Document

DEF 14A 1 algn-20211231xdef14a.htm DEF 14A Document

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934

Filed by the Registrant ý

Filed by a Party other than the Registrant ¨

Check the appropriate box:

☐ Preliminary Proxy Statement

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

☒ Definitive Proxy Statement

¨ Definitive Additional Materials

¨ Soliciting Material under §240.14a-12

ALIGN TECHNOLOGY, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

ý No fee required

¨ Fee paid previously with preliminary materials

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To be held on Wednesday, May 18, 2022

10:00 a.m. Mountain Standard Time

TO OUR STOCKHOLDERS:

The 2022 Annual Meeting of Stockholders ("Annual Meeting") of Align Technology, Inc. ("Align" or the "Company") will be webcast virtually on Wednesday, May 18, 2022, at 10:00 a.m. Mountain Standard Time. You may begin accessing the webcast using your personalized link in your confirmation email received after registration and Align stockholders will have the opportunity to listen to the meeting live, submit questions, and vote online.

Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting and Proxy Statement.

We are once again pleased to take advantage of the SEC rule allowing companies to furnish proxy materials to their stockholders over the Internet. We believe that this e-proxy process expedites stockholders' receipt of proxy materials, while lowering the costs of printing and distributing our proxy materials and reducing the environmental impact of our Annual Meeting. On or about April 5, 2022, we mailed to our beneficial and registered stockholders a Notice of Internet Availability of Proxy Materials (the "Notice") containing instructions on how to access our Proxy Statement and Annual Report and how to vote online. The Notice also contains instructions on how you can request and receive a printed paper copy of the Proxy Statement, Proxy Card and Annual Report.

Your vote is very important. Whether or not you plan to attend the Annual Meeting, we hope that you will vote as soon as possible. You may vote via the Internet or by telephone, or, if you received paper copies of the proxy materials by mail, you may also vote by mail by following the instructions on the proxy card. Voting over the Internet or by telephone or by written proxy will ensure your representation at the Annual Meeting regardless of whether you attend.

Thank you for your ongoing support of, and continued interest in, Align Technology, Inc.

Sincerely,


ALIGN TECHNOLOGY, INC.

Julie Coletti
Executive Vice President, Chief Legal and Regulatory Officer

Table of Contents


NOTICE OF ANNUAL MEETING		CORPORATE RESPONSIBILITY	58

PROXY STATEMENT SUMMARY	1	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	62
Meeting Agenda and Vote	1
Our Business	2	DELINQUENT SECTION 16(a) REPORTS	64
2021 Performance Highlights	2
Governance Highlights	4	CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	65
Fiscal 2021 Executive Compensation Highlights	5

CORPORATE GOVERNANCE	6	PROXY STATEMENT FOR THE 2022 ANNUAL MEETING OF STOCKHOLDERS	66
Corporate Governance Policies and Practices	6
Role of the Board	7	General Information	66
Board Meetings	7	Q: Why Am I Receiving These Materials?	66
Board and Committee Independence and Qualifications	7	Q. What is Included in These Materials?	66
Board Structure	7	Q: What Information Is Contained in these Materials?	66
Annual Board and Committee Self-Evaluations	7	Q: Why Did I Receive a Notice in the Mail Regarding the Internet Availability of the Proxy Materials Instead of a Paper Copy of the Full Set of Proxy Materials?	66
Board Oversight of Risk Management	8
Committee Oversight	8
Stockholder Communications with the Board	10	Q. How Can I Access the Proxy Materials Over the Internet?	66
		Q: Can I Vote my Shares by Filling Out and Returning the Notice of Internet Availability of Proxy Materials?	66
DIRECTORS	11
Board Composition and Refreshment	11	Q: What Is The Difference Between Holding Shares Directly Or As A Beneficial Owner, In Street Name?	67
Director Nominees	12
Board Diversity Matrix	16	Virtual Annual Meeting Information	67
Director Compensation	16	Q: How Can I Participate in the Annual Meeting?	67
		Q: Why Is the Annual Meeting Only Virtual?	67
EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS	19	Q: How Can I Submit Questions During the Annual Meeting?	67
		Q: What Are the Rules of Procedure for the Annual Meeting?	68
Named Executive Officers	19	Q: Will the List of Stockholders be Available During the Annual Meeting?	68
Executive Summary	20
Our Executive Compensation Program	20	Q: What if I Have Technical Difficulties or Trouble Accessing the Annual Meeting?	68
2021 Stockholder Say-On-Pay Vote	23
How We Implement and Manage Our Executive Compensation	24	Voting Information	68
Severance and Change of Control Arrangements	32	Q: Who Can Vote at the Annual Meeting?	68
		Q: How Do I Vote My Shares During the Annual Meeting?	68
PROPOSAL ONE ELECTION OF DIRECTORS	35	Q: How Can I Vote My Shares Without Participating in the Annual Meeting?	68

PROPOSAL TWO RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS	36	Q: What if I Don't Give Specific Voting Instructions?	69
		Q: Can I Change or Revoke my Vote?	69
Fees to PricewaterhouseCoopers LLP For 2021 and 2020	37	Q: What Are We Voting on And What Vote is Required to Approve Each Item?	70
Audit Committee’s Policy Of Pre-Approval Of Audit And Permissible Non-Audit Services	37
		Q: What Constitutes a Quorum?	70
		Q: Who Will Bear the Cost of Soliciting Votes for the Annual Meeting?	70
REPORT OF THE AUDIT COMMITTEE OF THE BOARD	38
		Q: Who Will Count the Vote?	71
PROPOSAL THREE ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS	40	Additional Information	71
		Q: What is Align's Website Address?	71
		Q: Where Can I Find the Voting Results of the Meeting?	71
COMPENSATION COMMITTEE OF THE BOARD REPORT	41	Q: What if Multiple Stockholders Share the Same Address?	71
Summary Compensation Table For Fiscal Year Ended 2021	42	Q: Is There Any Information that I Should Know Regarding Future Annual Meetings?	71
Grants and Plan-Based Awards for Fiscal Year Ended 2021	45
Outstanding Equity Awards At Fiscal 2021 Year End	48
Option Exercises And Stock Vested During Fiscal Year Ended 2021	50	OTHER MATTERS	72

Potential Payment Upon Termination Or Change Of Control	51
Other Compensation Matters	56

ALIGN TECHNOLOGY, INC.

410 N. Scottsdale Rd. Suite 1300

Tempe, AZ 85281

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

VIRTUAL MEETING LOGISTICS

ITEMS OF BUSINESS


1			To elect the ten (10) directors named in this proxy statement
2			To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accountants for the fiscal year ending December 31, 2022
3			To conduct an advisory (non-binding) vote on executive compensation
4			To consider such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof

IMPORTANT MEETING INFORMATION

Technical Issues

Contact 866-612-8937 (toll-free) or 973-873-7684 (international) for any technical difficulties or trouble accessing the virtual meeting or if you are unable to locate your digital control number.

Adjournments and Postponements

Any action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified above or at any time and date to which the Annual Meeting may be properly adjourned or postponed.

Meeting Admission

All stockholders as of the Record Date, or their duly appointed proxies, may attend the Annual Meeting. Online access will begin at 9:30 a.m. Mountain Standard Time, and we encourage you to join early. To be admitted to the Annual Meeting, stockholders as of the Record Date must register in advance at http://viewproxy.com/aligntech/2022/htype.asp.

Voting

Your vote is very important. Regardless of whether you plan to attend the Annual Meeting, we hope you will vote as soon as possible. You may vote your shares over the Internet or by telephone. If you received a paper copy of a proxy card by mail, you may submit your proxy for the Annual Meeting by completing, signing, dating and returning your proxy card in the pre-addressed envelope provided. For specific instructions on how to vote your shares, please refer to the section entitled, "Voting Information - How do I vote my shares during the Annual Meeting?"

This Notice of Annual Meeting and Proxy Statement and form of proxy are being distributed and made available on the Internet on or about April 5, 2022.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 18, 2022. The Proxy Statement and Align Technology, Inc.'s Annual Report on Form 10-K are available electronically at http://www.viewproxy.com/aligntech/2022.

PROXY STATEMENT SUMMARY

This summary highlights selected information contained in this proxy statement. It does not contain all the information you should consider and as such we urge you to carefully read the proxy statement in its entirety prior to voting. For additional information, please review our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

MEETING AGENDA AND VOTE

Proposals

Proposal One: Election of Directors

Page 6

The Board of Directors (the "Board") and the Nominating and Governance Committee (the "Nominating Committee") believe that the ten nominated directors (the "Nominees") encompass a range of talent, skill, expertise and diversity of backgrounds and experiences sufficient to provide sound and prudent guidance with respect to Align’s operations and interests and the interests of Align’s stockholders. See Section entitled "Director Nominees" for more information about the Nominees. Each member of our Board is elected annually by majority voting. You are being asked to vote for the election of these ten directors.

Kevin J. Dallas

Joseph M. Hogan

Joseph Lacob

C. Raymond Larkin, Jr.

George J. Morrow

Anne M. Myong

Andrea L. Saia

Greg J. Santora

Susan E. Siegel

Warren S. Thaler

Proposal Two: Ratification of Independent Registered Public Accounting Firm Page 36

Our Board believes the continued retention of PricewaterhouseCoopers LLP is in the best interests of Align and its stockholders. Our Board is submitting the selection of PricewaterhouseCoopers LLP to you for ratification as a matter of good corporate practice. See section entitled "Proposal Two Ratification of Appointment of Independent Public Accountants" for more information about PricewaterhouseCoopers LLP and our Report of the Audit Committee of the Board.

Proposal Three: Advisory Vote on Named Executive Officer Compensation Page 40

Our Board believes an annual advisory vote to approve the compensation of our named executive officers allows our stockholders to provide direct input on our compensation philosophy, policies and practices, and is consistent with our policy of seeking input from, and engaging in discussions with, our stockholders on these matters. Accordingly, our Board is requesting that you approve, on an advisory basis, the compensation of our named executive officers. See sections entitled "Executive Compensation" and "Proposal Three Advisory Vote to Approve the Compensation of Our Named Executive Officers" for more information about our named executive officers' compensation.

