EVVV EV3 (MM)

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

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o		Definitive Additional Materials
o		Soliciting Material Pursuant to § 240.14a-12

 

 

ev3 Inc.

(Name of Registrant as Specified In Its Charter)

 

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

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3033 Campus Drive
Plymouth, Minnesota 55441

April 9, 2010

Dear Fellow Stockholders:

We are pleased to invite you to join us for the ev3 Inc. Annual Meeting of Stockholders to be held on Tuesday, May 25, 2010, at 2:00 p.m., local time, at our new corporate offices located at 3033 Campus Drive, Plymouth, Minnesota 55441. Details about the meeting, nominees for election to the Board of Directors and other matters to be acted on at the meeting are presented in the Notice of Annual Meeting of Stockholders and proxy statement that follow.

It is important that your shares be represented at the meeting, regardless of the number of shares you hold and whether you plan to attend the meeting in person. Accordingly, please exercise your right to vote by following the instructions for voting on the Notice Regarding the Availability of Proxy Materials you received for the meeting or, if you received a paper copy of the proxy materials, by completing, signing, dating and returning your proxy card or by using Internet or telephone voting as described in the proxy statement.

We are again pleased this year to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe these rules allow us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our meeting.

On behalf of ev3’s Board of Directors and management, it is our pleasure to express our appreciation for your continued support.

Sincerely,

/s/ Robert J. Palmisano				/s/ Daniel J. Levangie
Robert J. Palmisano				Daniel J. Levangie
President and Chief Executive Officer				Chairman of the Board

Your vote is important. Please exercise your right to vote as soon as possible by following the instructions for voting on the Notice Regarding the Availability of Proxy Materials you received for the meeting or, if you received a paper copy of the proxy materials, by completing, signing, dating and returning your proxy card or by using Internet or telephone voting as described in the proxy statement. By doing so, you may save us the expense of additional solicitation.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2010

To the Stockholders of ev3 Inc.:

     The Annual Meeting of Stockholders of ev3 Inc., a Delaware corporation, will be held on Tuesday, May 25, 2010, at 2:00 p.m., local time, at ev3’s corporate offices at 3033 Campus Drive, Plymouth, Minnesota 55441 for the following purposes:

	1.		To elect three directors, each to serve for a term of three years.
	2.		To consider a proposal to approve the ev3 Inc. Third Amended and Restated 2005 Incentive Plan.
	3.		To consider a proposal to approve the ev3 Inc. Amended and Restated Employee Stock Purchase Plan.
	4.		To consider a proposal to ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2010.
	5.		To transact such other business as may properly come before the meeting or any adjournment of the meeting.

     Only stockholders of record at the close of business on March 29, 2010 will be entitled to notice of, and to vote at, the meeting and any adjournments thereof. A stockholder list will be available at ev3’s corporate offices beginning May 14, 2010 during normal business hours for examination by any stockholder registered on ev3’s stock ledger as of the record date for any purpose germane to the annual meeting.

April 9, 2010
Plymouth, Minnesota

TABLE OF CONTENTS

		Page
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS			1
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING			1
Date, Time, Place and Purposes of Meeting			1
Who Can Vote			2
How You Can Vote			2
How Does the Board Recommend that You Vote			3
How You May Revoke or Change Your Vote			3
Quorum Requirement			3
Vote Required			3
STOCK OWNERSHIP			5
Significant Stockholders			5
Directors and Executive Officers			6
Section 16(a) Beneficial Ownership Reporting Compliance			8
PROPOSAL ONE — ELECTION OF DIRECTORS			9
Board Structure; Number of Directors			9
Board Designation Rights			9
Nominees for Director			10
Board Recommendation			10
Information About Board Nominees and Other Directors			10
Additional Information About Board Nominees and Other Directors			11
CORPORATE GOVERNANCE			15
Corporate Governance Guidelines			15
Director Independence			15
Board Leadership Structure			15
Board Meetings and Attendance			16
Board Committees			16
Audit Committee			17
Audit Committee Report			18
Compensation Committee			19
Nominating, Corporate Governance and Compliance Committee			22
Code of Business Conduct			25
Stock Ownership Guidelines			25
Board Oversight of Risk			26
Policy Regarding Director Attendance at Annual Meetings of Stockholders			27
Process Regarding Stockholder Communications with Board of Directors			27
DIRECTOR COMPENSATION			28
Summary of Cash and Other Compensation			28
Overview			29
Cash Compensation			30
Equity-Based Compensation			31
Indemnification Agreements			31
COMPENSATION DISCUSSION AND ANALYSIS			32
Introduction			32
Compensation Objectives and Philosophy			32
Business Context in Which 2009 Compensation Decisions Were Made			33
Setting Executive Compensation			33
Executive Compensation Components			40
Total Compensation Mix and Pay for Performance			41

