Plan Combines Compensation and Corporate Governance Best Practices

The Amended and Restated 2020 Plan contains provisions that are designed to protect our stockholders’ interests and reflect corporate governance best practices, many of which were carried over from the 2020 Plan, and includes:

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Repricing Not Allowed.   The Amended and Restated 2020 Plan prohibits reducing the exercise price of stock options and SARs, cancelling “underwater” stock options and SARs or any action that would be considered a repricing under the applicable securities exchange on which our common stock is traded without prior stockholder approval in each case.

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Stockholder Approval Required for Additional Shares.   The Amended and Restated 2020 Plan does not contain an annual “evergreen” provision. The Amended and Restated 2020 Plan authorizes a fixed number of shares, so that stockholder approval is required to grant awards in excess of that number.

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Limit on Full Value Awards.   The Amended and Restated 2020 Plan limits the number of shares available for full value awards by providing that each share issued pursuant to a full value award

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reduces the number of shares available for grant under the Amended and Restated 2020 Plan by two and four one-hundredths (2.04) shares.

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No Liberal Share Counting or Recycling on Stock Options.   Shares tendered by the participant or withheld by the Company in payment of the purchase price of a stock option, shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of stock options, and any shares with respect to which a SAR is exercised will in each case not become available again for issuance under the Amended and Restated 2020 Plan.

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No Liberal Corporate Transaction Provisions.   No corporate transaction related vesting acceleration and other benefits may occur without an actual corporate transaction occurring.

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No Discounted Stock Options or SARs.   All stock options and SARs granted under the Amended and Restated 2020 Plan must have an exercise or strike price equal to or greater than the fair market value of our common stock on the date the stock option or SAR is granted, except for substitute option or SAR awards.

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No Reload Stock Options or SARs or Tax Gross-ups.   The Amended and Restated 2020 Plan does not provide for reload stock options or SARs or tax gross-ups in any circumstance.

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No Dividends and Dividend Equivalents on Unvested Awards.   Dividends and dividend equivalents will not be paid or settled with respect to any award granted under the Amended and Restated 2020 Plan until the underlying shares or units vest. Dividends or dividend equivalents will not be paid and/or accrue with respect to stock options and SARs.

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Limit on Non-Employee Director Awards.   Stock awards granted during a single fiscal year under the Amended and Restated 2020 Plan or otherwise, taken together with any cash fees paid during such fiscal year for services on the Board of Directors, will not exceed $625,000 in total value for any non-employee director serving as the lead director or chair and $525,000 in total value for any other non-employee director.

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Awards Subject to Recovery.   The Company has adopted a Compensation Recovery Policy in accordance with the listing standards of the Nasdaq Stock Exchange and applicable law, that provides for recoupment of certain incentive compensation paid to current and former executive officers of the Company (including certain incentive compensation granted under the Amended and Restated 2020 Plan) in the event of an accounting restatement of the Company’s financial statements. In addition, pursuant to a clawback agreement required to be executed by all employees who receive awards, if an employee engages in certain detrimental conduct, including willful misconduct in connection with a financial restatement that has a material adverse effect on the Company, the Compensation Committee may, in its sole discretion, cancel and terminate such employee’s outstanding stock awards (whether vested or unvested and whether time-based or performance-based) and recoup shares issued pursuant to the exercise or settlement of stock awards within the three years prior to the detrimental conduct (as determined by the Compensation Committee) and thereafter.

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Description of the Amended and Restated 2020 Plan

Set forth below is a summary of the material features of the Amended and Restated 2020 Plan. The Amended and Restated 2020 Plan is set forth in its entirety as Appendix A to this Proxy Statement, and all descriptions of the Amended and Restated 2020 Plan contained in this Proposal Three are qualified by reference to Appendix A.

Purpose

The Amended and Restated 2020 Plan is intended to increase incentives and to encourage share ownership on the part of (1) employees of the Company and its affiliates, (2) consultants who provide significant services to the Company and its affiliates, and (3) non-employee directors of the Company. The Amended and Restated 2020 Plan also is intended to further the growth and profitability of the Company.

Types of Stock Awards

The Amended and Restated 2020 Plan provides for the granting of non-qualified stock options, incentive stock options, SARs, restricted stock, RSUs, performance units and performance shares to

 

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employees and consultants and RSUs and non-qualified stock options to non-employee directors (all such types of awards, collectively, “stock awards”).

Share Reserve

Number of Shares

Subject to capitalization adjustments and the share counting provisions described below, as of the Restatement Date, a total of 5,800,000 shares will be authorized for awards granted under the Amended and Restated 2020 Plan (which amount is equal to 3,588,982 new shares plus 2,211,018 shares that are available for issuance under the 2020 Plan as of September 29, 2023), less one (1) share for every one (1) share that was subject to a stock option or SAR granted after September 29, 2023 and prior to the Restatement Date and two and four one-hundredths (2.04) shares for every one (1) share that was subject to an award other than a stock option or SAR granted after September 29, 2023 and prior to the Restatement Date. Any shares that are subject to stock options or SARs will be counted against this limit as one (1) share for every one (1) share granted, and any shares that are subject to awards other than stock options or SARs will be counted against this limit as two and four one-hundredths (2.04) shares for every one (1) share granted. A total of 5,800,000 shares may be issued as incentive stock options. The Amended and Restated 2020 Plan does not contain an evergreen provision, pursuant to which the share pool would be automatically increased each year based on a specified formula.

Lapsed Awards

If (i) any shares subject to an award are forfeited, an award expires, is forfeited or is settled for cash (in whole or in part), or (ii) after September 27, 2019 any shares subject to an award under the 2017 Omnibus Stock Plan (the “Prior Plan”) are forfeited, or an award under the Prior Plan expires, is forfeited or is settled for cash (in whole or in part), then in each such case the shares subject to such award or award under the Prior Plan will, to the extent of such forfeiture, expiration or cash settlement, be added to the shares available for awards under the Amended and Restated 2020 Plan. Any shares that again become available for awards under the Amended and Restated 2020 Plan will be added as (i) one (1) share for every one (1) share subject to stock options or SARs granted under the Amended and Restated 2020 Plan or stock options or SARs granted under the Prior Plan, and (ii) as two and four one-hundredths (2.04) shares for every one (1) share subject to awards other than stock options or SARs granted under the Amended and Restated 2020 Plan or awards other than stock options or SARs granted under the Prior Plan.