OUR BUSINESS

Align Technology, Inc. ("We", "Our", "Align") is a global medical device company engaged in the design, manufacture and marketing of Invisalign® clear aligners and iTero® intraoral scanners and services for dentistry, and exocad® computer-aided design and computer-aided manufacturing ("CAD/CAM") software for dental laboratories and dental practitioners. Our products are intended primarily for the treatment of malocclusions, or the misalignment of teeth, and are designed to help dental professionals achieve the clinical outcomes that they expect and the results patients desire.

Our purpose is to transform smiles and change lives, and we are accomplishing this by establishing clear aligners as the principal solution for the treatment of malocclusions, our Invisalign system as the treatment solution of choice by orthodontists, general dental practitioners and patients globally, our intraoral scanners as the preferred scanning technology for digital dental scans, and our exocad CAD/CAM software as the solution of choice for dental labs.

2021 PERFORMANCE HIGHLIGHTS

In 2021, our focus remained on our business strategic priorities.

International Expansion

General Practitioner Adoption

Patient Demand and Conversion

Orthodontist Utilization

Continually increasing our presence globally by making our products available in more markets.

Enabling general dentists to more easily identify, treat and monitor patients.

Making Invisalign a recognized brand name through awareness among consumers, motivating potential patients to seek treatment, reaching more consumers one-on-one and ensuring the best experience with the Invisalign brand.

Continually innovating to increase product applicability and predictability to enable doctors to confidently treat more patients.

As a result of our efforts to achieve our strategic priorities, we set new usage records in 2021. We served our 12 millionth Invisalign clear aligner patient, sold our 68 thousandth iTero scanner and installed our 47 thousandth exocad software license. During 2021, we also shipped 2.5 million Invisalign clear aligner cases, increasing worldwide Invisalign clear aligner volume by 54.8% compared to the prior year. This reflects 51.6% volume growth from our International doctors and 57.6% volume growth from our Americas doctors. Invisalign case submissions from iTero and other intraoral digital scanners increased to 89.1% in the Americas and 80.8% internationally by the fourth quarter of 2021, up from 84.0% and 73.7%, respectively, from the fourth quarter of 2020.

We also set new fiscal records in 2021. Total revenues were $4.0 billion, up 59.9% year-over-year. Clear Aligner revenues were up 54.5% to a record $3.2 billion, compared to 2020 and Imaging Systems and CAD/CAM Services revenues were up 90.4% to a record $705.5 million, compared to 2020. 2021 operating income of $976.4 million was up 152.2% compared to 2020.

Outstanding Year

Net Revenues ($B)

Operating Income
($M)

29.6%

31.4%

5 year CAGR

Remarkable Decade

COVID-19 Business Impact

In 2020, the COVID-19 pandemic disrupted our business and the businesses and lives of our customers, their patients and our suppliers in unprecedented ways, requiring us to reevaluate priorities, adapt to new ways of doing business and develop new strategies and plans quickly, and revise them frequently as conditions evolved. The pandemic continued to cause significant volatility and uncertainty in the global and regional economies in 2021, leading to changes in consumer and business behavior, fear and market fluctuations, materials and product shortages and restrictions on business and individual activities.

Overall, even with disruptions from the COVID-19 Delta and Omicron variants in 2021, we delivered a strong year with record revenues in addition to an operating margin that was in line with our guidance for the full year. In 2021, we met our goals and achieved numerous milestones. Globally, we delivered across each of our strategic priorities.

We remain mindful of the ongoing uncertainty surrounding COVID-19 and the challenges it creates. It has become increasingly clear over the last year with the spread of the Delta and Omicron variants, that COVID-19 may never fully go away and may persist in one form or another for the foreseeable future. The reality of “living with COVID” is one that governments, businesses and communities all over the world are beginning to acknowledge and move towards. We are beginning to do the same. The digital transition of the dental industry began before the pandemic and we expect it to continue, supported by our efforts to promote our clear aligners, intraoral scanners, clinical treatment planning and other offerings.

GOVERNANCE HIGHLIGHTS

We recognize the importance of corporate governance as a component of providing long-term stockholder value. Our Board is responsible for ensuring our governance practices are well-designed and appropriate for our business. We continually review and update our corporate governance practices to ensure that our policies are aligned with stockholder interests and corporate governance best practices.


Independence, Accountability and Diversity						•90% of director nominees are independent •Separate CEO and Independent Chair of the Board roles •Only independent directors on the Audit, Compensation and Nominating Committees •Declassified Board and annual election of all directors •Majority voting in uncontested elections •Annual performance self-evaluations by our Board and committees •Diversity of viewpoints, backgrounds, races, national origins, and experiences; 30% of director nominees identify as women •Nominating Committee oversight of ESG efforts

Best Practices						•Double trigger for all cash compensation arrangements in the event of a change of control for all members of senior management •Significant stock ownership requirements reviewed annually: ◦CEO - 6x his annual base salary ◦Other senior management - 3x their annual base salaries ◦Non-employee directors - $400,000 •Independent directors meet regularly without management present •Insider Trading Policy prohibits employees and directors from engaging in short-selling, hedging transactions or pledging Align securities as collateral for loans •Our Board and each of its committees may retain outside advisors and consultants at their discretion and our expense

Risk Oversight						•Board oversight of our overall risk management infrastructure •Committee oversight of risks related to each committee's area of responsibility •Our Board, each of its committees and management actively promote a culture to manage risks as part of our corporate strategy and day-to-day operations •Dedicated Chief Information Security, Data Privacy and Global Compliance and Ethics Officers responsible for enterprise-wide information security strategy, data privacy, and compliance and ethics policies, standards, processes, technologies and their effectiveness •Corporate Social Responsibility ("CSR") organization, full-time dedicated Vice President of CSR, a CSR Committee, and defined pillars of our comprehensive CSR program philosophy

FISCAL 2021 EXECUTIVE COMPENSATION HIGHLIGHTS

In 2021, we retained all of the key elements of our successful incentive-focused 2020 senior management compensation program. The program directly tied a substantial portion of the targeted direct compensation of senior management to variable compensation with 93% and 87% of the compensation for our CEO and our other named executive officers ("NEOs"), respectively, being variable. Base salary remained the only fixed direct compensation component, as outlined in the following table.

Alignment with Stockholder Interest and Company Performance

•Annual cash incentives are capped and subject to challenging performance goals tied to strategic financial goals aimed at increasing stockholder value.

•The majority of senior management compensation is equity-based to align incentives with long-term stockholder value, with 100% performance-based market stock units ("MSUs") comprising 66% of our CEO's 2021 total target compensation and, on average, 61% of the total target compensation of our other NEOs.

•Our non-employee directors, CEO and senior management are required to maintain significant stock ownership positions of $400,000, six times base salary and three times base salaries, respectively.

•2021 stockholder outreach extended to holders of more than 67% of our issued and outstanding stock and included our Executive Vice President, Global Human Resources, our Executive Vice President, Global Finance and Chief Financial Officer, our Executive Vice President, Chief Legal and Regulatory Officer, and our Vice President Corporate Communications and Investor Relations. We were successful in speaking with stockholders representing over 24% of our shares outstanding.

CORPORATE GOVERNANCE

We remain committed to implementing and following high standards of corporate governance, which we believe promotes the success of our business, creates stockholder value and maintains our credibility in the marketplace.

CORPORATE GOVERNANCE POLICIES AND PRACTICES

We have adopted policies and practices that establish the framework by which we govern our business. We maintain a corporate governance page on our website that publishes our policies and practices, including our Global Code of Conduct ("Code"), Corporate Governance Guidelines ("Guidelines"), and the charters for each of the standing committees of our Board. The corporate governance page can be found by clicking on the "Corporate Governance" link in the "Investors" section of our website at www.aligntech.com. The various policies and practices that we maintain and review regularly, including during the fiscal year ended December 31, 2021, foster responsible corporate governance. These policies including the following:


Global Code of Conduct			Our Code emphasizes our ongoing commitment to conducting our business with integrity. Our Code is applicable to our directors, officers and employees. In addition to finding the Code on our website, stockholders may request a free copy in writing directed to Align Technology, Inc., 410 N. Scottsdale Rd., Suite 1300, Tempe, AZ 85281, Attn: Investor Relations or by sending an email to investorinfo@aligntech.com. We will post on our website any amendments to the Code, as well as any waivers required to be disclosed by the rules of the Securities and Exchange Commission ("SEC") or the NASDAQ Stock Market LLC ("NASDAQ").
Global Speak Up Policy			Our Speak Up Policy is designed to encourage current and former directors and employees and third party business partners such as contractors, consultants, suppliers, distributors and even customers to voice their questions and concerns regarding conduct they believe in good faith to be inconsistent with the Code so that we may respond promptly, objectively, fairly and appropriately.
Corporate Governance Guidelines			Our corporate governance practices can be found in our Guidelines, a copy of which is available on our website. Our Guidelines include policies regarding the size and composition of our Board, director qualifications, independence, nominations and elections, director compensation, and leadership development and succession among other topics.
Anti-Hedging and Anti-Pledging			Our Insider Trading Policy prohibits executive officers, directors and employees from engaging in hedging transactions or pledging Align's securities as collateral for loans.
Significant Stock Ownership Guidelines			We maintain meaningful stock ownership guidelines for senior management and non-employee directors as a matter of good corporate governance and to align their interests with those of our stockholders. Each member of senior management and non-employee director has five years after becoming subject to the guidelines to attain the requisite stock ownership. As of December 31, 2021, all such individuals were in compliance with these guidelines. For purposes of this policy, "ownership" includes shares of our common stock directly held or held in trust for the benefit of such director or member of senior management or her or his family member living in the same household and shares of our underlying restricted stock units held directly, whether or not yet vested. "Ownership" does not include vested or unvested options to purchase our common stock or shares underlying unvested market stock units.
Committee Charters			During the year, our Board maintained an Audit Committee, a Compensation Committee, a Nominating Committee and a Technology Committee. Each committee has adopted a written charter that establishes its practices and procedures in accordance with applicable corporate governance rules and regulations. These charters are available on the Investor Relations section of our website located at investor.aligntech.com.

