Charters

Audit Committee Charter

AUDIT COMMITTEE CHARTER
STRYKER CORPORATION

This Charter governs the operations of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Stryker Corporation (the “Company”). The Committee shall review and reassess the adequacy of this Charter at least annually and recommend any proposed changes to the Board for approval. This Charter may be amended only by the affirmative vote of the Board. 

1. Organization

1.1  The Committee shall be appointed annually by the Board upon the recommendation of the Governance and Nominating Committee and shall comprise at least three directors, each of whom has been affirmatively determined by the Board to be independent of the Company. A director shall not be considered independent if he or she (i) accepts, directly or indirectly, any consulting, advisory or other compensatory fee from the Company or any of its subsidiaries other than in his or her capacity as a member of the Committee, the Board or any other committee of the Board, (ii) is an affiliate of the Company or any of its subsidiaries, (iii) has a material relationship with the Company or any of its subsidiaries (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company or a subsidiary and determined not merely from the standpoint of the director but also from that of any person or organization with which the director is affiliated) that may interfere with the exercise of his or her independence from management and the Company or (iv) does not meet any other independence requirement under applicable laws, rules or stock exchange listing standards, each as in effect from time to time. 

1.2  All Committee members shall be financially literate and at least one member shall have a strong financial/investment background as determined by the Board in its business judgment. In addition, at least one member shall qualify as an “audit committee financial expert” as defined in rules promulgated by the Securities and Exchange Commission (“SEC”). 

2. Meetings

The Committee shall meet as often as it deems necessary to fulfill its responsibilities, but not less frequently than quarterly. Periodically during the year, the Committee shall meet separately with management, the internal auditors and the independent auditors to discuss issues and concerns warranting Committee attention. At least annually, the Committee shall coordinate with the Governance and Nominating Committee with regard to matters of mutual interest within the context of each committee’s responsibilities for compliance with legal and regulatory requirements. The Committee shall report regularly to the Board. 

3. Purpose

The Committee shall provide assistance to the Board in fulfilling its oversight responsibility to the shareholders, potential shareholders, the investment community and others relating to (i) the integrity of the Company’s financial statements and its financial reporting process; (ii) the qualifications, independence and performance of the Company’s independent auditors; (iii) the performance of the Company’s internal audit function; and (iv) the Company’s compliance with legal and regulatory requirements. In addition, the Committee shall assist the Board in discharging its responsibilities with respect to certain financial matters, including the review of the Company’s investment, dividend and share repurchase policies and financing arrangements. In so doing, it is the responsibility of the Committee to maintain free and open communication among the Committee, the Board, the independent auditors, the internal audit and compliance supervisory personnel of the Company and management of the Company. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention, with full access to all books, records, facilities and personnel of the Company and the independent auditor and the power to retain, at the Company’s expense, independent legal, accounting and other advisers to provide advice and assistance as the Committee deems necessary or appropriate to carry out its duties. 

4. Responsibilities and Processes

4.1 The primary responsibility of the Committee is to oversee the accounting and financial reporting processes of the Company and the audits and reviews of the financial statements of the Company and to report to the Board with respect thereto. While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Management is responsible for preparing the Company’s financial statements and the independent auditors are responsible for auditing the Company’s annual financial statements and for reviewing the Company’s interim unaudited financial statements. The Committee shall take appropriate action to set the overall corporate “tone” for quality financial reporting, sound business risk practices and compliant and ethical behavior. 

4.2 The Committee in carrying out its responsibilities believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The following shall be the principal duties and responsibilities of the Committee and are set forth as a guide, with the understanding that the Committee may supplement them as appropriate: 

4.3 Relationship with the Company’s Independent Auditors 

4.3.1 The Committee shall be directly responsible for the appointment, retention and oversight of the work of the firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services, which firm or firms shall report directly to the Committee, and for the determination of the compensation to be paid by the Company for such services. 

4.3.2 The Committee shall evaluate the qualifications, performance and independence of the independent auditors (after receipt of the written disclosures and letter required by Independence Standards Board Standard No. 1 from the independent auditors confirming the professional judgment of the independent auditors that the firm is independent of the Company) and shall discuss with the independent auditors their independence. 

4.3.3 The Committee shall pre-approve all audit and non-audit services to be provided by the independent auditors (other than non-audit services that satisfy an exception provided by applicable law) and, in the case of non-audit services, provide for the disclosure of such approval as required by SEC regulations. The independent auditors shall not be engaged to perform any non-audit service proscribed by law or regulation. The independent auditors shall not be engaged to provide any permitted non-audit service unless it is affirmatively determined that performing such service is compatible with maintaining the independent auditors’ independence. The Committee may delegate pre-approval authority to a member of the Committee. The decisions of any Committee member to whom pre-approval authority is delegated must be presented to the full Committee at its next scheduled meeting. 