Shares Available for Subsequent Issuance

The following shares will be added back (or added, as applicable) to the shares authorized for grant under the Amended and Restated 2020 Plan: after September 29, 2023, shares withheld by the Company to satisfy any tax withholding obligation with respect to awards other than stock options or SARs (including, after September 29, 2023, awards other than stock options or SARs under the Prior Plan). The following shares will not be added back (or added, as applicable) to the shares authorized for grant: (i) after September 29, 2023, shares tendered by the participant or withheld by the Company in payment of the purchase price of a stock option (including, after September 29, 2023, a stock option under the Prior Plan), (ii) after September 29, 2023, shares tendered by the participant to satisfy any tax withholding obligation with respect to awards (including, after September 29, 2023, awards under the Prior Plan), (iii) after September 29, 2023, shares withheld by the Company to satisfy any tax withholding obligation with respect to options or SARs (including, after September 29, 2023, stock options or SARs under the Prior Plan), (iv) after September 29, 2023, shares subject to a SAR (including, after September 29, 2023, a SAR under the Prior Plan) that in each case are not issued in connection with its stock settlement on exercise thereof, and (v) after September 29, 2023, shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of stock options (including, after September 29, 2023, stock options under the Prior Plan); provided that, shares of restricted stock (including, after September 29, 2023, restricted stock awards under the Prior Plan) that are forfeited rather than vesting will, in each case, be added back (or added, as applicable) to the shares authorized for grant under the Amended and Restated 2020 Plan.

Substitute Awards

Awards granted or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted by a company acquired by the Company will not reduce the shares authorized

 

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for grant under the Amended and Restated 2020 Plan or the limitations on grants to a participant contained in the Amended and Restated 2020 Plan, nor will shares subject to a substitute award be added to the shares available for awards under the Amended and Restated 2020 Plan. Additionally, in the event that a company acquired by the Company or any subsidiary or with which the Company or any subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for awards under the Amended and Restated 2020 Plan and will not reduce the shares authorized for grant under the Amended and Restated 2020 Plan (and shares subject to such awards will not be added to the shares available for awards under the Amended and Restated 2020 Plan); provided that awards using such available shares will not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and will only be made to individuals who were not employees, consultants or directors prior to such acquisition or combination.

Eligibility

Employees and consultants of the Company and its affiliates and the Company’s non-employee directors are all eligible to participate in the Amended and Restated 2020 Plan. As of December 1, 2023, for equity plan purposes we had a total of approximately 2,400 employees, no consultants, and six non-employee directors who would be eligible to be granted awards from the Amended and Restated 2020 Plan.

Administration

The Compensation Committee will administer the Amended and Restated 2020 Plan. The members of the Compensation Committee must qualify as “non-employee directors” under Rule 16b-3 under the Exchange Act and as “independent directors” under Nasdaq Listing Rule 5605(a)(2).

Subject to the terms of the Amended and Restated 2020 Plan, the Compensation Committee has the sole discretion to determine the employees and consultants who will be granted stock awards, the size and types of these stock awards, and the terms and conditions of these stock awards, including the authority to accelerate the vesting of awards. Subject to applicable law and certain other limitations, the Compensation Committee may delegate all or any part of its authority and powers under the Amended and Restated 2020 Plan to a committee of one or more directors and/or to officers of the Company. The Board of Directors will determine and administer stock options and RSUs granted to non-employee directors.

No Repricing, Underpriced Options or SARs or Reload Options

The Amended and Restated 2020 Plan expressly prohibits the repricing of outstanding stock options and SARs, the cancellation of any outstanding stock options or SARs that have an exercise or strike price greater than the then-current fair market value of our common stock in exchange for cash or other awards under the Amended and Restated 2020 Plan and any other action with respect to a stock option or SAR that would be treated as a repricing under the rules and regulations of the principal securities market on which the Company’s shares are traded without prior stockholder approval. Furthermore, the Amended and Restated 2020 Plan does not permit the granting of discounted stock options or SARs.

Stock Options

The Compensation Committee may grant non-qualified stock options to purchase shares of our common stock, incentive stock options (which are entitled to favorable tax treatment), or a combination thereof. Incentive stock options may only be granted to employees of the Company or its subsidiaries. The Compensation Committee will determine the number of shares covered by each stock option, but during any fiscal year, no participant may be granted stock options for more than 500,000 shares.

The Compensation Committee sets the exercise price for each stock option, which cannot be less than 100% of the fair market value of the underlying shares of our common stock on the date of grant. In addition, if the participant owns stock possessing more than 10% of the total combined voting power of all classes

 

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of stock of the Company or any of its subsidiaries, the exercise price of an incentive stock option must be at least 110% of fair market value on the date of grant.

Notwithstanding the foregoing, substitute stock options may be granted at less than fair market value to persons who become employees and consultants of the Company on account of a corporate transaction. Also, the aggregate fair market value of the shares (determined on the date of grant) covered by incentive stock options that first become exercisable by any participant during any calendar year may not exceed $100,000.

The Compensation Committee may permit payment through any other means that the Compensation Committee determines to be consistent with the Amended and Restated 2020 Plan’s purpose and constitutes legal consideration including, but not limited to: (a) cash or its equivalent, (b) previously acquired shares having an aggregate fair market value at the time of exercise equal to the total exercise price, (c) a “same day sale” pursuant to a program developed under Regulation T, or (d) having the Company withhold otherwise deliverable shares.

Stock options become exercisable at the times and on the terms established by the Compensation Committee. Stock options expire at the times established by the Compensation Committee, which may not be more than 10 years after the date of grant. In addition, if the participant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, the maximum term of a stock option may not be more than five (5) years from the date of grant. If the participant terminates services prior to a stock option’s normal expiration date, the period of exercisability may be shorter depending on the reason for the termination. The Compensation Committee may extend the term of any stock option granted under the Amended and Restated 2020 Plan but in no event may the term of the option exceed 10 years from the date of grant.