ROLE OF OUR BOARD

Our Board is responsible for reviewing our overall performance, overseeing our management, and assuring the long-term interests of stockholders are being served. To satisfy its duties our Board reviews corporate objectives and strategies, evaluates and approves significant policies and proposed major commitments of corporate resources, and selects, evaluates and provides for the succession of senior management and, subject to oversight by our Nominating Committee, our Board nominates individuals for election at annual stockholder meetings to serve as our directors and elects individuals to fill any vacancies on our Board.

BOARD MEETINGS

Our Board holds meetings at least quarterly, and the committees hold meetings at least annually. In 2021, each director attended at least 75% of the aggregate of the total number of meetings of our Board and the committees on which they each served. Our Board held seven meetings in 2021.

Our Guidelines provide that our independent directors meet in executive session at least twice a year. The independent directors met in executive sessions four times in 2021.

Our Board members are encouraged but not required to attend annual meetings of stockholders. Last year, three directors attended our 2021 annual meeting of stockholders.

BOARD AND COMMITTEE INDEPENDENCE AND QUALIFICATIONS

Our Board has determined that all Board members, other than Mr. Hogan, are independent under applicable rules of NASDAQ.

Our Board has determined that all committee members are independent under applicable NASDAQ and SEC rules for committee memberships, and that each member of the Audit Committee also meets the additional independence criteria set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our Board also has determined that two of our Audit Committee members qualify as an “audit committee financial expert” as that term is defined under SEC rules.

We support the ongoing development and expansion of knowledge of our directors through regular updates on trends and best practices in areas including governance, compliance, ethics and other topics deemed relevant to the fulfillment of their fiduciary duties and encourage them to attend third party trainings, seminars and workshops for which we reimburse them their expenses.

BOARD STRUCTURE

The roles of CEO and Chair of our Board are separated in recognition of the differences between the two roles. The CEO is responsible for setting our strategic direction and establishing key initiatives after consultation and input from our Board. The CEO furthermore provides our day-to-day leadership and monitors our performance against our initiatives. On the other hand, the Chair of our Board provides guidance to the CEO and, in consultation with the CEO and other members of our Board, sets the agenda for Board meetings and presides over meetings of the full Board. We believe that this separation of duties allows the CEO and Chair of our Board to most efficiently use their time and to most effectively fulfill their respective responsibilities, which are critical to our success. While our Bylaws and Guidelines do not require that the Chair of our Board and CEO positions be separate, our Board believes that having separate positions and having an independent outside director serve as Chair of our Board is the appropriate leadership structure for us at this time.

ANNUAL BOARD AND COMMITTEE SELF-EVALUATIONS

To ensure that our Board and its committees are performing effectively and in our best interests and those of our stockholders, our directors perform an annual assessment of our Board and its committees.

BOARD OVERSIGHT OF RISK MANAGEMENT

Management is responsible for the day-to-day management of the risks we face, while our Board, as a whole and through its committees, is responsible for overseeing management in the competent and ethical operation of the Company. Our directors take a proactive, focused approach to their responsibilities by setting standards to ensure our business success is achieved through the highest standards of responsibility and ethics.

In its oversight role, our Board must be satisfied that the key risks to our business and operations are identified and prioritized and that the processes implemented by management to respond to those risks are adequate and functioning as designed. As a critical part of this risk oversight role, our Board encourages management to promote a culture that actively promotes risk identification as part of our corporate strategy and day-to-day business operations. Furthermore, our Board encourages full and open communication between it and management. Our Chair of our Board meets regularly with our CEO and other members of senior management to discuss strategy and the risks we face. Senior management, other employees as well as consultants and advisers routinely attend Board meetings and are available to address any questions or concerns raised by our Board on risk management-related and other matters. Our Board regularly receives presentations on strategic matters involving our operations to enable it to understand our risk identification, risk management and risk mitigation strategies. Our Board also holds strategic planning sessions with senior management and other employees as well as consultants and advisers to discuss our strategies, key challenges, and risks and opportunities.

Our Board does not have a standing risk management committee. Rather, it administers its oversight responsibilities directly through the Board as a whole, as well as through the various standing committees that address risks inherent to their respective areas of oversight. Our Board and each of its committees may retain outside advisors and consultants to assist in our oversight. Our Board and each committee may select and use the outside advisors and consultants at their discretion and our expense. When a committee receives a report, the chair of the committee discusses it with the full Board during the committee reports portion of the next Board meeting which enables the entire Board to coordinate the risk oversight function.

COMMITTEE OVERSIGHT

During the year, our Board maintained an Audit Committee, a Compensation Committee, a Nominating Committee and a Technology Committee. Each of the committees assisted our Board with risk management oversight within their areas of responsibility and apprised the full Board of significant matters and management’s response.


Audit Committee Greg J. Santora (Chair) Anne M. Myong Andrea L. Saia Warren S. Thaler 9 meetings in 2021 Audit Committee Report on Page 38			Our Audit Committee assists our Board in areas of financial and investment risks, internal financial controls, cybersecurity, data privacy, crisis preparedness, and legal and regulatory requirements, including those related to our employee benefit plans. Our Audit Committee also reviews, approves and monitors our Code and Speak Up Policy. Financial Reporting and Audits Our Audit Committee oversees and monitors our accounting and financial reporting processes, our financial statement audits, our internal accounting and financial controls, and our Internal Audit Department. It is responsible for appointing, compensating, retaining, terminating and overseeing the work of our independent auditors and for reviewing the auditors' proposed scope, approach and independence. Our Audit Committee also establishes procedures for receiving, retaining and treating complaints regarding accounting, internal accounting controls or auditing matters. Compliance and Ethics Our Audit Committee is responsible for reviewing compliance and ethics risks as well as the steps management takes to understand and mitigate these risks. The Global Compliance and Ethics Officer ("GCEO") is responsible for implementing and maintaining an effective compliance and ethics program, including the Code, Speak Up Policy and other policies, trainings and communications related to key risk areas such as anti-bribery, anti-corruption and ethical interactions with healthcare professionals. The GCEO is responsible for reviewing and assessing the effectiveness of our program against related laws and industry best practices. Anti-Bribery and Anti-Corruption Compliance Our Audit Committee oversees and reviews our Global Anti-Bribery and Anti-Corruption ("ABAC") Compliance Program. The Audit Committee receives periodic updates from the GCEO concerning the ABAC Program and related activities. In 2021, the GCEO met with the Audit Committee two times to discuss our ABAC Program. Cybersecurity Our Audit Committee is responsible for reviewing cybersecurity risks and the cybersecurity program. It oversees and reviews our cybersecurity, data privacy, and other information technology risks, controls and procedures. To more effectively address the cybersecurity threats posed today, we have a dedicated Chief Information Security Officer ("CISO") who is responsible for leading enterprise-wide information security strategy, policy, standards, process, and technology. Our information security program includes, among other things, vulnerability management, antivirus and malware protection, technology compliance and risk management, encryption, identity and access management, application security, and security monitoring and incident response. In 2021, the CISO met with the Audit Committee four times to discuss our cyber risks and threats. Data Privacy Our Audit Committee is responsible for reviewing data privacy risks, controls and procedures as well as steps taken by management to understand and mitigate such risks. Our Audit Committee routinely receives updates on data privacy risks we face and recommends actions to mitigate those risks. We have various technical, administrative, and physical safeguards in place to help protect against unauthorized access to, use, or disclosure of the customer, consumer, and patient information and data we collect and store. We have dedicated privacy experts who advise the business on privacy risks and assesses the effectiveness of privacy controls and compliance with various legislative and regulatory requirements. In 2021, the Global Privacy Director met with the Audit Committee three times.


Compensation Committee George J. Morrow (Chair) Anne M. Myong Andrea L. Saia Greg J. Santora 8 meetings in 2021 Compensation Committee Report on Page 41			The Compensation Committee assists our Board to manage risks arising from our compensation policies and practices. It ensures that our compensation programs successfully align the interests of employees, including senior management, with those of our stockholders. It reviews and administers all compensation arrangements for senior management and reviews general compensation goals and guidelines for our employees and the criteria for which bonuses are determined. It evaluates the various elements of our compensation programs to avoid encouraging, and to mitigate against, excessive risk taking by promoting behaviors that support sustainable value creation. Additionally, our Compensation Committee retains, oversees, and assesses the independence of our compensation consultants and advisors. In 2021, the charter of our Compensation Committee was amended to specifically empower it to oversee our diversity, equity and inclusion initiatives. Compensation Committee Interlocks and Insider Participation None of the members of our Compensation Committee is or has ever been a member of our senior management or an employee. None of the members of senior management currently serves, or in the past year has served, as a member of the Compensation Committee or director (or other Board committee performing equivalent functions or, in the absence of any such committee, the entire Board) of any entity that has one or more members of senior management serving on our Compensation Committee or our Board.


Nominating and Governance Committee Joseph Lacob (Chair) C. Raymond Larkin, Jr. George J. Morrow Susan E. Siegel Warren S. Thaler 4 meetings in 2021			Our Nominating Committee assists our Board to manage risks associated with Board membership and organization as well as long-term and emergency senior management and Board succession planning. At the request of our Board, our Nominating Committee conducts annual reviews and makes recommendations concerning Board and senior management succession. It evaluates the composition, organization and governance of the Board and its committees and identifies, evaluates and recommends nominees to the Board. Our Nominating Committee develops and recommends corporate governance principles applicable to Align and is responsible for the assessment, analysis and implementation of matters involving ESG initiatives. In 2021, the charter of our Nominating Committee was amended to specifically empower it to oversee our ESG initiatives and disclosures.


Technology Committee Kevin J. Dallas Joseph Lacob Andrea L. Saia Susan E. Siegel Warren S. Thaler 1 meeting in 2021			Our Technology Committee assists our Board to evaluate major technology plans and strategies, including technical and market risks associated with product development and investment. It reviews our technology and development activities and oversees and advises our Board on matters of innovation and technology.