4.3.4 At least annually, the Committee shall obtain and review a report by the independent auditors that describes: 

4.3.4.1 The independent auditors’ internal quality control procedures; 

4.3.4.2 Any material issues raised by the most recent internal quality control review, or peer review, of the independent auditor, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, with respect to one or more audits carried out by the independent auditor and the steps taken to deal with any such issues; and 

4.3.4.3 All relationships between the independent auditors and the Company (in order to assess independence). 

4.3.5. The Committee shall evaluate the partner of the independent auditors who has primary responsibility for the audit, taking into account the opinions of the Company’s management and its internal auditors, and shall ensure that such lead partner and the reviewing partner are rotated at least every five years. 

4.3.6 The Committee shall set clear hiring policies for employees and former employees of the independent auditors that meet applicable SEC regulations and stock exchange listing standards. 

4.4 Oversight Responsibilities 

4.4.1 The Committee shall discuss with the independent auditors the overall scope and plans for the audit, including the adequacy of staffing, and the estimated fees. 

4.4.2 The Committee shall discuss with the Vice President, Internal Audit the responsibilities, budget and staffing of the internal audit function and the planned scope of internal audits and any significant changes therein and review summaries of the reports issued by the internal audit function, together with management’s responses and follow-up to such reports. 

4.4.3 The Committee shall discuss with management, the Vice President, Internal Audit and the independent auditors the adequacy and effectiveness of the accounting and financial controls, and special audit steps adopted in light of any material control deficiencies that could significantly affect the Company’s financial statements. 

4.4.4 The Committee shall review with the independent auditors any audit problem or difficulty encountered in the course of the audit work and management’s response thereto, including any restriction on the scope of activities or access to required information, and any significant disagreement with management. 

4.4.5 The Committee shall resolve disagreements between management and the independent auditor regarding financial reporting. 

4.4.6 The Committee shall receive regular reports from the independent auditors regarding the critical accounting policies and practices used by the Company and the alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, the ramifications of the use of such alternative treatments and the treatment preferred by the independent auditors. 

4.4.7 The Committee shall review any management or internal control letter or schedule of unadjusted differences and other material written communications between the independent auditors and management. 

4.4.8 The Committee shall establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, and auditing matters. The Committee shall establish procedures for the confidential, anonymous submission of concerns by employees of the Company that provide protection to an employee who reports such information. 

4.4.9 The Committee shall review with management and the independent auditors the potential effect of regulatory and accounting initiatives on the Company’s financial statements. 

4.4.10 The Committee shall review and discuss with management the Company’s policies and practices with respect to risk assessment and risk management, including the guidelines and policies that govern the assessment and management of the Company’s exposure to risk and the steps management has taken to assess, monitor and control such exposure. 

4.4.11 The Committee shall review the status of compliance with laws, regulations and internal procedures. The Committee shall coordinate its review with the Governance and Nominating Committee and may rely on reports, analyses and recommendations provided to it by that committee. 

4.5 Review of Periodic Statements and Disclosures.

4.5.1 The Committee shall review management’s certifications of disclosure controls and procedures and internal control over financial reporting as of the end of each fiscal quarter and at year end and, in the case of the report of management as of year-end, the required report of management and attestation of the independent auditors regarding management’s evaluation of the internal control over financial reporting. 

4.5.2 The Committee shall review analyses prepared by management and the independent auditors of significant accounting and financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements and its financial reporting generally, including an analysis of any significant changes in the Company’s selection or application of accounting principles, the critical accounting policies and practices used, off-balance sheet financial structures and the use of non-GAAP financial measures. 

4.5.3 The Committee shall review and discuss with management the policies with respect to earnings press releases, as well as the financial information and earnings guidance to be provided to analysts and rating agencies. Such review may be done generally (consisting of reviewing the types of information to be disclosed and the types of presentations to be made) and need not be in connection with each earnings release or each instance in which the Company provides earnings guidance. 

4.5.4 The Committee shall discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards, including the matters required to be discussed by applicable Public Company Accounting Oversight Board auditing standards relating to the conduct of the audit. 

4.5.5 The Committee shall review and discuss with management and the independent auditors the audited financial statements and the disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations, and recommend to the Board that such financial statements and disclosures be included in the Company’s Annual Report on Form 10-K (or the annual report to shareholders if distributed prior to the filing of Form 10-K). 