Stock Appreciation Rights

The Compensation Committee will determine the terms and conditions of each SAR; provided however, the exercise price for each SAR cannot be less than 100% of the fair market value (i.e., the closing price) of the underlying shares of our common stock on the date of grant. Notwithstanding the foregoing, substitute SARs may be granted at less than fair market value to persons who become employees and consultants of the Company on account of a corporate transaction. SARs may be granted in conjunction with a stock option, or may be granted on an independent basis. The Compensation Committee will determine the number of shares covered by each SAR, but during any fiscal year no participant may be granted SARs for more than 500,000 shares. Upon exercise of a SAR, the participant will receive payment from us in an amount determined by multiplying: (i) the difference between the fair market value of a share on the date of exercise over the grant price (fair market value of a share on the date of grant), by (ii) the number of shares with respect to which the SAR is exercised. SARs may be paid in cash or shares of our common stock, as determined by the Compensation Committee. SARs are exercisable at the times and on the terms established by the Compensation Committee.

Restricted Stock and RSUs

Restricted stock awards are grants of shares of our common stock that are subject to various restrictions, including restrictions on transferability and forfeiture provisions. Shares of restricted stock will vest and the restrictions on such shares will lapse in accordance with terms and conditions established by the Compensation Committee. Each RSU is a bookkeeping entry representing an amount equal to the fair market value of one share of our common stock. The Compensation Committee will determine the number of shares subject to a restricted stock or RSU award, but during any fiscal year no participant may be granted more than 500,000 shares of restricted stock or RSUs.

In determining whether restricted stock or RSUs should be granted, and/or the vesting schedule for such a stock award, the Compensation Committee may impose whatever conditions on vesting as it determines to be appropriate. For example, the Compensation Committee may determine to grant restricted stock or RSUs only if performance goals established by the Compensation Committee are satisfied. Any performance goals may be applied on a Company-wide or an individual business unit basis, as determined by the Compensation Committee. Please refer to the discussion below under “— Performance Goals” for more information.

 

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Participants holding shares of restricted stock will not be entitled to receive dividends and other distributions on any restricted shares. Notwithstanding the foregoing, at the Compensation Committee’s sole discretion, participants holding restricted shares may be credited with such dividends and other distributions while such shares are restricted provided that such dividends and other distributions will be paid or distributed to participants only if, when and to the extent such restrictions on such shares lapse. The value of dividends and other distributions payable or distributable with respect to any shares for which such restrictions do not lapse during the applicable restriction period will be forfeited.

Performance Units and Performance Shares

Performance units and performance shares are stock awards that will result in a payment to a participant only if the performance goals that the Compensation Committee establishes are satisfied. The Compensation Committee will determine the applicable performance goals, which may be applied on a Company-wide or an individual business unit basis, as deemed appropriate in light of the participant’s specific responsibilities. Please refer to the discussion below under “— Performance Goals” for more information. After the applicable performance period has ended, the participant will be entitled to receive a payout of the number of performance units or shares earned during the performance period, depending upon the extent to which the applicable performance objectives have been achieved. During any fiscal year, no participant will receive more than 500,000 performance units or performance shares.

Performance Goals

The Compensation Committee in its discretion may make performance goals applicable to a participant with respect to a stock award. Currently, at the Compensation Committee’s discretion, one or more of the following performance goals may apply: EBIT, EBITDA, EBIT percentage, EBITDA percentage, EBIT percentage growth, EBITDA percentage growth, earnings per share, net income, operating cash flow, return on assets, return on equity, return on sales, revenue, shareholder return, orders or net orders, expenses, cost of goods sold, profit/loss or profit margin, gross margin, working capital, operating income, operating margin, cash flow, market share, economic value add, stock price of our stock, price/earnings ratio, debt or debt-to-equity ratio, accounts receivable, cash, write-offs, assets, liquidity, operations, intellectual property (e.g., patents), product development, regulatory activities, manufacturing, production or inventory, mergers, acquisitions or divestitures, financings, days sales outstanding, backlog, deferred revenue, employee headcount, total shareholder return, and any derivations of the foregoing or any other subjective or objective measures determined by the Compensation Committee, in its sole discretion, including other financial or strategic goals. The performance goals may differ from participant to participant and from award to award. The Compensation Committee will determine whether any significant element(s) will be included in or excluded from the calculation of any performance goal with respect to any participant, regardless of whether it results in any performance goal being measured on a basis other than generally acceptable accounting principles, and may provide for the adjustment of any applicable performance measure or performance results to reflect any unforeseeable, nonrecurring or infrequently occurring events, as the Compensation Committee determines to be appropriate in its sole discretion.

Under the Amended and Restated 2020 Plan, certain performance goals are specifically defined. “EBIT” means the Company’s or a business unit’s income before reductions for interest and taxes. “EBITDA” means the Company’s or a business unit’s income before reductions for interest, taxes, depreciation and amortization. “Earnings per share” means the Company’s or a business unit’s net income, divided by a weighted average number of common shares outstanding and dilutive common equivalent shares deemed outstanding. “Net income” means the Company’s or a business unit’s income after taxes. “Net orders” means the Company’s or a business unit’s net orders calculated for and reported in the Company’s quarterly financial earnings. “Operating cash flow” means the Company’s or a business unit’s sum of net income plus depreciation and amortization less capital expenditures plus certain specified changes in working capital. “Return on assets” means the percentage equal to the Company’s or a business unit’s EBIT (before incentive compensation), divided by the Company’s or a business unit’s, as applicable, average net assets. “Return on equity” means the percentage equal to the Company’s net income, divided by average stockholders’ equity. “Return on sales” means the percentage equal to the Company’s or a business unit’s EBIT (before incentive compensation), divided by the Company’s or the business unit’s, as applicable, revenue. “Revenue” means the

 

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Company’s or a business unit’s sales. “Shareholder return” means the total return (change in price plus reinvestment of any dividends) of a share.