STOCKHOLDER COMMUNICATIONS WITH THE BOARD

Stockholders may communicate directly with our non-management directors by sending an email to Board@aligntech.com. These communications are monitored to ensure appropriate summaries of all received messages are provided to our Board at its regularly scheduled meetings. Where the nature of a communication warrants, our Executive Vice President, Chief Legal and Regulatory Officer may decide to obtain the more immediate attention of an appropriate committee of our Board or a non-management director, senior management or independent advisors. After reviewing stockholder messages, our Board will determine an appropriate response if they deem a response necessary or warranted.

DIRECTORS

Our Board consists of a diverse group of highly qualified leaders in their respective fields, all of whom have senior leadership experience at large domestic and multinational companies. In these positions, they have gained significant and diverse management experience, including strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development. They also have in-depth public company experience serving as executive officers, or on boards of directors and board committees, and have a robust understanding of corporate governance practices and trends. Our Board and Nominating Committee believe the skills, qualities, attributes, and experiences of our directors provide us with business acumen and a diverse range of perspectives to effectively address our evolving needs and represent the best interests of our stockholders.

BOARD COMPOSITION AND REFRESHMENT

Qualifications and Diversity

Our Nominating Committee has specified the following minimum qualifications it believes must be met by a nominee for a position on our Board:

•the highest personal and professional ethics and integrity;

•proven achievement and competence in the nominee's field and the ability to exercise sound business judgment;

•skills and experience that are complementary to those of the existing directors;

•the ability to assist and support management and make significant contributions to our success; and

•an understanding of the fiduciary responsibilities required of a member of our Board, including the commitment of time and energy necessary to diligently carry out those responsibilities.

While we do not have a formal diversity policy for Board membership, our Board seeks directors who represent a mix of backgrounds, skills, and experiences, including candidates of diverse gender, race and ethnicity, that will enhance the quality of its deliberations and decisions. Moreover, our directors have diverse business and professional backgrounds, including experience in finance and accounting, venture capital, medical device, consumer products, technology, brand management and international sales, marketing and operations. Such diversity considerations are discussed by our Nominating Committee in connection with the general qualifications of each potential nominee.

Identifying Nominees

Our Nominating Committee considers candidates for Board membership suggested by our Board, senior management and stockholders. Our Nominating Committee also periodically retains third-party executive search firms to identify independent director candidates. In considering candidates for director nominees, our Nominating Committee generally assembles all information regarding a candidate's background and qualifications. Our Nominating Committee, in its discretion, may designate one or more of its members to interview any candidate. In addition, our Nominating Committee may seek input from senior management or other members of our Board, who may interview any candidate. Our Nominating Committee recommends Nominees on its assessment of the backgrounds, experiences and overall suitability to serve on our Board in accordance with our policy regarding nominations and qualifications of directors.

Under our Guidelines, our Nominating Committee considers candidate recommendations from stockholders holding at least 1% of the total outstanding shares of our common stock continuously for at least 12 months prior to the date they submit their recommendation. Our Nominating Committee will consider persons recommended by our stockholders in the same manner as nominees recommended by our Board, individual board members or senior management. A stockholder may also nominate a person directly for election to our Board at an annual meeting of our stockholders provided their proposal meets the requirements set forth in our Bylaws and the rules and regulations of the SEC related to stockholder proposals. The process for properly submitting a stockholder proposal, including a proposal to nominate a person for election to our Board at an annual meeting, is described below in the answer to the question, "Is there any information that I should know regarding future annual meetings?"

Board Refreshment

As an innovative technology company in the highly regulated medical device industry, our directors bring considerable experience overseeing sales and marketing, operations, finance and accounting, regulatory and compliance and corporate governance, all practices essential to our success. Since 2017, our Board has added three new independent directors, each of whom has brought valuable and diverse backgrounds and perspectives to our Board overall. Our refreshment process reflects a balanced approach that allows us to benefit from our valued tenured members who know and understand our company, while also seeking new members with experiences that add future value. We are committed to maintaining a Board that blends a diversity of backgrounds with strategic expertise in varying fields who offer perspectives in areas key to our mission, vision and strategic growth and expansion of our business into key domestic and international markets, including technology, cybersecurity, healthcare, life sciences, medical devices, e-commerce, consumer products and manufacturing.

DIRECTOR NOMINEES



						Kevin J. Dallas Director since 2018 \| Independent Technology Committee Kevin J. Dallas, 58, has served as the President and Chief Executive Officer at Wind River Systems, Inc., a company whose software deploys IoT systems, since 2020. Mr. Dallas previously served as the Corporate Vice President for Cloud & AI Business Development for Microsoft from 1996 to 2020, helping to enable the digital transformation of customers and partners across a range of industries including: connected/autonomous vehicles, industrial IoT, discrete manufacturing, retail, financial services, media and entertainment, and healthcare. Prior to working with Microsoft, he held roles at NVIDIA Corporation and National Semiconductor (now Texas Instruments Inc.) in the U.S., Europe, and the Middle East. Mr. Dallas earned a B.S.c. degree in Electrical and Electronic Engineering from Staffordshire University, Stoke-on-Trent, Staffordshire, England. He brings to the Board more than 25 years of experience driving digital innovation and growth at technology companies and expertise in the digital transformation of customers and partners.



						Joseph M. Hogan Director and CEO of Align Technology, Inc. since 2015 Joseph M. Hogan, 64, joined Align in June 2015 as President, CEO and as a Director. Before joining Align, Mr. Hogan served as CEO of ABB, a $40 billion global power and automation technologies company based in Zurich, Switzerland. During his five years at ABB, Mr. Hogan oversaw a 25% increase in revenues. Prior to ABB, Mr. Hogan spent 25 years at General Electric (GE) in a variety of executive and management roles, including eight years as CEO of GE Healthcare, where he drove significant geographic and market portfolio expansion and more than doubled revenues from $7 billion to $16 billion. Mr. Hogan earned his M.B.A. from Robert Morris University and a B.S. in Business and Economics from Geneva College, both in Pennsylvania. He is a proven leader serving as an integral connection between our board of directors and management. He brings to Align significant leadership experience from large public companies, with strategic business, market development and sales acumen, and expertise in strategic and operational aspects of complex, international organizations.



						Joseph Lacob Director since 1997 \| Independent Nominating Committee (C) \|Technology Committee Joseph Lacob, 66, acquired The Golden State Warriors of the National Basketball Association in 2010 and is currently the Managing Partner and CEO of the Warriors. From 1987 to 2018, he was a partner of Kleiner Perkins Caufield & Byers (KPCB), a venture capital firm. Prior to joining KPCB, Mr. Lacob was an executive with Cetus Corporation (now Chiron), FHP International, a health maintenance organization, and Booz, Allen & Hamilton, a management consulting firm. Mr. Lacob earned an M.B.A. from Stanford University, a Masters in Public Health from the University of California at Los Angeles and a B.S. in Biological Sciences from the University of California at Irvine. He brings to the Board expertise in evaluating and developing strategic opportunities, having overseen hundreds of venture company investments and having been a member of dozens of boards of directors over the years, specifically in the technology, healthcare and life sciences industries and significant financial, strategic investment and mergers and acquisition experience.
Former Directorships ▪Board of Directors, Orexigen Therapeutics



						C. Raymond Larkin, Jr. Chair of the Board since 2006 \| Director since 2004 \| Independent Nominating Committee C. Raymond Larkin, Jr., 73, currently serves as a principal of Group Outcome L.L.C., a merchant banking firm concentrating on medical technologies. Previously, Mr. Larkin was Chairman and CEO at Eunoe, Inc. He also served as a part time Venture Partner at Cutlass Capital, from 2001 to 2007. Prior to Eunoe, Inc, he was President and CEO of Nellcor Puritan Bennett, Inc., a respiratory product company, which grew to nearly $1 billion in revenues during his tenure through the development and introduction of pulse oximetry for patient safety monitoring. Mr. Larkin earned his B.S. degree in Industrial Management from LaSalle University and served in the United States Marine Corps, rising to the level of Capitan. He brings to the Board significant leadership experience at large public companies, a deep knowledge and authority in the medical device and healthcare fields, extensive public and private company board experience, and strong strategic business development and tactical implementation skills.
Selected Directorships and Memberships ▪Chairman of the Board of directors of Shockwave Medical, Inc. Former Directorships ▪Board of Directors, Orexigen Therapeutics ▪Heartware, Inc.



						George J. Morrow Director since 2006 \| Independent Compensation Committee (C) \| Nominating Committee George J. Morrow, 70, served as the Executive Vice President, Global Commercial Operations (2003-2011) and Executive Vice President of Worldwide Sales and Marketing (2001-2003) at Amgen Inc., a global biotechnology company. From 1992 to 2001, Mr. Morrow held multiple leadership positions at GlaxoSmithKline Inc. and its subsidiaries, including President and Chief Executive Officer of Glaxo Wellcome Inc. Mr. Morrow earned an M.B.A. from Duke University, an M.S. degree in Biochemistry from Bryn Mawr College and a B.S. degree in Chemistry from Southampton College, Long Island University. He brings to the Board significant leadership experience in sales, marketing and operational global ownership, a valuable understanding of medical device regulatory and compliance, financial, and corporate governance, and expertise in growth driven sales compensation strategies and risk mitigation controls.
			Selected Directorships and Memberships ▪Board of Directors, Neurocrine Biosciences Former Directorships ▪Board of Directors, Human Genome Sciences, Inc.



						Anne M. Myong Director since 2019 \| Independent Audit Committee \| Compensation Committee Anne M. Myong, 54, has served as President, eCommerce and Digital for Amyris, Inc. a beauty, health and wellness biotechnology company and previously served at Walmart Global eCommerce (2014-2017) as Senior Vice President and Chief Financial Officer and previously as Senior Vice President, Chief Financial and Administrative Officer, Walmart China Retail. Prior to Walmart, Ms. Myong was Vice President and CFO of Agilent Technologies China. Ms. Myong earned an M.B.A. from Harvard Business School and a B.B.A. in Computer Information Systems from James Madison University. She brings to the Board extensive experience in global operations, finance and digital transformation with a unique knowledge of international markets, a deep understanding of financial reporting and organizational risks, controls and monitoring, and expertise in consumer products, e-commerce, and developing and delivering industry-transforming technology and innovations.
Selected Directorships and Memberships ▪Goodwill Industries International



						Andrea L. Saia Director since 2013 \| Independent Audit Committee \| Compensation Committee \| Technology Committee Andrea L. Saia, 64, previously served as the Global Head of Vision Care (2011-2012) for the Alcon division of Novartis AG, at CibaVision Corporation, a +$2Bio subsidiary of Novartis in a variety of senior leadership roles, including President and CEO (2008-2011), President of Europe, Middle East, and Africa operations (2005-2007), President of the Global Lens Business (2003-2005) and Global Head of Marketing (2002-2003), and in a variety of senior executive roles with Unilever, Procter & Gamble and Revlon. Ms. Saia earned an M.B.A. from J.L. Kellogg Graduate School of Business and a B.S. in Business Administration from Miami University. She brings to the Board 30 years of global experience within the healthcare, medical device and consumer products industries and expertise in global sales and marketing and strategic business development.
Selected Directorships and Memberships ▪LivaNova PLC ▪Outset Medical, Inc. Former Directorships ▪Board of Directors, Coca-Cola Enterprises, Inc.