4.5.6 The Committee shall prepare its report to be included in the Company’s annual proxy statement, as required by SEC regulations. 

4.5.7 The Committee shall discuss the results of the quarterly review and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards. 

4.5.8 The Committee shall review and discuss the interim financial statements and the disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations with management and the independent auditors prior to the filing of the Company’s Quarterly Report on Form 10-Q. 

4.6 Other Activities & Financial Matters.

4.6.1 The Committee shall oversee the Company’s Related Party Transactions Policy and approve or disapprove transactions as provided therein. 

4.6.2 The Committee shall perform an evaluation of its performance at least annually to determine whether it is functioning effectively. 

4.6.3 The Committee shall annually review the Company’s investment policies with respect to the various U.S. and international employee savings and retirement plans and the investment and safeguarding of the working reserves of cash of the Company. These reviews shall include cash held in foreign countries and repatriation thereof and risk areas (including foreign exchange, interest rates, investments and derivatives). 

4.6.4 The Committee shall review and approve the Company’s annual Capital Plan and take action with respect to proposed capital expenditures not in the Capital Plan that exceed the CEO approval threshold. 

4.6.5 The Committee shall review, and make recommendations to the Board regarding (i) the Company’s dividend policy and dividend actions; (ii) the Company’s plans for share repurchases; and (iii) the capital structure of the Company and any significant financing arrangements (including debt or equity securities and credit agreements). 

This Charter was approved by the Board on December 5, 2017. 

 

 

Compensation Committee Charter

COMPENSATION COMMITTEE CHARTER
STRYKER CORPORATION

This Charter governs the operations of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Stryker Corporation (the “Company”). The Committee shall review and reassess the adequacy of this Charter at least annually and recommend any proposed changes to the Board for approval. This Charter may be amended only by the affirmative vote of the Board. 

1. Organization

The Committee shall be appointed annually by the Board upon the recommendation of the Governance and Nominating Committee and shall comprise at least two directors, each of whom must be (i) an independent director in accordance with the rules of the New York Stock Exchange (“NYSE”), (ii) an “outside director” as such term is defined in Section 162(m) of the Internal Revenue Code of 1986, as amended and (iii) a “non-employee director” as such term is defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended. Members of the Committee may be removed by the Board in its discretion. 

2. Meetings

The Committee shall meet as often as it deems necessary to fulfill its responsibilities and shall report to the Board following each meeting. The Committee may delegate any of its responsibilities to one or more subcommittees, each of which shall be composed of two or more members, as it may deem appropriate. 

3. Purpose

The purpose of the Committee shall be to assist the Board in discharging its overall responsibilities relating to executive compensation, including the administration of the Company’s equity-based plans. 

4. Responsibilities and Processes

The Committee in carrying out its responsibilities believes its policies and procedures should remain flexible in order to best react to changing conditions and circumstances. The following shall be the principal duties and responsibilities of the Committee and are set forth as a guide, with the understanding that the Committee may supplement them as appropriate: 

4.1 On an annual basis, the Committee shall review the Company’s overall compensation strategy and philosophy, as well as its executive benefit programs, including its retirement programs, and, if the Committee deems it appropriate, adopt or recommend to the Board the adoption of changes in the Company’s compensation strategy and philosophy and/or new, or the amendment of existing, executive benefit and compensation plans. 

4.2 The Committee shall review and approve the corporate goals and objectives relevant to the compensation of the Chief Executive Officer and the other members of the Stryker Leadership Team (“SLT”) for each year, evaluate individual current year performance in light of the established goals and set annual compensation for the Chief Executive Officer and other members of the SLT, including salary, bonus targets and grants of long-term incentive awards. The corporate goals and objectives and annual compensation of the Chief Executive Officer shall be subject to final approval by the independent members of the Board. 

4.3 The Committee shall from time to time review the level and form of the Board’s compensation and receive and review reports regarding the status of Board compensation in relation to other corporations of similar size and a peer industry comparison group. The Committee shall make recommendations to the Board regarding changes in Board compensation as it deems appropriate. 

4.4 The Committee shall have authority, in its sole discretion, to retain, at the Company’s expense, and terminate a compensation consulting firm to assist in the evaluation of director or executive compensation and any legal and other advisor that it deems necessary for the fulfillment of its responsibilities, including the sole authority to approve fees and other retention terms. Prior to selecting a compensation consultant or any other external advisor, and from time to time as the Committee deems appropriate, the Committee shall take into account all factors relevant to such advisor’s independence, including the factors specified in the NYSE listing standards. 