		Page
Base Salary			42
Short-Term Cash Incentive Compensation			46
Long-Term Equity-Based Incentive Compensation			53
Executive Benefits and Perquisites and All Other Compensation			59
Employment Agreements			60
Change in Control and Post-Termination Severance Arrangements			61
Tax and Accounting Implications			63
Consideration of Risk and Recoupment Policy			64
Stock Ownership			65
EXECUTIVE COMPENSATION			67
Compensation Committee Report			67
Summary of Cash and Other Compensation			67
Grants of Plan-Based Awards			72
Outstanding Equity Awards at Fiscal Year End			76
Options Exercised and Stock Vested During Fiscal Year			78
Potential Payments Upon Termination or Change in Control			79
Risk Considerations in our Compensation Programs			85
RELATED PERSON RELATIONSHIPS AND TRANSACTIONS			86
Relationship with Warburg Pincus Entities			86
Holders Agreement			86
Registration Rights Agreement			87
Product Sales to Warburg Pincus Portfolio Company			87
Director and Executive Officer Compensation			87
Policies and Procedures Regarding Related Party Transactions			87
PROPOSAL TWO — APPROVAL OF ev3 INC. THIRD AMENDED AND RESTATED 2005 INCENTIVE PLAN			89
Introduction			89
Reasons Why You Should Vote in Favor of the Approval of the Amended and Restated 2005 Plan			89
Summary of Sound Governance Features of the Amended and Restated 2005 Plan			91
Comparison of Amended and Restated 2005 Plan to Current 2005 Plan			93
Summary of the Amended and Restated 2005 Plan			94
Federal Income Tax Consequences			103
Incentive Awards Granted Under the Amended and Restated 2005 Plan			105
Securities Authorized for Issuance Under Equity Compensation Plans			107
Board of Directors Recommendation			108
PROPOSAL THREE — APPROVAL OF ev3 INC. AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN			109
Introduction			109
Summary of the Amended and Restated ESPP			109
Federal Income Tax Consequences			112
Plan Benefits			113
Board of Directors Recommendation			114
PROPOSAL FOUR— RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			115
Selection of Independent Registered Public Accounting Firm			115
Audit, Audit-Related, Tax and Other Fees			115
Pre-Approval Policies and Procedures			116
Board Recommendation			116
OTHER MATTERS			117
Stockholder Proposals for 2011 Annual Meeting			117
Director Nominations for 2011 Annual Meeting			117
Copies of 2009 Annual Report			117
Householding of Annual Meeting Materials			118

		Page
Proxy Solicitation Costs			118
Other Business			118

3033 Campus Drive
Plymouth, Minnesota 55441

PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS

MAY 25, 2010

The board of directors of ev3 Inc. is soliciting your proxy for use at the 2010 Annual Meeting of Stockholders to be held on Tuesday, May 25, 2010. The board of directors expects to make available to our stockholders beginning on or about April 9, 2010 the Notice of Annual Meeting of Stockholders, this proxy statement and a form of proxy on the Internet or has sent these materials to stockholders.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

Our proxy statement and annual report to stockholders, which includes our annual report on Form 10-K, are available at www.proxyvote.com/ev3 . Pursuant to rules adopted by the Securities and Exchange Commission, or SEC, we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice Regarding the Availability of Proxy Materials to certain of our stockholders of record and beneficial owners (excluding those stockholders of record and beneficial owners who previously have requested that they receive electronic or paper copies of our proxy materials). All stockholders have the ability to access our proxy materials on the website referred to in the Notice Regarding the Availability of Proxy Materials or request to receive a printed set of our proxy materials. Instructions on how to access our proxy materials over the Internet or to request a printed copy may be found in the Notice Regarding the Availability of Proxy Materials. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. We believe that this process should expedite your receipt of our proxy materials, lower the costs of our Annual Meeting and reduce the environmental impact of our meeting.

GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Date, Time, Place and Purposes of Meeting

The Annual Meeting of Stockholders of ev3 Inc. will be held on Tuesday, May 25, 2010, at 2:00 p.m., local time, at ev3’s corporate offices located at 3033 Campus Drive, Plymouth, Minnesota 55441, for the purposes set forth in the Notice of Annual Meeting of Stockholders.

Who Can Vote

Stockholders of record at the close of business on March 29, 2010 will be entitled to notice of and to vote at the meeting or any adjournment of the Annual Meeting. As of that date, there were 112,945,011 shares of our common stock outstanding. Each share of our common stock is entitled to one vote on each matter to be voted on at the Annual Meeting. Stockholders are not entitled to cumulate voting rights.

How You Can Vote

Your vote is important. Whether you hold shares directly as a stockholder of record or beneficially in “street name” (through a broker, bank or other nominee), you may vote your shares without attending the Annual Meeting. You may vote by granting a proxy or, for shares held in street name, by submitting voting instructions to your stockbroker or nominee.

If you are a stockholder whose shares are registered in your name, you may vote your shares in person at the meeting or by one of the three following methods:

	•		Vote by Internet , by going to the web address http://www.proxyvote.com and following the instructions for Internet voting shown on the Notice of Internet Availability of Proxy Materials or on your proxy card.
	•		Vote by Telephone , by dialing 1-800-690-6903 and following the instructions for telephone voting.
	•		Vote by Proxy Card , by completing, signing, dating and mailing the enclosed proxy card in the envelope provided if you received a paper copy of these proxy materials. If you vote by Internet or telephone, please do not mail your proxy card.

If your shares are held in street name, you may receive a separate voting instruction form or you may need to contact your broker, bank or other nominee to determine whether you will be able to vote electronically using the Internet or telephone.

The deadline for voting by telephone or by using the Internet is 11:59 p.m., Eastern Daylight Savings Time, on Monday, May 24, 2010. Please see the Notice of Internet Availability of Proxy Materials, your proxy card or the information your bank, broker, or other holder of record provided to you for more information on your options for voting.

If you return your signed proxy card or use Internet or telephone voting before the Annual Meeting, the named proxies will vote your shares as you direct. You have three choices on each matter to be voted on.

For the election of directors, you may:

	•		Vote FOR any one or more of the three nominees for director,
	•		Vote AGAINST any one or more of the three nominees for director or
	•		ABSTAIN from voting on any one or more of the three nominees for director.

For each of the other proposals, you may:

	•		Vote FOR the proposal,
	•		Vote AGAINST the proposal or
	•		ABSTAIN from voting on the proposal.

If you send in your proxy card or use Internet or telephone voting, but do not specify how you want to vote your shares, the proxies will vote your shares FOR all three of the nominees for director and FOR all of the other proposals set forth in the Notice of Annual Meeting of Stockholders.

How Does the Board Recommend that You Vote

The board of directors unanimously recommends that you vote FOR the three nominees for director and FOR the approval of all of the other proposals set forth in the Notice of Annual Meeting of Stockholders.

How You May Revoke or Change Your Vote

If you are a stockholder whose shares are registered in your name, you may revoke your proxy at any time before it is voted by one of the following methods:

	•		Submitting another proper proxy with a more recent date than that of the proxy first given by following the Internet or telephone voting instructions or completing, signing, dating and returning a proxy card to us.
	•		Sending written notice of revocation to our Corporate Secretary.
	•		Attending the Annual Meeting and voting by ballot.

Quorum Requirement

The presence at the Annual Meeting, in person or by proxy, of the holders of a majority (56,472,506 shares) of the outstanding shares of our common stock as of the record date will constitute a quorum for the transaction of business at the Annual Meeting. Shares represented by proxies marked “For,” “Against” or “Abstain” are counted in determining whether a quorum is present. In addition, a “broker non-vote” is counted in determining whether a quorum is present. A “broker non-vote” is a proxy returned by a broker on behalf of its beneficial owner customer that is not voted on a particular matter because voting instructions have not been received by the broker from the customer, and the broker does not have discretionary authority to vote on behalf of such customer on such matter.

Vote Required

Assuming a quorum is represented at the Annual Meeting, either in person or by proxy, the election of the three nominees for director will be decided by a majority vote, which under our bylaws means the number of shares voted “For” a director must exceed the number of votes cast “Against” that director. Pursuant to our corporate governance guidelines, each of the three nominees for director has agreed to tender an irrevocable offer of resignation which will be automatically effective upon such person’s receiving, in an uncontested election, less than the requisite vote necessary for such person’s re-election pursuant to our bylaws. In the event that a nominee for re-election fails to receive the requisite vote in an uncontested

election, the nominating, corporate governance and compliance committee of our board of directors will consider the resignation offer and make a recommendation to our board of directors. The independent members of our board of directors will then act on the nominating, corporate governance and compliance committee’s recommendation within 90 days following certification of the stockholder vote.