						Greg J. Santora Director since 2003 \| Independent Audit Committee (C) \| Compensation Committee Greg J. Santora, 70, served as the CFO (2003-2005) for Shopping.com, a provider of Internet-based comparison-shopping resources. From 1997 through 2002, Mr. Santora was the CFO and Senior Vice President for Intuit Inc., a provider of small business and personal finance software. Prior to Intuit, he spent 13 years at Apple Computer in various senior financial positions. Mr. Santora earned an M.B.A. from San Jose State University, a B.S. in Accounting from the University of Illinois, and has been a CPA since 1974. He brings to the Board over 35 years of public company major audit firm senior leadership experience, a deep understanding of e-commerce, accounting, and finance, expertise in compliance, financial reporting, and audits, and insight into internal controls and risk mitigation best practices.
Former Directorships ▪Taleo Corporation ▪RetailMeNot, Inc.



						Susan E. Siegel Director since 2017 \| Independent Nominating Committee \| Technology Committee Susan E. Siegel, 61, served as GE’s Chief Innovation Officer (2017-2019) and CEO of GE Ventures & Licensing (2012-2017). Before GE, she was a General Partner at Mohr Davidow Ventures, leading investments in personalized medicine, life sciences & digital health. During the early days of the human genome project, Ms. Siegel led Affymetrix as a director and President, one of the fastest growing genomics companies. Ms. Siegel earned a M.S. in Biochemistry and Molecular Biology from Boston University Medical School and a B.S. in Biology from the University of Puerto Rico. She brings to the Board extensive experience identifying, funding, pioneering and implementing industry-shifting ideas in the life sciences, biomedical research and healthcare industries.
Selected Directorships and Memberships ▪Board of Directors, Illumina, Inc. ▪Board of Directors, Nevro, Inc. ▪Chairman of the Board, MIT's The Engine ▪Trustee, The Kaiser Family Foundation



						Warren S. Thaler Director since 2004 \| Independent Audit Committee \| Nominating Committee \| Technology Committee Warren S. Thaler, 59, has served since 2017 as a consultant to Gund Investment Corporation, an investment firm owned by Gordon Gund, with holdings in real estate as well as public and private equity securities and as its President from 2001 until 2017. Previously, Mr. Thaler served on the boards of privately held companies owned by the Gund family. From 1990 to 2005, Mr. Thaler was on the board of directors of the Cleveland Cavaliers and Gund Arena Company, and from 2001 to 2005, he represented the Cleveland Cavaliers as its Alternate Governor at meetings of the NBA's Board of Governors. Mr. Thaler earned an M.B.A. from Harvard University and a B.A. from Princeton University. He brings to the Board over 25 years of experience as a senior executive and board member, extensive involvement philanthropic and civic organizations and expertise in business management, operations and M&A. He combines his expertise with significant experience across a broad range of healthcare industries, including dentistry.
Former Directorships ▪Cleveland Cavaliers ▪Gund Arena Company

There are no family relationships between any director and any of our executive officers.

BOARD DIVERSITY MATRIX

The following matrix is provided to illustrate the demographic diversity and tenure distribution of the Nominees to serve on our Board as of March 23, 2022:

Anne M. Myong

Kevin J. Dallas

Susan E. Siegel

Joseph M. Hogan

Andrea L. Saia

George J. Morrow

C. Raymond Larkin, Jr.

Warren S. Thaler

Greg J. Santora

Joseph Lacob

Part I: Gender Identity

Male

●

Female

●

Non-Binary

Did Not Disclose Gender

Part II: Demographic Information

African American or Black

●

Alaskan Native or Native American

Asian

●

Hispanic or Latino

●

Native Hawaiian or Pacific Islander

White or Caucasian

●

Two or More Races or Ethnicities

LGBTQ+

Did Not Disclose Demographic Information

Tenure

0-9 years (50%)

16+ years (50%)

DIRECTOR COMPENSATION

Our director compensation program is designed both to attract and fairly compensate highly qualified, non-employee directors to represent and act in the best interests of our stockholders, employees, and the communities we serve. For the purpose of determining non-employee director compensation for 2021, our Compensation Committee engaged Compensia to evaluate the competitiveness of our program. Our Compensation Committee considered an overview of the corporate governance environment as well as recent trends and developments relating to director compensation. Our Compensation Committee also specifically considered the amounts payable under, and the various components of, our director compensation program, as well as the aggregate director compensation cost, in comparison to boards of directors of the same group of peer companies it used in determining senior management compensation. (For further details on our peer group, see the discussion of our "Peer Group" in the Compensation Discussion and Analysis section below). The analysis showed that our non-employee director compensation practices were, in aggregate, generally aligned with market norms and emerging best practices. As a consequence of the review, our Compensation Committee determined that no changes were necessary for our 2021 non-employee director compensation program.

Cash Compensation

Our 2021 non-employee directors cash compensation program was as follows and paid in quarterly installments:


Description	Current Fee
Annual Retainer for Board Membership (other than the Chair of our Board)	$	50,000
Annual Retainer for membership on the Compensation and/or Audit Committee (other than the Chair)	$	13,500
Annual Retainer for Chair of the Compensation Committee and/or Audit Committee	$	27,000
Annual Retainer for membership on the Nominating Committee (other than the Chair) and/or Technology Committee	$	5,000
Annual Retainer for the Chair of Nominating Committee	$	10,000
Annual Retainer for the Chair of our Board (1)	$	100,000

(1)The Chair of our Board does not receive any compensation for membership on any committee other than the annual retainer.

Equity Compensation

In March 2021, our Compensation Committee approved an annual equity grant of RSUs to our then-current board members (other than Mr. Larkin) having a long-term incentive value equivalent to $300,000. For Mr. Larkin's additional responsibilities as Chair of our Board, the Compensation Committee approved an annual RSU grant of $400,000. The actual number of shares under the RSU awards was calculated using the closing price of our common stock on the date of our 2021 annual meeting of stockholders. Accordingly, on May 19, 2021, each non-employee director other than Mr. Larkin was granted 524 RSUs and Mr. Larkin was granted 699 RSUs based on the closing per share price of our stock on that date of $571.49. Each of these RSU awards vests 100% upon the earlier of (i) the one-year anniversary of the grant date or (ii) the date of the next annual meeting of stockholders following the grant date. Assuming the continued service of each non-employee director, each of these equity awards are expected to vest 100% on May 18, 2022.

Total Compensation

The table below summarizes the compensation paid to our non-employee directors for the year ended December 31, 2021. The compensation of our President and CEO, Joe Hogan, is shown in the Summary Compensation Table of this proxy statement.


Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)(1)	Total ($)
Kevin J. Dallas	55,000	299,461	354,461
Joseph Lacob	65,000	299,461	364,461
C. Raymond Larkin, Jr.	100,000	399,472	499,472
George J. Morrow	82,000	299,461	381,461
Anne M. Myong	77,000	299,461	376,461
Thomas M. Prescott(2)	22,917	—	22,917
Andrea L. Saia	82,000	299,461	381,461
Greg J. Santora	90,500	299,461	389,961
Susan E. Siegel	60,000	299,461	359,461
Warren S. Thaler	73,500	299,461	372,961

(1)The amounts reflect the aggregate grant date fair value of RSU awards computed in accordance with FASB ASC Topic 718. There can be no assurance that the grant date fair value amounts will ever be realized. The RSUs are time-based awards and are not subject to performance or market conditions.

(2)Mr. Prescott's tenure as a non-employee director ended at the commencement of our 2021 annual meeting of stockholders on May 19, 2021. The amounts indicated reflect the fees earned and paid to him for his service on our Board in 2021 through the end of his term of office.

The aggregate number of stock awards granted to each non-employee director during the fiscal year ended December 31, 2021 were as follows:


Name						Stock Awards
Kevin J. Dallas						524
Joseph Lacob						524
C. Raymond Larkin, Jr.						699
George J. Morrow						524
Anne M. Myong						524
Andrea L. Saia						524
Greg J. Santora						524
Susan E. Siegel						524
Warren S. Thaler						524

EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS

This section explains how we compensate our named executive officers (each, a "NEO" and collectively, the "NEOs"), although much of the discussion also applies to all our senior management whose titles are executive vice president and above.

NAMED EXECUTIVE OFFICERS

Our NEOs for fiscal year 2021 include our CEO, CFO and our three other most highly compensated executive officers. They are:

Joseph M. Hogan

John F. Morici

Emory Wright

President and CEO

CFO and Executive Vice President, Global Finance

Executive Vice President, Global Operations

Julie Coletti

Stuart Hockridge

Executive Vice President, Chief Legal and Regulatory Officer

Executive Vice President, Global Human Resources

For more information on our NEO's background and experience, see Item 1, Business, of our Annual Report on Form 10-K filed with the SEC on February 25, 2022.

EXECUTIVE SUMMARY


2021 Executive Compensation						93% of our CEO's total-target annual compensation was at-risk and subject to annual performance goals or tied to the value of our common stock.
						87% of our other NEOs' total-target annual compensation, on average, was at-risk and subject to annual performance goals or tied to the value of our common stock.
						Based on strong performance against challenging 2021 financial objectives, we achieved a weighted average of 447.8% of our financial targets resulting in our NEOs receiving annual incentive payments (bonuses) of 240% of target award opportunities.