4.5 The Committee shall review the Company’s equity-based plans and recommend changes to the Board as it deems appropriate. The Committee shall have all authority granted to a committee of the Board under the terms of any such plan with respect to the granting of awards thereunder and the administration of such plans. 

4.6 The Committee shall review the perquisites and other personal benefits available to the Company’s Chief Executive Officer and other members of the SLT and recommend any changes to the Board. 

4.7 The Committee shall prepare an annual CEO Performance Review, to first be reviewed with the independent members of the Board, followed by the Chair of the Committee and the Lead Independent Director/Non-Executive Chairman (or, if the same person is the Chair of the Committee and the Lead Independent Director/Non-Executive Chairman, such person and an independent director designated by the Committee) conducting the review with the CEO. 

4.8 The Committee shall review and discuss with management the “Compensation Discussion and Analysis” section prepared for inclusion in the Company’s annual proxy statement and produce the report required by regulations promulgated by the Securities and Exchange Commission stating that it has done so and recommended that the “Compensation and Discussion Analysis” section be included in the proxy statement. 

4.9 The Committee shall review the results of the non-binding advisory vote related to the approval of the compensation of the Company’s named executive officers as disclosed in the Company’s annual proxy statement and take the results into account in future determinations concerning the Company’s executive compensation program. 

4.10 The Committee shall perform an evaluation of its performance at least annually to determine whether it is functioning effectively. 

This Charter was approved by the Board on December 5, 2017. 

Governance & Nominating Committee Charter

GOVERNANCE AND NOMINATING COMMITTEE CHARTER
STRYKER CORPORATION

This Charter governs the operations of the Governance and Nominating Committee (the “Committee”) of the Board of Directors (the “Board”) of Stryker Corporation (the “Company”). The Committee shall review and reassess the adequacy of this Charter at least annually and recommend any proposed changes to the Board for approval. This Charter may be amended only by the affirmative vote of the board. 

1. Organization

The Committee shall be appointed annually by the Board and shall comprise at least two directors, each of whom has been affirmatively determined by the Board to be independent of the Company. A director shall not be considered independent if he or she (i) has a material relationship with the Company or any of its subsidiaries (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company or a subsidiary and determined not merely from the standpoint of the director but also from that of organizations with which the director is affiliated) that may interfere with the exercise of his or her independence from management and the Company or (ii) does not meet any other independence requirement under applicable laws, rules or stock exchange listing standards. Members of the Committee may be removed by the Board in its discretion. 

2. Meetings

The Committee shall meet as often as it deems necessary to fulfill its responsibilities and shall report to the Board following each meeting. The Committee may delegate any of its responsibilities to one or more subcommittees, each of which shall be composed of two or more members, as it may deem appropriate. At least annually, the Committee shall coordinate with the Audit Committee with regard to matters of mutual interest within the context of each Committee’s responsibilities for compliance with legal and regulatory requirements. 

3. Purpose

The purpose of the Committee shall be to assist the Board in discharging its responsibilities with respect to the following: the Company’s governance practices; the composition, function and evaluation of the Board and its committees; the evaluation of the Company’s management; and relations with shareholders on matters of governance. In addition, the Committee shall have oversight responsibility for compliance, legal and regulatory affairs/quality assurance issues. 

4. Responsibilities and Processes

4.1 The Committee, in carrying out its responsibilities, believes its policies and procedures should remain flexible in order to best react to changing conditions and circumstances. The following shall be the principal duties and responsibilities of the Committee and are set forth as a guide, with the understanding that the Committee may supplement them as appropriate:

4.2 Governance Practices. 

4.2.1 The Committee is responsible for monitoring developments in law and practice relating to corporate governance and the Company’s response to same. 

4.2.2 The Committee shall develop and recommend to the Board corporate governance guidelines and shall review such guidelines at least annually and recommend changes as necessary. 

4.2.3 The Committee shall report to the Board recommendations from individual Directors concerning the governance of the Company. 

4.3 The Board and its Committees: Composition, Function and Evaluation. 

4.3.1 The Committee shall conduct the search for and identify individuals qualified to become members of the Board to fill new positions and vacancies on the Board. The Committee shall recommend to the Board the slate of director nominees for shareholder approval at each annual meeting. As part of this process, the Committee shall consult with Board members, management and others and shall give consideration to candidates recommended by shareholders. The Committee shall consider the background and reputation of potential nominees in terms of their character; personal and professional integrity; business and finance experience and acumen; experience in healthcare, corporate compliance or regulatory and governmental affairs; and availability to devote sufficient time to Board duties, as well as any other criteria established by the Board. The Committee is committed to creating a Board with a diversity of expertise, experience, gender and ethnicity. The Committee, acting on behalf of the Board, will commit to actively identify, recruit and advance diverse candidates, including women and minority candidates, in the search process. In considering whether to recommend a director for reelection, the Committee shall consider the individual’s past attendance at meetings and participation in and contributions to the activities of the Board and committees thereof. The Committee shall specifically consider the effect of any change in a director’s principal occupation or business association from that held when he or she became a member of the Board and the appropriateness of continued membership under the circumstances. 