Non-Employee Director Compensation Limit

Stock awards granted during a single fiscal year under the Amended and Restated 2020 Plan or otherwise taken together with any cash fees paid during such fiscal year for services on the Board of Directors, will not exceed $625,000 in total value for any non-employee director serving as the lead director or chair and $525,000 in total value for any other non-employee director (calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes). Such applicable limit will include the value of any stock awards that are received in lieu of all or a portion of any annual committee cash retainers or other similar cash-based payments.

Non-Employee Director Options

Under the Amended and Restated 2020 Plan, the Board of Directors will determine the number of shares subject to stock options to be issued to each non-employee director. Non-employee director stock options may only be non-qualified options. The exercise price of each non-employee director stock option will be 100% of the fair market value (i.e., the closing price) of the underlying shares of our common stock on the date of grant. Nevertheless, substitute stock options may be granted at less than fair market value to persons who become non-employee directors of the Company on account of a corporate transaction. Unless provided otherwise in an award agreement, each stock option is immediately exercisable on the date of grant. All stock options granted to non-employee directors expire at the times established by the Board of Directors, which may not be more than 10 years after the date of grant. If a director terminates service on the Board of Directors (including a voluntary resignation) prior to a stock option’s normal expiration date, the period of exercisability of the stock option may be shorter, depending upon the reason for the termination.

In addition, the Amended and Restated 2020 Plan allows the Board of Directors to adopt procedures to permit non-employee directors to forego all or part of their cash compensation in exchange for stock options or shares of our common stock.

Non-Employee Director RSUs

Under the Amended and Restated 2020 Plan, the Board of Directors will determine the number of RSUs to be granted to each non-employee director. RSUs will vest over a period provided in the grant agreement as determined by the Board of Directors, and vesting may be pro rata during the vesting period. Unless otherwise provided in the grant agreement as determined by the Board of Directors, settlement of RSUs will be made in shares of our common stock, with one share of our common stock being issued for each RSU. Payment may be made in a lump sum, in installments or may be made on a deferred basis, in the form of DSUs.

Nontransferability of Stock Awards

In general, stock awards granted under the Amended and Restated 2020 Plan may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the applicable laws of descent and distribution, and any stock awards may be exercised only by the participant during a participant’s lifetime. Notwithstanding the above, the Compensation Committee (or the Board of Directors, in the case of stock awards granted to non-employee directors) may, in its discretion, permit stock awards to be transferred to an individual or entity other than the Company subject to any restrictions as the Compensation Committee or the Board of Directors may impose; provided, however, that in no event may any award be transferred for consideration to a third-party financial institution.

Dividend Equivalents

The recipient of a stock award other than stock options or SARs (including, without limitation, any deferred stock award) may, at the Compensation Committees’, or if applicable, the Board of Directors’, sole discretion, receive dividend equivalents. Such dividend equivalents entitle the participant to be credited with an amount equal to all dividends and other distributions (whether in cash or other property) paid on

 

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an equivalent number of shares while the stock award is outstanding. Dividend equivalents may be converted into additional stock awards (for example, additional RSUs). Settlement of dividend equivalents may be made in the form of cash, in the form of shares, or a combination of both. Any dividend equivalents credited with respect to stock awards will be settled only if, when and to the extent such stock awards vest and are settled. The value of amounts payable with respect to stock awards that do not vest will be forfeited. Dividends and dividend equivalents will not be paid and/or accrue with respect to stock options of SARs.

Recoupment Policy

The SEC and the Nasdaq Stock Market recently adopted long-awaited final rules implementing the incentive-based compensation recovery provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which require listed companies to develop and implement a policy providing for the recovery of erroneously awarded incentive-based compensation received by current or former executive officers.

In accordance with these final rules, on November 17, 2023, the Compensation Committee approved a Compensation Recovery Policy, which provides for recoupment of certain incentive compensation paid to current and former executive officers of the Company (including certain incentive compensation granted under the Amended and Restated 2020 Plan) in the event of an accounting restatement of the Company’s financial statements.

In addition, pursuant to a clawback agreement required to be executed by all employees who receive awards, if an employee engages in certain detrimental conduct, including willful misconduct in connection with a financial restatement that has a material adverse effect on the Company, the Compensation Committee may, in its sole discretion, cancel and terminate such employee’s outstanding stock awards (whether vested or unvested and whether time-based or performance-based) and recoup shares issued pursuant to the exercise or settlement of stock awards within the three years prior to the detrimental conduct (as determined by the Compensation Committee) and thereafter.

Corporate Transaction

Except as set forth in a stock award agreement, upon the occurrence of (a) a merger, combination, consolidation, reorganization or other corporate transaction; (b) an exchange of shares of the Company’s common stock or other securities of the Company; (c) a sale of all or substantially all the business, stock or assets of the Company; (d) a dissolution of the Company; or (e) any event in which the Company does not survive (or does not survive as a public company in respect of its shares of common stock), then any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all stock awards outstanding under the Amended and Restated 2020 Plan or may substitute similar stock awards for stock awards outstanding under the Amended and Restated 2020 Plan (including but not limited to, stock awards to acquire the same consideration paid to the stockholders of the Company pursuant to the transaction), and any reacquisition or repurchase rights held by the Company in respect of shares issued pursuant to stock awards may be assigned by the Company to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) in connection with such transaction. Except as set forth in a stock award agreement, if the Compensation Committee does not provide for the assumption, continuation or substitution of stock awards, each stock award will fully vest and terminate upon the related event, provided that holders of stock options or SARs be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise their outstanding vested stock options and SARs before the termination of such awards; provided, however, that any payout in connection with a terminated stock award will comply with Section 409A of the Code (“Section 409A”) to the extent necessary to avoid taxation thereunder.

Notwithstanding the foregoing, except as set forth in a stock award agreement, in the event that a stock award would otherwise terminate upon the effective time of any transaction described above, the Compensation Committee may provide for a payment in such form as may be determined by the Compensation Committee, equal in value to the excess, if any, of (A) the value of the property the participant would have received upon the exercise or vesting of the stock award immediately prior to the effective time of the transaction, over (B) any exercise price payable by such holder in connection with such exercise, and provided further, that at the discretion of the Compensation Committee, such payment may be subject to the same conditions that apply to the consideration that will be paid to holders of shares in connection with

 

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the transaction; provided, however, that any payout in connection with a terminated stock award will comply with Section 409A to the extent necessary to avoid taxation thereunder.