Strong Compensation Pay Practices						Core governance principles and practices are employed to align the compensation of senior management with stockholder interests.
						There were no changes to the long-term component of our executive compensation program in 2021.
						We continue to carefully manage equity burn rates with our overall equity-based burn rate for 2021 at 0.4% and our adjusted gross burn rate at 0.9%.


Strong Company Performance						Our stock price increased 23.0% in 2021. Our three-year total stockholder return ("TSR") of 213.8% far exceeds the NASDAQ Composite Index three-year TSR of 135.8% and the S&P 500 Index three-year "TSR" of 90.1%.
						2021 net revenues were a record $4.0 billion, a 59.9% increase over 2020.
						We shipped a record 2.5 million Invisalign cases in 2021, an increase of 54.8% compared to 2020.
						2021 operating income was $976.4 million, up 152.2% compared to 2020.
						Our cash, cash equivalents and marketable securities as of December 31, 2021, were $1.3 billion, which was primarily driven by strong cash flow from operations of $1.2 billion.

OUR EXECUTIVE COMPENSATION PROGRAM

Our senior management compensation program is designed to provide a balanced mix of cash and equity, annual, and longer-term incentives to encourage corporate strategies and actions that are in the long-term best interests of us and our stockholders. We do this by tying the majority of the compensation paid to our senior management to the achievement of performance goals intended to promote the creation of stockholder value and by designing compensation to attract and retain high-caliber executives in a competitive market for talent.

Our Compensation Committee evaluates the various elements of our compensation programs to avoid encouraging, and to mitigate against, excessive risk taking by promoting behaviors that support sustainable value creation. It annually assesses our compensation programs and believes our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect.

Executive Compensation Philosophy and Core Objectives

The objective of our senior management compensation program is to encourage our corporate leaders to achieve our financial and strategic objectives, thereby creating value for our stockholders. We remain committed to our longstanding compensation philosophy. In designing our compensation program, we adhere to compensation governance best practices, including the following:


Offer competitive compensation			We seek to provide competitive compensation opportunities to attract, retain and incentivize superior talent.
Reward performance			A significant portion of the total target compensation of our NEOs is tied to the achievement of financial and strategic objectives, supporting our pay-for-performance philosophy by directly and substantially linking rewards to achievement of measurable financial targets and a shared set of critical strategic priorities. By also rewarding individual performance, we seek to recognize outstanding individual contributions.


Link the interests of senior management with those of our stockholders			A significant portion of the total target compensation for our NEOs is in the form of long-term equity-based compensation. This structure is designed to focus decision-making and behavior on goals that are consistent with our overall strategy.


Solely Independent Directors			Our Compensation Committee is composed solely of independent directors, and it retains an independent compensation consultant directly.
Annual Say-on-Pay Votes			We submit annual compensation proposals ("say-on-pay") to stockholders for advisory votes, and our Compensation Committee considers the outcome of the votes in making future compensation decisions.


Stock Ownership Guidelines			We maintain meaningful stock ownership guidelines for senior management and non-employee directors as a matter of good corporate governance and to demonstrate that the interests of senior management and non-employee directors are consistent with those of our stockholders. In 2021, each member of senior management other than our CEO was subject to a stock ownership guideline equal to 3x their annual base salaries. Our CEO was subject to a stock ownership guideline equal to 6x his annual base salary.
No "single-trigger" on Cash Compensation			All of our post-employment cash compensation arrangements in the event of a change in control are "double-trigger" arrangements requiring both a change in control and a qualifying termination of employment before any cash payments are paid. In addition, the employment agreements entered into by our CEO, CFO as well as others who join or are promoted to a senior management role after September 2016 provide that such individuals will only receive accelerated vesting of their stock if they are terminated without cause or for convenience within 18 months of a change of control (double trigger).
Annual Compensation-Related Risk Assessment			Our compensation policies are structured to discourage inappropriate risk-taking. There are no guarantees bonuses will be paid under our annual cash bonus incentive program. In 2021, bonus awards were capped at 240% of target in part to discourage excessive risk-taking. The Compensation Risk Assessment located below in this proxy statement describes the Compensation Committee's assessment that the risks arising from our company-wide compensation programs are reasonable, in the best interest of our stockholders, and unlikely to have a material adverse effect on us.
No Hedging or Pledging of Our Stock			Employees may not directly or indirectly engage in transactions intended to hedge or offset the market value of our common stock that they own. In addition, our Insider Trading Policy further prohibits employees from directly or indirectly pledging our common stock as collateral for any obligation.
Carefully Manage Equity Burn Rates			We are committed to carefully managing the dilutive impact of equity compensation awards. Management and our Compensation Committee regularly evaluate share utilization levels by reviewing the dilutive impact of stock compensation. For fiscal 2021, our overall equity-award-based gross burn rate and adjusted gross burn rate were 0.4% and 0.9%, respectively. Gross burn rate is defined as the number of equity awards granted in the year divided by shares outstanding. Adjusted gross burn rate includes a premium applied to full-value shares (i.e., RSUs and MSUs) of 2:1. We do not reprice, buyout or exchange underwater stock options and there is no liberal counting or recycling of shares.
Compensation Committee Discretion			Our Compensation Committee has discretion over annual cash incentive program payouts.

Compensation Program Evaluation and Risk Management

Our Compensation Committee assesses the design features of our senior management and broad-based compensation programs for undesired or unintentional risks of a material nature and to guard against excessive risk-taking. Our Compensation Committee monitors and evaluates our compensation programs to ensure that:

•We provide a balanced mix of cash and equity, annual, and longer-term incentives in order to encourage strategies and actions that are in the long-term best interests of us and our stockholders;

•We set base salaries consistent with employees' responsibilities so that they are not motivated to take excessive risks to achieve a reasonable level of financial security;

•We annually assess performance under prior year compensation programs and make adjustments we deem necessary or appropriate in order to mitigate opportunities or motives for excessive risk-taking;

•Based on a review of prior results, we annually review our annual cash incentive plan and establish performance goals for the future that we believe (A) are reasonable in light of past performance and market conditions, and (B) encourage success without encouraging excessive risk-taking to achieve short-term results and, thereby avoid encouraging unnecessary or excessive risk-taking;

•We set annual cash incentive plan performance goals that are company-wide in order to encourage decision-making that is in the best long-term interests of us and our stockholders as a whole;

•We do not employ an “all-or-nothing” approach. Under our annual cash incentive plans, achievement of performance goals at levels below full target goals reduces only the payout related to that goal, not the other goals;

•We cap the amount senior management can receive under our cash incentive compensation plan at a maximum of their targets in order in part to avoid excessive risk-taking; and

•We use a portfolio of equity-based awards for senior management that incentivize performance over a variety of time periods with respect to several balanced goals:

◦RSUs retain value even in depressed markets making it less likely employees will take unreasonable risks to get, or keep, equity grants "in the money;"

◦Performance-based MSUs measure relative stockholder return over a three-year performance cycle, thereby retaining value even if the price of our stock decreases in a market downturn; and

◦Senior management is subject to material share ownership guidelines.

Alignment of Compensation with Performance

We believe our senior management compensation program was instrumental helping us successfully execute our strategic growth drivers and concurrently achieve solid financial performance.

We created long-term, sustained value for our stockholders. Our three-year TSR is 213.8% compared with the three-year NASDAQ Composite Index TSR and S&P 500 TSR of 135.8% and 90.1%, respectively.

We continued to emphasize performance-based pay. Our compensation program is designed to pay more when our financial and strategic performance is robust and less when it is not, providing built-in flexibility in the management of our operating expenses and enabling us to preserve and alter strategic programs when economic conditions are unfavorable or warrant adjustments. A significant portion of the compensation of senior management is variable and tied to the success of our business and the individual performance of each member of senior management. Consistent with this pay-for-performance orientation, we believe that annual cash incentive (bonus) awards and long-term equity compensation should together represent the most significant portion of total target direct compensation. As a result, a larger portion of senior management's total target compensation is at risk relative to that of our employees generally. We believe this is appropriate because the members of senior management bear the greatest responsibility for our results and can exert the greatest influence on our performance. As illustrated by the chart below, in fiscal 2021, approximately 93% of our CEO's total target direct compensation was completely "at-risk" based on our performance against measurable performance objectives.

* Target Total Direct Compensation reflects annual base salary, annual cash incentive opportunity and the grant date fair value of equity awards.

Annual cash incentive awards reflected strong 2021 Corporate performance. Our Compensation Committee seeks to motivate senior management to continuously improve our financial performance and achieve strategic objectives through a cash incentive (bonus) plan that rewards higher performance with increased incentive opportunities. This provides us with a variable expense structure, reducing our compensation costs in challenging times and rewarding achievements when business conditions and results warrant. Based on our strong financial results in 2021, we achieved a weighted average of 447.8% of our financial targets. As a result, the 2021 annual incentive payments to our NEOs were 240% of their 2021 target award opportunity.

Equity awards are tied to the value of our common stock. Value received under our annual equity awards varies based on our stock price performance. In particular, payouts of the market stock units ("MSUs") awarded to senior management vary based on the relative performance of our stock compared to the NASDAQ Composite Index. MSUs granted in 2021 are earned based on our relative stockholder return over a three-year performance period, with 100% of the earned shares vesting at the end of three years. For MSUs granted in February 2018 that vested in February 2021, our stock outperformed the NASDAQ Composite Index by approximately 35.0% during the applicable performance period. As a result, our NEOs who were granted MSUs in February 2018 earned a payout of 204.9% of their February 2018 target awards.

Our CEO was also granted an MSU award in June 2018 ("2018 MSU") that vested in June 2021. During the performance period of the 2018 MSU, our stock outperformed the NASDAQ Composite Index by 111.6% and surpassed the $500 per share highest stock price performance hurdle under the 2018 MSU by $89.53 per share. As a result, Mr. Hogan also earned the maximum allowable payout under the MSU of 300% of his target award.