4.3.2 The Committee shall review Board composition each year after the Board meeting at which the Company’s strategic plan is reviewed to ensure that the background, expertise and other attributes of the directors are in alignment with the strategic direction of the Company. 

4.3.3 The Committee shall adopt procedures to be followed by shareholders in submitting recommendations of director candidates for consideration by the Committee. 

4.3.4 The Committee shall have sole authority to retain, at the Company’s expense, and terminate any search firm to be used to identify director candidates, and any legal and other advisor that it deems necessary for the fulfillment of its responsibilities, including the sole authority to approve fees and other retention terms. 3 

4.3.5 The Committee shall periodically assess the current structure and operations of the committees of the Board and, to the extent appropriate, recommend changes to the Board. 

4.3.6 The Committee shall recommend to the Board, after consultation with the Chairman of the Board and Chief Executive Officer, the members and chairs of each committee of the Board, who shall be appointed annually at the meeting of the Board following the annual meeting of shareholders. The Committee shall recommend directors to fill committee vacancies as they occur, taking into account the special skills required for service on particular committees, past performance on the Board and committees and such other factors as the Committee deems appropriate. The Committee shall ensure that committee members meet the qualifications on independence and other criteria established by applicable laws, rules and stock exchange listing standards. The Committee shall develop and recommend to the Board procedures for the evaluation and self-evaluation of the Board and its committees and shall oversee the evaluation process. The Committee shall ensure that those evaluation procedures include an assessment of the effectiveness of the Board, of each director as a member of the Board and of each committee on which he or she serves. 

4.3.7 The Committee shall perform an evaluation of its performance at least annually to determine whether it is functioning effectively. 

4.3.8 The Committee shall provide the Board with information concerning continuing educational programs that may assist directors in carrying out their responsibilities. The Committee will cause each Director who attends such a program to provide a summary report to the Board, including any specific recommendations arising from the program. 

4.4 Relations with Shareholders on Matters of Governance. 

4.4.1 The Committee shall establish a process for shareholders to send communications directly to the members of the Board. 

4.4.2 The Committee shall be responsible for reviewing and making recommendations to the Board regarding the Company’s response to shareholder proposals for inclusion in the Company’s annual proxy statement. 

4.5 Oversight of Compliance, Risk Management, Legal and RA/QA Matters. 

4.5.1 The Committee shall receive a report at least once a year from one or more senior executives, either individually or jointly, with responsibility for regulatory affairs and quality assurance issues on the status of the Company’s compliance with relevant laws, regulations and internal procedures and may meet with such senior executives in executive session as the Committee deems appropriate. 

4.5.2 The Committee shall receive a report at least once a year from one or more senior executives, either individually or jointly, with responsibility for compliance, risk management and legal issues on the key compliance, risk management and legal issues facing the Company, and may meet with such senior executives in executive session as the Committee deems appropriate.  

4.5.3 The Committee shall receive a report at least once a year from an independent expert on the Federal Food, Drug, and Cosmetic Act (the “FDCA”) and regulations promulgated by the Food and Drug Administration on trends in regulatory, compliance, enforcement and other relevant issues. 

4.5.4 The Committee shall review major issues regarding the status of the Company’s compliance with laws and regulations, as well as major legislative and regulatory developments that may have a significant impact on the Company. 

4.5.5 The Committee shall review the processes and procedures for management’s monitoring of compliance with laws. 

4.5.6 The Committee shall conduct a review of the content, operations and effectiveness of the Company’s compliance program, including as it relates to the marketing, promotion and sale of medical devices on an annual basis that shall include updates and reports by the Company’s Chief Compliance Officer and other compliance personnel on the adoption and implementation of policies, procedures and practices designed to assure compliance with applicable FDCA requirements. 

4.5.7 The Committee shall provide the Audit Committee with such reports, analyses and recommendations as the Audit Committee may request or as the Committee deems appropriate. 

4.5.8 The Committee shall report any issue it deems appropriate to the Board. 

This Charter was approved by the Board on December 5, 2017.