Amendment, Termination, and Duration of the Amended and Restated 2020 Plan

The Board of Directors generally may amend or terminate the Amended and Restated 2020 Plan at any time and for any reason; provided, however, that any amendment will be subject to the approval of our stockholders to the extent required by applicable law or regulation. In addition, the amendment or termination of the Amended and Restated 2020 Plan will not alter or impair any rights or obligations under any stock award without the participant’s consent. Without further stockholder approval, no incentive stock options may be granted under the Amended and Restated 2020 Plan after November 17, 2033.

U.S. Federal Tax Aspects

A participant who receives a stock option or SAR will not have taxable income upon the grant of the stock option or SAR. For stock options, other than incentive stock options, and SARs the participant will recognize ordinary income upon exercise in an amount equal to the excess of the fair market value of the shares over the exercise price — the appreciation value — on the date of exercise. Any gain or loss recognized upon any later disposition of the shares generally will be capital gain or loss.

Purchase of shares upon exercise of an incentive stock option will not result in any taxable income to the participant, except for purposes of the alternative minimum tax. Gain or loss recognized by the participant on a later sale or other disposition of the shares will either be long-term capital gain or loss or ordinary income depending upon whether the participant holds the shares transferred upon exercise for a specified period. Any ordinary income recognized will be in the amount, if any, by which the lesser of the fair market value of the shares on the date of exercise or the amount realized from the sale exceeds the stock option price.

A participant who receives restricted stock will not have taxable income upon grant, but upon vesting unless the participant elects to be taxed at the time of grant of restricted stock. Absent such election, the participant will recognize ordinary income equal to the fair market value of the shares at the time of vesting.

A participant who receives RSUs, performance units or performance shares will not have taxable income upon grant of the stock award; instead, the participant will be taxed upon settlement of the stock award. The participant will recognize ordinary income equal to the fair market value of the shares or the amount of cash received by the participant. In addition, Section 409A imposes certain restrictions on deferred compensation arrangements. Stock awards that are treated as deferred compensation under Section 409A are intended to meet the requirements of this section of the Code.

At the discretion of the Compensation Committee, the Amended and Restated 2020 Plan allows a participant to satisfy tax withholding requirements under applicable U.S. federal and state tax laws or applicable foreign tax laws by any means which the Compensation Committee, in its sole discretion, determines both to satisfy the required tax withholding obligations and to be consistent with the purposes of the Amended and Restated 2020 Plan, including, but not limited to: (a) having the Company withhold otherwise deliverable shares, (b) delivering to the Company already-owned shares having a fair market value equal to the amount required to be withheld, or (c) a “same day sale” pursuant to a program developed under Regulation T provided, however, that the amount of tax withholding to be satisfied by any such method will be limited to the extent necessary to avoid adverse accounting consequences, including but not limited to the award being classified as a liability award. The fair market value of the shares to be withheld or delivered will be determined based on such methodology that the Company deems to be reasonable and in accordance with applicable law. Currently, we require employees to satisfy the taxes due upon vesting of RSUs through the withholding of shares and the taxes due upon the exercise of non-qualified stock options through same day sales.

The Company will be entitled to a tax deduction in connection with a stock award under the Amended and Restated 2020 Plan only in an amount equal to the ordinary income realized by the participant and at the time the participant recognizes the income. Section 162(m) places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most

 

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highly paid executive officers. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee retains the discretion to award and pay compensation that is not deductible as it believes that it is in the best interests of our stockholders to maintain flexibility in our approach to executive compensation and to structure a program that we consider to be the most effective in attracting, motivating and retaining key employees.

New Plan Benefits

The Amended and Restated 2020 Plan does not provide for set benefits or amounts of awards and we have not approved any awards that are conditioned on stockholder approval of the Amended and Restated 2020 Plan. While each of our current non-employee directors is entitled to receive a grant of DSUs on the date of our 2024 Annual Meeting of Stockholders with a grant date fair value of $160,000 and our current non-employee chair of the Board of Directors will receive an additional annual award of DSUs with a grant date fair value of $35,000, such awards will be granted under the 2020 Plan and not under the Amended and Restated 2020 Plan as the Amended and Restated 2020 Plan will not become effective until the day immediately following the date of 2024 Annual Meeting.

For informational purposes only, we have provided the following table which shows (a) that none of our executive officers (including our named executive officers) or employees will receive any set benefits or awards that are conditioned upon shareholder approval of the Amended and Restated 2020 Plan and (b) the DSU grants that our current non-employee directors as a group would receive under the Amended and Restated 2020 Plan if they are re-elected at subsequent Annual Meetings of Stockholders based on the terms of our current director compensation program.

(1)

The number of shares subject to each non-employee director’s DSU grant will not be determinable until the date of grant. See the section entitled “Compensation of Directors” for more information.

​

Prior Grants Under the 2020 Plan

The following table provides information concerning the total number of options and stock awards granted to the following persons and groups since the inception of the 2020 Plan through December 1, 2023, including Converted Awards. Amounts have not been adjusted to reflect forfeitures or cancelations. No options or awards have been granted under the 2020 Plan to any associate of any of our directors (including nominees) or executive officers. Except for Mr. Sanyal and Mr. Maheshwari, no person has received 5% or more of the total options or awards granted under the 2020 Plan since its inception.

 

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(1)

The total number of shares include shares granted as performance awards and reflects the target number of shares issuable pursuant to such awards. Depending on the Company’s annual achievement of its performance goals, the shares granted as performance awards may or may not be issued in full.

​

(2)

All the non-employee directors who are nominees for election as a director are included within this group. The total number of shares that they were granted on an individual basis are as follows: Walter M Rosebrough, Jr.: 23,793; Kathleen L. Bardwell: 12,102; Jocelyn D. Chertoff: 21,937; Timothy E. Guertin: 21,937; Jay K. Kunkel: 21,937; and Christine A. Tsingos: 21,937.