2021 STOCKHOLDER SAY-ON-PAY VOTE

At our Annual Meeting of Stockholders in May 2021 ("2021 Meeting"), our stockholders were asked to cast a non-binding advisory vote ("say-on-pay") to approve the compensation for our 2020 fiscal year named executive officers ("2020 NEOs"). At the 2021 Meeting, approximately 92% of the votes cast by our stockholders were in support of our "say-on-pay" proposal. Based on the results of this vote and our stockholder outreach, our Compensation Committee believes our stockholders strongly support our approach to NEO and senior management compensation.

Stockholder Outreach and Engagement

Recognizing that stockholders are the owners of Align, we maintain open dialogue outreach programs to actively encourage and welcome feedback from stockholders regarding all aspects of our business, including the outreach program itself. Our engagement is year round and can include members of our Board and various members of senior management, including our CEO, CFO, and other organizational leaders from select internal organizations depending on the circumstances, including Legal, Human Resources, Operations, Sales and Marketing, Product Development and Investor Relations. In return, we use every element of the program to provide stockholders with honest, candid information on the most pressing and relevant issues we face, sharing the rationale for our corporate strategy and the impact of Board oversight in key areas.

In 2021, we adopted a hybrid approach to our engagement strategy that included both in person and virtual events to compensate for ongoing travel and gathering restrictions relating to the COVID-19 pandemic. During the year we reached out to stockholders representing more than 67% of our shares outstanding and were successful speaking with stockholders representing over 24% of our shares outstanding. In addition to attending virtual or in-person investment analyst-sponsored industry conferences, we hosted and webcast an Investor Day in October which drew approximately 350 in-person and virtual attendees from around the globe.

Input from stockholders, analysts and customers is shared internally, including with our Board, to be used in future strategic, operational, compensation and governance decisions, as appropriate. The feedback from stockholders with whom we spoke in 2021 was consistently positive. Stockholders appreciated the opportunity to furnish input on compensation, our proxy proposals and matters of importance to them through our outreach process. A common theme stockholders expressed was gratitude for management's candor regarding the impacts of the pandemic and our efforts to help our employees, customers and suppliers stay safe while mitigating and thereafter recovering from the significant business impacts of pandemic-related shutdowns and closures. Additional topics raised during our

outreach included board and CEO succession planning, discussion of ESG matters and our remote working initiatives. Finally, stockholders expressed general satisfaction with the 2020 senior management compensation program, making limited suggestions on ways to better measure long-term overall corporate performance.

Meaningful Compensation and Governance Changes in Response to Stockholder Feedback

In response to ongoing feedback from stockholders, our Board, Nominating Committee and Compensation Committee have carefully considered such feedback and taken action where appropriate. Recent examples include the following:


•Amending the charter of our Nominating Committee to assign Board oversight of ESG efforts and disclosures to our Nominating Committee;
•Amending the charter of the Compensation Committee to assign Board oversight of diversity, equity and inclusion efforts and disclosures to our Compensation Committee;
•Expanding disclosures concerning ESG related matters, including corporate responsibility, sustainability and human capital management, on our website and in our securities filings including, most recently, those set forth in our Annual Report on Form 10-K filed with the SEC on February 25, 2022, and in this proxy statement;
•Forming an ESG committee overseen by key members of senior management to gather data and forming strategies to incorporate ESG principles into our strategic objectives;
•Creating a CSR organization, appointing a full-time dedicated Vice President of CSR, establishing a CSR Committee, and establishing the philosophical pillars of our comprehensive CSR program; and
•Increasing the focus, frequency, and breadth of shareholder engagement in order to ensure we consistently foster relationships and capture suggestions to better understand and address feedback.

HOW WE IMPLEMENT AND MANAGE OUR EXECUTIVE COMPENSATION PROGRAM

The table below specifies the responsible parties and their respective roles in determining our NEOs' compensation:


Responsible Party						Roles and Responsibilities
Compensation Committee						Sets our overall compensation philosophy, which our Board reviews and approves.
						Reviews and approves our compensation programs; designs and monitors the execution of these programs.
						Reviews and approves all cash-based compensation arrangements for senior management (other than our CEO).
						Reviews and recommends to our Board all cash-based compensation arrangements for our CEO.
						No member of our Compensation Committee is a former or current officer of Align or any of its subsidiaries. No member of senior management serves as a member of the board or compensation committee of any entity that has one or more members of senior management serving on our Board or Compensation Committee.



Consultant to the Compensation Committee (Compensia, Inc. an independent executive compensation consulting firm retained directly by the Compensation Committee to assist it in performing its responsibilities)						Compensia attends meetings of the Compensation Committee and communicates outside of meetings with its members and management with respect to the design and assessment of compensation packages for senior management. In 2021, Compensia provided the services below on behalf of the Committee: •Analyzed whether the compensation packages of senior management were consistent with our compensation philosophy and competitive within the market relative to our peer companies; •Assisted in defining the appropriate peer group of comparable companies; •Assisted in the design of our compensation programs for senior management and Board members, including discussing evolving compensation trends; •Reviewed the effectiveness of our compensation programs; •Provided advice on stock ownership guidelines for senior management and non-employee directors; •Compiled and provided market data to assist in setting our compensation philosophy, plan parameters and measures; •Conducted a comprehensive review of Board compensation and provided recommendations to our Compensation Committee and Board regarding non-employee director pay structure; and •Provided updates on NASDAQ listing standards, Say-on-Pay results, and regulatory developments. In addition, our Compensation Committee conducted a formal review of Compensia’s independence and is satisfied with the qualifications, performance and independence of Compensia. Compensia performed no other work for us.


Senior Management (Assisted by Company Staff)						Management's role is to advise our Compensation Committee regarding the alignment and weighting of our performance measures under our annual cash incentive program with our overall strategy, the impact of the design of our equity incentive awards on our ability to attract, motivate and retain highly talented executives and the competitiveness of our compensation program. Our CEO plays a significant role in setting the compensation for other NEOs. The CEO conducts performance reviews for the other NEOs and makes recommendations to our Compensation Committee with respect to the other NEOs' compensation. Our Compensation Committee has the discretion to accept, reject, or modify the CEO's recommendations. The CEO leaves the meetings during discussions and deliberations of individual compensation actions affecting him personally. Ultimately all decisions regarding senior management compensation are made by our Compensation Committee or in the case of our CEO's cash compensation, the full Board upon our Compensation Committee's recommendation.

How We Determine Compensation

Competitive Positioning

Within the overall framework of the objectives and principles discussed above, our Compensation Committee exercises its judgment when making senior management compensation decisions. Our Compensation Committee takes into consideration the unique roles played by each member of senior management and seeks to individually tailor their compensation to align their pay based on market compensation data (peer group data and survey data) and other elements, including:

•the scope of the individual's role;

•the individual's experience, qualifications, skills, and performance during the fiscal year (see discussion below under "Role of Individual Performance");

•internal equity; and

•our operational and financial performance.

After reviewing these various competitive positioning factors (none of which is determinative), our Compensation Committee relies upon the judgment of its members to make appropriate adjustments to the compensation of senior management to meet our corporate objectives.

The Use of Market Comparison Data

In connection with our Compensation Committee's continuing assessment of the competitiveness of senior management's pay levels and practices relative to its peers, our Compensation Committee considers compensation data gathered from: (i) a selected peer group of companies, and (ii) published surveys with data from a broader mix of technology and life science companies.

Peer Group. Our Compensation Committee reviews our peer group at least annually and makes adjustments to its composition, taking into account changes in both our business and the businesses of the companies in the peer group. For compensation decisions applicable to fiscal year 2021, our Compensation Committee, with the assistance of Compensia, reviewed and approved a peer group that consists entirely of medical device and technology product companies, which are the industries from which we primarily recruit executive talent. The peer group was chosen based on the following selection criteria:

•Industry - medical device companies and medical technology companies, which are the industries from which we primarily recruit executive talent;

•Market Capitalization - companies with a market capitalization between approximately $4.5 billion and $73.5 billion based upon the companies’ trading ranges at the time of selection which approximated 0.25 to 4.0 times our market capitalization at that time; and

•Revenue - companies with revenue between approximately $800.0 million to $7.2 billion based upon the last four quarters of revenue at the time of selection which approximated 0.3 to 3.0 times our rolling four quarters of revenues at that time.

As a result of its review of the foregoing criteria, our Compensation Committee elected not to make any changes in 2021 to the peer group used for senior management compensation comparisons in 2020. At the time of our Compensation Committee's assessment of potential peers performed in the second quarter of 2020, we compared to the 2021 peer group as follows:


	Revenue ($B)	Market Capitalization ($B)	Market Capitalization as a Multiple of Revenue
Peer Group 50th Percentile	$2.9	$15.5	6.1x
Align	$2.4	$18.4	7.6x
Percentile Rank	29%	58%	57%

Based on its analysis, our Compensation Committee determined that the following peer group constituted an appropriate comparative reference for determining senior management compensation for fiscal year 2021:


Align's 2021 Peer Group
ABIOMED	Hologic	Resmed
Agilent Technologies	IDEXX Labs	Teleflex
Bio-Rad Laboratories	Illumina	The Cooper Companies
Bio-Techne	Intuitive Surgical	Varian Medical Systems
Dentsply Sirona	Masimo	Waters
DexCom	Mettler-Toledo	Zimmer Biomet Holdings
Edwards Lifesciences	PerkinElmer

Reference Peers. Our Compensation Committee also considers the compensation data of other companies as reference peers, which are companies identified by management as key business or labor market comparators. The compensation data of these companies was used for informational purposes only and was not used in setting senior management compensation levels because the financial profiles of these companies are outside the peer group development parameters.

Survey Data. When peer data is unavailable, our Compensation Committee reviews various pay surveys, including the Radford Technology Survey. In addition, our Compensation Committee may review the data separately to understand pay differences, if any, by industry or business segment and to assess whether any changes in pay data from year to year reflect true market trends.