The approval of each of the other proposals described in this proxy statement requires the affirmative vote of the holders of a majority of the shares of our common stock present in person or by proxy and entitled to vote. In addition, under the Listing Rules of the NASDAQ Stock Market, the approval of the ev3 Inc. Third Amended and Restated 2005 Incentive Plan (Proposal Two) and the approval of the ev3 Inc. Amended and Restated Employee Stock Purchase Plan (Proposal Three) require the affirmative vote of a majority of the total votes cast on the proposal.

If your shares are held in “street name” and you do not indicate how you wish to vote, your broker is permitted to exercise its discretion to vote your shares on certain “routine” matters. The election of directors (Proposal One), the approval of the ev3 Inc. Third Amended and Restated 2005 Incentive Plan (Proposal Two) and the approval of the ev3 Inc. Amended and Restated Employee Stock Purchase Plan (Proposal Three) are not “routine” matters; whereas, the ratification of the selection of our independent registered public accounting firm (Proposal Four) is a “routine” matter. Accordingly, if you do not direct your broker how to vote for a director in Proposal One or how to vote for Proposal Two or Proposal Three, your broker may not exercise discretion and may not vote your shares. For purposes for Proposal One, Proposal Two and Proposal Three, broker non-votes are considered to be shares represented by proxy at the meeting but are not considered to be shares “entitled to vote” or “votes cast” at the meeting. As such, a broker non-vote will not be counted as a vote “For” or “Against” with respect to a director in Proposal One or a vote “For” or “Against” Proposal Two or Proposal Three and, therefore, will have no effect on the outcome of the vote on any such proposal. Proxies marked “Abstain” will be counted in determining the total number of shares “entitled to vote” and “votes cast” on each of the proposals and will have the effect of a vote “Against” a director or a proposal.

STOCK OWNERSHIP

Significant Stockholders

The following table sets forth information as to individuals and entities that have reported to the SEC or have advised us that they are a beneficial owner, as defined by the SEC’s rules and regulations, of more than five percent of our outstanding common stock.

		Shares Beneficially Owned
Name of Beneficial Owner		Number				Percentage
Warburg, Pincus Equity Partners, L.P. (1)			27,151,570				24.0	%
FMR LLC (2)			16,838,219				14.9	%
Individuals and Entities Affiliated with John B. Simpson, Ph.D., M.D. (3)			8,428,581				7.5	%
D.E. Shaw Valence Portfolios, L.L.C. (4)			7,323,417				6.5	%

Directors and Executive Officers

The following table sets forth information known to us regarding the beneficial ownership of our common stock as of March 29, 2010 for:

	•		each of our current directors and nominees for directors;
	•		our current President and Chief Executive Officer, our current Senior Vice President and Chief Financial Officer, our former Senior Vice President and Chief Financial Officer and other current executive officers named in the Summary Compensation Table under the heading “Executive Compensation—Summary of Cash and Other Compensation” (we collectively refer to these persons as our “named executive officers”); and
	•		all of our current directors and executive officers as a group.

The number of shares beneficially owned by a person includes shares subject to options held by that person that are currently exercisable or that become exercisable within 60 days of March 29, 2010, shares subject to stock grants which vest over time and/or upon the achievement of certain milestones and are subject to forfeiture until vested and shares subject to restricted stock units which vest over time and/or upon the achievement of certain milestones and become issuable within 60 days of March 29, 2010. Percentage calculations assume, for each person and group, that all shares that may be acquired by such person or group pursuant to options currently exercisable or that become exercisable or restricted stock units that vest within 60 days of March 29, 2010 are outstanding for the purpose of computing the percentage of common stock owned by such person or group. However, those unissued shares of common stock described above are not deemed to be outstanding for calculating the percentage of common stock owned by any other person.

Except as otherwise indicated, the persons in the following table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and subject to the information contained in the notes to the table. Unless otherwise indicated, the address for each of the individuals in the table below is c/o ev3 Inc., 3033 Campus Drive, Plymouth, Minnesota 55441.