​

Equity Compensation Plan Information

The following table provides information as of September 29, 2023 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.

(1)

Consists of stock options, restricted stock units (“RSUs”), and deferred stock units (“DSUs”) granted under the Varex Imaging Corporation 2017 Omnibus Stock Plan and the 2020 Plan. Excludes purchase rights under the ESPP.

​

(2)

The weighted average exercise price does not take into account the shares issuable upon vesting of outstanding RSUs and DSUs, which have no exercise price.

​

(3)

Includes 2,211,018 shares available for future issuance under the 2020 Plan, and also includes 567,000 shares available for future issuance under the ESPP. Shares available for issuance under the ESPP, including shares subject to purchase during the current purchase period, which commenced on August 28, 2023 (the exact number of which will not be known until the purchase date on February 23, 2024). Subject to the number of shares remaining in the share reserve, the maximum number of shares purchasable by any participant on any one purchase date for any purchase period, including the current purchase period, may not exceed 2,000 shares.

​

 

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PROPOSAL FOUR
RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

Ratification of Independent Auditors

The Audit Committee has appointed Deloitte as our independent registered public accounting firm to perform the audit of our financial statements for the fiscal year ending September 27, 2024 (“fiscal year 2024”), and we are asking you and other stockholders to ratify this appointment.

The Audit Committee, which is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm, annually reviews the independent registered public accounting firm’s independence, including reviewing all relationships between the independent registered public accounting firm and us and any disclosed relationships or services that may impact the objectivity and independence of the independent registered public accounting firm, and the independent registered public accounting firm’s performance. Additionally, the Audit Committee also noted that our Deloitte engagement audit partner is subject to regular rotation. As a matter of good corporate governance, the Board, upon recommendation of the Audit Committee, has determined to submit to stockholders for ratification, the appointment of Deloitte. In the event that a majority of the shares of common stock present online at the virtual meeting or represented by proxy at the Annual Meeting and entitled to vote on Proposal Four does not ratify this appointment of Deloitte, the Audit Committee will review its future appointment of Deloitte.

We expect that a representative of Deloitte will be present at the Annual Meeting and that such representative will have an opportunity to make a statement if he or she desires and will be available to respond to appropriate questions.

Policy on Audit Committee Pre-Approval of Services of Independent Registered Public Accounting Firm

The Audit Committee must pre-approve all audit and permissible non-audit services to be provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services, and other services. Pre-approval is generally requested annually, and any pre-approval is detailed as to the particular service, which must be classified in one of the four categories of services. The Audit Committee may also, on a case-by-case basis, pre-approve services that are not contained in the annual pre-approval request. In connection with this pre-approval policy, the Audit Committee also considers whether the categories of pre-approved services are consistent with the rules on accountant independence promulgated by the SEC.

Principal Accountant Fees and Services

The following is a summary of the fees for professional services billed (or to be billed) to us by Deloitte, our principal independent registered public accounting firm for fiscal years 2023 and 2022. “Deloitte” means (i) Deloitte & Touche LLP, and the other subsidiaries of its parent company, Deloitte LLP, a U.S. member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”); and (ii) any of the other member firms of DTTL and their affiliates that, in case of both (i) and of this sentence, provide professional services to Varex.

 

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(1)

Audit Fees.   Consist of fees for the audit of annual financial statements, review of quarterly financial statements and services normally provided in connection with statutory and regulatory filings or engagements. Audit fees for fiscal year 2023 increased over the prior year primarily due to approved increases to the fixed audit fee in the United States.

​

(2)

All Other Fees.   Fiscal year 2023 fees consist of fees for ESG limited assurance services and for accessing an online accounting and financial information resource site. Fiscal year 2022 fees consist of ESG advisory services and fees for accessing an online accounting and financial information resource site.

​

The Audit Committee determined that the provision of the above services, and the fees that we paid for these services, are compatible with maintaining the independence of our independent registered public accounting firm. The Audit Committee pre-approved all services that Deloitte provided in fiscal years 2023 and 2022 in accordance with the pre-approval policy discussed above.

 

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AUDIT COMMITTEE REPORT

The Audit Committee (the “Audit Committee”) of the Board of Directors (the “Board”) of Varex Imaging Corporation (the “Company”) consists of the four directors whose names appear below. Each member of the Audit Committee meets the definition of “independent director” and otherwise qualifies to be a member of the Audit Committee under Nasdaq listing requirements.

The Audit Committee’s general role is to assist the Board in monitoring the integrity of the Company’s financial reporting process and related matters, as well as the effectiveness of the Company’s internal control over financial reporting. Its specific responsibilities are set forth in its charter. The Audit Committee reviews its charter at least annually and did so in the August 2023 Audit Committee meeting.

As required by the charter, the Audit Committee reviewed the Company’s financial statements for fiscal year 2023 and met with management, as well as with representatives of Deloitte & Touche LLP, (“Deloitte”) the Company’s independent registered public accounting firm, to discuss the financial statements. The Audit Committee also discussed with members of Deloitte the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the Securities and Exchange Commission (the “SEC”).

In addition, the Audit Committee received the written disclosures and letters required by the applicable requirements of the PCAOB regarding Deloitte’s communications with the Audit Committee concerning independence and discussed with members of Deloitte its independence from management and the Company.

Based on these discussions, the financial statement review, and other matters it deemed relevant, the Audit Committee recommended to the Board that the Company’s audited financial statements for fiscal year 2023 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 29, 2023.

Furthermore, in connection with the standards for independence promulgated by the SEC, the Audit Committee reviewed the services provided by Deloitte, the fees the Company paid for these services, and whether the provision of the services is compatible with maintaining the independence of the independent registered public accounting firm. The Audit Committee deemed that the provision of the services is compatible with maintaining that independence.