Role of Competitive Data and our Compensation Committee's Discretion. Our Compensation Committee uses the following percentiles of peer group and survey data as reference points for assessing appropriate base salary, target total cash compensation and equity compensation for our executive officers:


Element of Compensation						Target Percentile
Base salary						50th percentile
Target total cash compensation						65th to 75th percentile
Equity compensation						50th to 75th percentile

While we believe that comparisons to market data are useful, our Compensation Committee does not believe it appropriate to establish senior management compensation levels based solely on a comparison to market data. Due to the variations between companies reporting and the roles for which compensation for these companies is ultimately disclosed, directly comparable information is not available from each peer group company with respect to each of our NEOs. In considering market compensation data, our Compensation Committee recognizes that senior management roles at different companies can vary significantly, with different responsibilities and scopes of work, even though they may hold similar titles or nominal positions. Our Compensation Committee therefore uses the market data only as a reference point and incorporates flexibility into our compensation programs and in the assessment process to respond to and adjust for the evolving business environment and other subjective elements described in the competitive positioning factors above. After reviewing these various factors, our Compensation Committee relies upon the judgment of its members to adjust senior management compensation below or above these percentile ranges as it deems appropriate.

Role of Company Performance

Our Compensation Committee believes that senior management should be rewarded based on their success as a team. Consistent with this belief, the achievement of shared financial and critical strategic goals, which we describe below under “Annual Cash Incentive Compensation” is the primary factor in determining the amount of cash incentive payments.

Role of Individual Performance

Although our Compensation Committee believes that the largest portion of the total target compensation of each member of senior management should be based on their success as a team and thus based on achievement of shared financial and critical strategic goals, it also believes there should be some ability to reward individual contributions. To evaluate individual performance, our Compensation Committee considers annual individual goals set for each member of senior management. These include shared financial and strategic objectives as well as objectives that are directly related to each individual's specific business function. Except with respect to his own performance, this assessment is based on our CEO's recommendation to our Compensation Committee on how well an individual performed their job, and such assessment is largely (although not exclusively) qualitative, not quantitative, in nature. There is no specific weight given to any one individual goal or objective. This subjective evaluation of the impact of the individual contributions on actual compensation is not a formula-based process resulting in a quantifiable amount of impact, but rather involves the exercise of discretion and judgment. This enables our Compensation Committee to differentiate among individuals and emphasize the link between personal performance and compensation.

The Use of Tally Sheets

Our Compensation Committee uses tally sheets to understand senior management total annual compensation and to provide perspective on wealth accumulation from our compensation programs. Compensation previously paid to each individual, including amounts realized under prior equity-based compensation awards, did not affect our Compensation Committee's compensation decisions for 2021. Our Compensation Committee believes that compensation should reflect an individual's performance and the market value of their services and does not want to create a disincentive for exceptional performance.

The Principal Components of Senior Management Compensation

The principal components of the target total compensation package of each member of senior management are:

•base salary;

•annual cash incentive awards; and

•long-term equity-based incentive grants.

In determining the mix of compensation among these elements, our Compensation Committee does not assign specific ratios. Instead, it typically structures compensation so that a significant portion of the target total direct compensation is "at-risk" or performance-based, with the actual value realized subject to the achievement of short-term or long-term corporate and financial performance goals. In 2021, approximately 93% of our CEO's target total direct compensation was structured as "at-risk" performance-based. The "at-risk" performance-based compensation of our other NEOs was approximately 87% of their target total direct compensation. By linking a significant portion of the compensation payable to each member of senior management to performance, our Compensation Committee emphasized incentive-based variable pay, which is consistent with our pay-for-performance philosophy and creates a strong alignment with long-term stockholder value. In reviewing the equity portfolio for our NEOs for 2021 annual focal awards, our Compensation Committee determined that a mix of 67% MSUs and 33% RSUs closely aligned our NEOs' compensation with the interests of our stockholders.

Base Salary

Base salary is intended to provide a fixed, baseline level of compensation that is not contingent upon our performance. Consistent with our pay-for-performance philosophy, base salaries generally represent a modest proportion of the total compensation opportunity for senior management. In January 2021, our Compensation Committee reviewed the base salaries of our NEOs, comparing these salaries to the base salary levels of companies in our peer group, as well as considering the roles and responsibilities and potential performance of the NEOs and their positioning for other elements of their compensation. After this review, our Compensation Committee made the adjustments to base salary set forth in the table below.


Name	2020 Base Salary		2021 Base Salary		Percentage Increase
Joseph M. Hogan	$	1,175,000	$	1,235,000	5.1%
John F. Morici	$	540,000	$	565,000	4.6%
Emory Wright	$	480,000	$	500,000	4.2%
Julie Coletti	$	450,000	$	490,000	8.9%
Stuart Hockridge	$	440,000	$	460,000	4.5%

The base salary of each NEO reflects our significant growth and the role of each NEO in that achievement. In the case of Mr. Hogan, his base salary reflects his position as our most senior executive officer, his successful leadership since joining us as our CEO, our strong performance during his tenure, and recognition of the salary that someone with his proven ability and track record could command in the competitive market.

Annual Cash Incentive Compensation

We use a cash incentive compensation plan to reward senior management, including our NEOs, for achieving and surpassing pre-established financial goals. In December 2020, our Compensation Committee conducted its annual review of our Annual Cash Incentive Award plan ("Bonus Plan"). Based on its review, our Compensation Committee determined that the pool of funds available to pay awards to our senior management for performance in 2021 would continue to be based on the extent to which we met or exceeded predetermined goals under selected financial metrics. Consistent with prior years, the Compensation Committee selected two financial metrics, weighted as identified below, for purposes of funding the overall Bonus Plan pool for 2021:

•Revenue - 60%

•Operating Income - 40%

Considered in the aggregate, our Compensation Committee believes these metrics are strong indicators of our overall performance and our ability to create stockholder value. These measures balance propelling growth while encouraging efficiency and are aligned with our strategic priorities of international expansion, general practitioner ("GP") doctors' adoption, patient demand and conversion and orthodontist utilization.

Achieving Outstanding Results

Our Compensation Committee believes the design of our Bonus Plan has helped us exceed their intended goals and far exceed the results of our peers. The table below provides the five-year compound annual growth rate for our revenue and operating income in comparison to our 2021 peers during the same period, illustrating the significant over performance of our senior management team during the period.

* Varian Medical Systems is excluded due to its acquisition by Siemen Healthineers.

Determining Bonuses. In determining actual bonuses to be awarded to each member of senior management, bonus amounts are adjusted, either up or down, based on each individual's overall performance and contribution to the achievement of our performance goals.

Target Bonus Percentage

Individual Performance Factor

Company Multiplier

Bonus Payout

Base Salary

Target Bonus Percentage

Individual Goals

Net Revenues - 60%

Operating Income - 40%

Target Bonus Percentage. The Bonus Plan target award opportunity is the amount of cash incentive compensation that each member of senior management could expect to earn if we achieved our financial and strategic performance goals for the year. The incentive targets for members of senior management were set by our Compensation Committee based on the scope and significance of their roles as our leaders, with our CEO receiving the highest target due to his greater responsibilities. The 2021 target award as a percent of base salary for each member of senior management (other than our CEO) was 70% of base salary, consistent with 2020. Mr. Hogan's 2021 target award opportunity also remained unchanged at 150% of his base salary. In order to appropriately encourage and reward a range of acceptable performance and contributions in fiscal year 2021, our awards were structured so that the actual payout to a member of senior management could be as low as 0% up to a maximum award of 240% of target.

Individual Performance Factor. The Individual Performance Factor reflects our Compensation Committee's assessment of the specific performance of each member of senior management in light of the achievement of their individual goals. There is no specific weight given to any one individual goal or performance criterion. Our Compensation Committee considers the views of our CEO regarding how well each individual performed, and such assessment is qualitative, not quantitative, in nature. The CEO does not provide input regarding his own performance. Individual performance that meets expectations yields a 100% multiplier.

Company Multiplier. The Company Multiplier is the same for all members of senior management. It is determined based on pre-established goals under selected financial targets. Our Compensation Committee reviewed the structure of the Bonus Plan and selected two financial metrics that focused on (1) revenues growth and (2) profitability for purposes of funding the overall pool. Management typically recommends the performance targets for funding the Bonus Pool based on our annual operating plan as well as reference to historical performance and revenue and operating profit growth rates at select comparable medical device companies, but the targets are ultimately approved by our Compensation Committee and reviewed by our Board.

For 2021, our Compensation Committee established 100% Bonus Pool funding based on target revenues of $3,032 million and target operating income of $614 million or 20.3% of revenues.

The table below shows the performance metrics used in 2021 and our level of performance with respect to these metrics.


Measure/Weight	Why do we use this measure?	Target (2021) (in millions)	Achievement (2021) (in millions)	Level of Achievement vs Target	Impact on Company Multiplier

Revenues (1) (2)(60%)	Improvement in this measure aligns with our overall growth strategy	$3,032	$3,953	130%	519%
Operating income (1) (2) (40%)	Directly links incentive payments to profitability and provides incentives to employees (including management) to share in our profitability. Because profitability encompasses both revenues and expense management, the Compensation Committee believes this measure encourages a balanced, holistic approach to managing our business. The Compensation Committee considers operating profit before taxes because management cannot predict or directly affect our taxes or our tax rate.	$614	$976	159%	341%
COMPANY MULTIPLIER:					240%

(1) The target performance and the level of performance at which the funding for that particular financial performance measure will be capped as follows:

•A rating of zero if achievement is below 90% of target. Performance below target automatically reduces only the payout related to that goal, not the other goal, as we want senior management to have the same incentive to achieve other financial goals as well as their individual performance goals even if our performance tracks below the target during the course of the year;

•A rating ranging from 90% to 100% if achievement meets or exceeds the minimum performance level but does not achieve the target performance level; and

•A rating of 101% and above if achievement exceeds the target performance level. Each individual financial metric is uncapped; however, once the Company Multiplier reaches 240% in the aggregate the Bonus Pool is fully funded. Therefore, in the aggregate, the Bonus Pool for our NEOs will not exceed 240% funding.

(2) Our Compensation Committee has the discretion to exclude from Revenues and Operating Income:

•significant and/or extraordinary items not indicative of our core operating performance that are separately stated on our financial statements;

•items identified as non-GAAP in our quarterly earnings announcements; and

•other discrete items as necessary that may result in unintended gain or loss under the Bonus Plan.

Our Compensation Committee believes that the items listed in footnote (2) above are not indicative of our core opera

SEC Form DEF 14A filed by Align Technology Inc.