		Shares Beneficially Owned (1)(2)
Name		Number				Percentage
Directors:
John K. Bakewell			96,488				*
Jeffrey B. Child			130,524				*
Richard B. Emmitt (3)			2,005,352				1.8	%
Douglas W. Kohrs			100,379				*
Daniel J. Levangie			146,488				*
John L. Miclot			32,359				*
Robert J. Palmisano			730,862				*
Thomas E. Timbie			166,488				*
Elizabeth H. Weatherman (4)			27,233,298				24.1	%
Named Executive Officers:
Robert J. Palmisano			730,862				*
Shawn McCormick			98,204				*
Patrick D. Spangler (5)			90,942				*
Pascal E.R. Girin			512,757				*
Stacy Enxing Seng			476,690				*
Brett A. Wall			154,407				*
All directors and executive officers as a group (18 persons) (6)			32,514,114				28.2	%

Name		Stock Options				Restricted Stock				Restricted Stock Units
Directors:
John K. Bakewell			80,617				4,148				—
Jeffrey B. Child			110,337				4,148				—
Richard B. Emmitt			65,857				4,148				—
Douglas W. Kohrs			84,621				7,897				—
Daniel J. Levangie			80,617				4,148				—
John L. Miclot			16,768				7,796				—
Robert J. Palmisano			626,353				79,743				—
Thomas E. Timbie			150,617				4,148				—
Elizabeth H. Weatherman			65,857				4,148				—
Named Executive Officers:
Robert J. Palmisano			626,353				79,743				—
Shawn McCormick			46,667				45,303				—
Patrick D. Spangler			78,906				12,036				—
Pascal E.R. Girin			311,904				25,941				123,388
Stacy Enxing Seng			349,411				90,170				—
Brett A. Wall			113,498				34,429				—
All directors and executive officers as a group (18 persons)			2,472,665				501,291				123,388

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and all persons who beneficially own more than 10 percent of the outstanding shares of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Directors, executive officers and greater than 10 percent beneficial owners are also required to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based on review of the copies of such reports and amendments to such reports furnished to us with respect to the year ended December 31, 2009, and based on written representations by our directors and executive officers, all required Section 16 reports under the Securities Exchange Act of 1934, as amended, for our directors, executive officers and beneficial owners of greater than 10 percent of our common stock were filed on a timely basis during the year ended December 31, 2009.

PROPOSAL ONE — ELECTION OF DIRECTORS

Board Structure; Number of Directors

As provided in our certificate of incorporation, our board of directors is divided into three staggered classes of directors of the same or nearly the same number. At each annual meeting of stockholders, a class of directors is elected for a three-year term to succeed the directors of the same class whose terms are then expiring. The term of the directors will expire upon election and qualification of successor directors at the 2012 annual meeting of stockholders for the Class I directors, at the 2010 annual meeting of stockholders for the Class II directors and at the 2011 annual meeting of stockholders for the Class III directors.

Our current directors and their respective classes and terms are as follows:

		Class III Directors —
Class II Directors — Term Ending		Term Ending at 2011		Class I Directors — Term Ending
at 2010 Annual Meeting		Annual Meeting		at 2012 Annual Meeting
John K. Bakewell		Daniel J. Levangie		Jeffrey B. Child
Richard B. Emmitt		Robert J. Palmisano		John L. Miclot
Douglas W. Kohrs		Elizabeth H. Weatherman		Thomas E. Timbie

On February 10, 2010, our board of directors nominated the following three individuals to serve as Class II directors with three-year terms expiring at our 2013 annual meeting of stockholders: John K. Bakewell, Richard B. Emmitt and Douglas W. Kohrs.

Our certificate of incorporation and bylaws provide that the number of directors that constitute our board of directors will be fixed from time to time by a resolution of the majority of our board of directors and will consist of at least five members. Our board of directors has fixed the number of directors at nine.