The Audit Committee has selected Deloitte to be the Company’s independent registered public accounting firm for fiscal year 2024. In doing so, the Audit Committee considered the results from its review of Deloitte’s independence, including (a) all relationships between Deloitte and the Company and any disclosed relationships or services that may impact their objectivity and independence, (b) Deloitte’s performance and qualification as an independent registered public accounting firm, and (c) the fact that the Deloitte engagement audit partner is rotated on a regular basis as required by applicable laws and regulations. As a matter of good corporate governance, the Audit Committee has determined to submit its appointment of Deloitte to the stockholders for ratification. In the event that a majority of the shares of common stock present or represented at the Annual Meeting and entitled to vote on the matter does not ratify this appointment, the Audit Committee will review its future appointment of Deloitte.

Christine A. Tsingos (Chair)
Kathleen L. Bardwell
Jocelyn D. Chertoff
Jay K. Kunkel

 

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STOCK OWNERSHIP

Beneficial Ownership of Certain Stockholders, Directors, and Executive Officers

This table shows as of December 1, 2023: (1) the beneficial owners of more than five percent of our common stock and the number of shares they beneficially owned based on information provided in their most recent filings with the SEC; and (2) the number of shares each director, each nominee for director and each NEO and all directors, nominees for director and executive officers as a group beneficially owned, as reported by each person. Except as otherwise indicated, the address of each is 1678 S. Pioneer Road, Salt Lake City, Utah 84104. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Except as noted, each person has sole voting and investment power over the shares shown in this table. For each individual and group included in the table below, the percentage ownership is calculated by dividing the number of shares beneficially owned by the person or group, which includes the number of shares of common stock that the person or group had the right to acquire on or within 60 days after December 1, 2023 by the sum of the 40,529,573 shares of common stock outstanding on December 1, 2023, plus the number of shares of common stock that the person or group had the right to acquire on or within 60 days after December 1, 2023.

*

The percentage of shares of common stock beneficially owned does not exceed one percent of the shares of common stock outstanding at December 1, 2023.

​

 

41

 

(1)

Based on a Schedule 13G/A filed on January 24, 2023, Blackrock, Inc. has sole power to vote 7,401,202 of these shares and sole power to dispose of 7,577,907 of these shares.

​

(2)

Based on a Schedule 13G/A filed on February 9, 2023, The Vanguard Group, Inc. has sole power to vote 0 of these shares, shared power to vote 26,650 of these shares, sole power to dispose of 4,546,280 of these shares, and shared power to dispose of 64,167 of these shares.

​

(3)

Based on a Schedule 13G filed on February 14, 2023, Shapiro Capital Management LLC has sole power to vote 2,397,859 of these shares, shared power to vote 426,444 of these shares, and sole power to dispose of 2,824,303 of these shares.

​

(4)

Based on a Schedule 13G filed on January 12, 2023, Allspring Global Investments Holdings, LLC has sole power to vote 2,560,885 of these shares and sole power to dispose of 2,814,919 of these shares.

​

(5)

Based on a Schedule 13G filed on February 13, 2023, Janus Henderson Group plc has shared power to vote 2,045,158 of these shares and shared power to dispose of 2,045,158 of these shares.

​

(6)

Based on a Schedule 13G filed on February 3, 2023, State Street Corporation has shared power to vote 1,933,781 of these shares and shared power to dispose of 2,022,618 of these shares.

​

(7)

Amount shown includes 3,619 deferred stock units (“DSUs”) that have vested but that are subject to deferred distribution.

​

(8)

Amount shown includes 13,454 DSUs that have vested but that are subject to deferred distribution.

​

(9)

Amount shown includes 13,454 DSUs that have vested but that are subject to deferred distribution.

​

(10)

Amount shown includes 4,664 RSU shares vesting along with 13,936 shares that may be acquired under stock options exercisable within 60 days of December 1, 2023.

​

(11)

Amount shown includes 5,108 RSU shares vesting along with 14,781 shares that may be acquired under stock options exercisable within 60 days of December 1, 2023. Also includes 195 shares held in a trust of which Ms. Honeysett is the trustee.

​

(12)

Amount shown includes 4,664 RSU shares vesting along with 13,820 shares that may be acquired under stock options exercisable within 60 days of December 2023.

​

(13)

Amount shown includes 13,454 DSUs that have vested but that are subject to deferred distribution.

​

(14)

Amount shown includes 7,062 RSU shares vesting along with 28,710 shares that may be acquired under stock options exercisable within 60 days of December 1, 2023.

​

(15)

Amount shown includes 14,000 shares held in a trust of which Mr. Rosebrough is the trustee and 13,454 DSUs that have vested but that are subject to deferred distribution.

​

(16)

Amount shown includes 26,652 RSU shares vesting along with 83,943 shares that may be acquired under stock options exercisable within 60 days of December 1, 2023.

​

(17)

Amount shown includes 13,454 DSUs that have vested but that are subject to deferred distribution.

​

(18)

Total beneficial ownership is determined in accordance with the rules of the SEC and represents the sum of the number of shares of common stock owned, and stock options exercisable within 60 days of December 1, 2023. This table does not include (i) unvested grants of restricted stock units and performance-based stock options for our executives or (ii) unvested DSUs for our non-employee directors, both of which are disclosed in the Compensation Discussion and Analysis Section of this Proxy Statement.

​

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The discussion in this section provides an overview of, and describes details regarding, the compensation programs for our NEOs and Board in fiscal year 2023. It includes a discussion of our business highlights, philosophy, and governance, along with actual and target compensation received.

For 2023, the Compensation Committee approved:

•

an annual cash incentive plan that incorporated the financial measure of earnings before interest and taxes (“EBIT”) of the Company as well an assessment of pre-determined individual strategic goals; and

​

•

a long-term equity-based incentive (“LTI”) program comprised of time-based RSUs (50%) and performance-based stock options (50%).

​

The Compensation Committee believes this program incentivizes the NEOs to manage the business and take actions that will increase the market valuation of the Company over the long term.

Business Highlights

Fiscal year 2023 was another successful year for Varex, despite the uncertain economic environment, some continued supply chain and logistics challenges, and geopolitical tensions that contributed to inflation, higher interest rates and capital costs, increased shipping costs, supply shortages, increased costs of labor and materials, exchange rate volatility, and other similar effects. The demand for many of our products remained solid, led by a higher proportion of Industrial segment sales during fiscal year 2023.

Financial Results.   Our financial results for fiscal year 2023 included:

•

Revenues increased to $893 million from $859 million in the prior year. Medical revenues were flat and Industrial revenues increased by 19% from the prior year. The Medical segment represented 75% of total company revenues and the Industrial segment represented 25%.

​

•

Year-over-year, we experienced solid sales from CT products, as well as strong growth in other products for other medical modalities, including mammography and radiography. Industrial product sales saw solid demand for photon counting detectors for non-destructive inspection in several of our industrial verticals, including battery inspection, while demand was robust for imaging products for security screening at ports and borders.

​

•

For fiscal year 2023, we had GAAP net earnings of $48 million, or $1.08 per diluted share.

​

•

We ended fiscal year 2023 with cash and cash equivalents, marketable securities and certificates of deposit of $195 million. For the fiscal year, we had cash flow from operations of $108 million. Our total debt outstanding was $448 million compared to $450 million at the end of the prior fiscal year.

​

Capital Structure.   During fiscal year 2023, we continued to lower our net leverage. This was accomplished through continued improvement in profitability, lower debt levels, and solid cash generation.

China.   With sales of $140 million in fiscal year 2023, China continued to be a strong market for us despite the Chinese government anti-corruption campaign initiated in late 2023. We remain focused on executing our long-term strategy in China and support the government’s efforts to improve the overall healthcare infrastructure. In fiscal year 2023, the China market represented 16% of our total company revenues. Our local Chinese original equipment manufacturer (“OEM”) customers continued to successfully bring new CT systems to market.

New Products.   Our R&D teams were actively engaged with our customers during fiscal year 2023 with new product development efforts.

•

During fiscal year 2023, we continued see to traction with our photon counting technology. In our Industrial segment, we saw increased adoption across various non-destructive inspection verticals such as electronics, battery and food inspection. In addition, during fiscal year 2023 we entered into several projects across our Medical businesses to further display the capabilities of our photon

​

 

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counting technology. Specifically, we continue to make progress with our CT customers for potential integration of photon counting detectors into their systems.

•

We continued to make progress with our nanotube technology. During fiscal year 2023 we achieved three milestones with regard to our collaboration with Micro-X, a leader in carbon nanotube-based X-ray systems for medical and security markets. We believe in the future importance of cold-cathode X-ray sources, and we are excited to invest in additional nanotube technology to diversify our portfolio of products.

​

•

In our Industrial segment, one of our subsidiaries successfully launched XRPure, a new irradiation system that can be used to reduce microbial loads in agricultural and other products. This new product represents both a new novel use of X-ray and our commitment to providing more integrated solutions, including full systems, to our customers across various Industrial verticals.

​

2023 Say-on-Pay Advisory Vote on Executive Compensation

At our 2023 Annual Meeting of Stockholders, approximately 93% of the votes cast for or against the “say-on-pay” advisory vote were “FOR” approval of our proposal. We value this positive endorsement by our stockholders of our 2022 executive compensation policies and believe that the outcome signals our stockholders’ support of our compensation program. Consequently, based on these say-on-pay results, we continued our general approach to compensation for fiscal year 2023, including our pay for performance philosophy and our efforts to attract, retain, and motivate our NEOs.

Philosophy of Our Executive Compensation Programs

The Compensation Committee believes that attracting, motivating, and retaining a team of high- performing executives is critical to advancing the interests of stockholders. To promote these objectives, the Compensation Committee is guided by the following principles in developing our executive compensation program and in making pay decisions:

•

Key Talent.   The pay program should enable us to attract and retain individuals with the background, experience, and talent required to lead the development and successful implementation of our business strategy.

​

•

Pay for Performance.   A significant proportion of total compensation should be at risk for achievement of annual operating and strategic goals and for long-term value creation for stockholders.

​

•

Stockholder Alignment.   Long-term incentives should be awarded in the form of Company equity to directly align executive interests with those of stockholders.

​

•

Long-term Performance Orientation.   The mix of incentives should place emphasis on long-term sustainable growth and profitability in line with stockholder interests.

​

•

Total Compensation Context.   Pay decisions should be made in the context of total compensation relative to pay practices of competitors for key talent and in consideration of individual performance, experience, knowledge, and internal parity among peers.

​

The Compensation Committee believes that our compensation programs should include short-term and long-term components, including cash and equity-based compensation, and should reward performance as measured against established goals and in terms of stockholder value creation. The Compensation Committee evaluates both performance and compensation to make sure that the compensation provided to executives remains competitive relative to compensation paid by companies of similar size operating in our industry, taking into account our relative performance and our own strategic goals. Our Compensation Committee considers the total current and potential long-term compensation of each of our executive officers in establishing each element of compensation but views each element as related but distinct.

Program Overview

This Compensation Discussion and Analysis section focuses on the following executives who were our NEOs for fiscal year 2023:

 

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Each program component and the rationale for it are highlighted below:

Pay for Performance

Our executive compensation programs are heavily weighted towards variable compensation that provides a direct link between corporate performance, stockholder value creation, and pay outcomes for our executives. Our programs also tie pay outcomes to the achievement of key strategic objectives that we believe will drive longer-term value to stockholders. The Compensation Committee regularly assesses our programs to ensure they are aligned with our evolving business strategy and are effective in supporting our talent needs.

•

Compensation Mix.   The target total direct compensation (“Target TDC”) of our NEOs is comprised of three elements: base salary, target annual cash incentive opportunity, and the grant date fair value of LTIs. As illustrated by the segments in the following graphs, 84% of the Target TDC of our Chief Executive Officer (“CEO”) was at-risk and/or performance based in the form of annual cash incentives and LTIs. For our other NEOs as a group on average, 67% of their Target TDC was at- risk and/or performance-based. The Compensation Committee generally positions target TDC for the NEOs near the median in terms of mix and value of base salary, annual cash incentive, and long-term equity incentives, taking into consideration individual factors such as experience, criticality to the organization, and performance.

​

 

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