Under our certificate of incorporation, our board of directors has the power to fill vacancies on our board resulting from death, resignation, removal, disqualification or other cause, and newly created directorships resulting from any increase in the authorized number of directors. Any director so elected by our board will hold office for the remainder of the full term of the class of directors in which the vacancy occurred or to which the new directorship is apportioned, and until such director’s successor is elected and qualified. Any additional directorships resulting from any increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

Board Designation Rights

We and certain of our stockholders, including Warburg, Pincus Equity Partners, L.P. and certain of its affiliates (collectively, “Warburg Pincus”), Vertical Fund I, L.P. and Vertical Fund II, L.P. (collectively, the “Vertical Funds”), and members of our management, are parties to a holders agreement, which includes terms relating to the composition of our board of directors. The holders agreement requires us to nominate and use our best efforts to have elected to our board of directors:

	•		two persons designated by Warburg Pincus and the Vertical Funds if Warburg Pincus and the Vertical Funds collectively beneficially own 20 percent or more of our common stock; or
	•		one person designated by Warburg Pincus and the Vertical Funds if Warburg Pincus and the Vertical Funds collectively beneficially own at least 10 percent but less than 20 percent of our common stock.

Mr. Emmitt and Ms. Weatherman are the current designees under the holders agreement. In the event any director designated by Warburg Pincus and the Vertical Funds is unable to serve or is removed or withdraws from our board of directors, Warburg Pincus and the Vertical Funds will have the right to designate a substitute for such director. We and certain of our stockholders, including certain members of our management party to the holders agreement, have agreed to take all action within our or their respective power, including the voting of shares of common stock owned by us or them as is necessary to cause the election of the substitute director designated by Warburg Pincus and the Vertical Funds or to, upon the written request of Warburg Pincus and the Vertical Funds, remove with or without cause a director previously designated by such institutional investors.

Nominees for Director

The three nominees for election at the 2010 Annual Meeting are John K. Bakewell, Richard B. Emmitt and Douglas W. Kohrs. All of these nominees are current members of our board of directors and have consented to serve if elected. Proxies can only be voted for the number of persons named as nominees in this proxy statement, which is three.

Board Recommendation

The board of directors unanimously recommends a vote FOR the election of the three nominees named above.

If prior to the Annual Meeting, the board of directors should learn that any nominee will be unable to serve for any reason, the proxies that otherwise would have been voted for this nominee will be voted for a substitute nominee as selected by the board of directors. Alternatively, the proxies, at the discretion of the board of directors, may be voted for that fewer number of nominees as results from the inability of any nominee to serve. The board of directors has no reason to believe that any of the nominees will be unable to serve.

Information About Board Nominees and Other Directors

The following table sets forth certain information that has been furnished to us by each director and each person who has been nominated by our board of directors to serve as a director of our company.

Name of Nominee/Director		Age				Principal Occupation		Director Since
Nominees for election as Class II directors for three-year terms expiring 2013
John K. Bakewell (1)			48			Executive Vice President and Chief Financial Officer of RegionalCare Hospital Partners, Inc.			2006
Richard B. Emmitt (2)			65			General Partner of The Vertical Group, L.P.			2005
Douglas W. Kohrs (3)			52			President and Chief Executive Officer of Tornier B.V.			2008
Class III directors not standing for election this year whose terms expire in 2011
Daniel J. Levangie (1)			59			Chairman of the Board of ev3 Inc. and President and Chief Executive Officer of Keystone Dental, Inc.			2007
Robert J. Palmisano			65			President and Chief Executive Officer of ev3 Inc.			2008
Elizabeth H. Weatherman (1)(3)			50			Managing Director of Warburg Pincus LLC			2005
Class I directors not standing for election this year whose terms expire in 2012
Jeffrey B. Child (1) (2)			50			Chief Financial Officer of a Family Office of an Unaffiliated Third Party			2007
John L. Miclot (3)			51			President and Chief Executive Officer of CCS Medical, Inc.			2008
Thomas E. Timbie (2)			52			President of Timbie & Company, LLC			2005

Additional Information About Board Nominees and Other Directors

The following paragraphs provide information about each nominee and each director not standing for election, including all positions he or she holds, his or her principal occupation and business experience for the past five years, and the names of other publicly-held companies of which he or she currently serves as a director or has served as a director during the past five years. We believe that all of our director nominees and directors display personal and professional integrity; satisfactory levels of education and/or business experience; broad-based business acumen; an appropriate level of understanding of our business and its industry and other industries relevant to our business; the ability and willingness to devote adequate time to the work of our board and its committees; a fit of skills and personality with those of our other directors that helps build a board that is effective, collegial and responsive to the needs of our company; strategic thinking and a willingness to share ideas; a diversity of experiences, expertise and background; and the ability to represent the interests of all of our stockholders. The information presented below regarding each nominee or director also sets forth specific experience, qualifications, attributes and skills that led our board to the conclusion that he or she should serve as a director in light of our business and structure.

Nominees for Election as Class II Directors for Three-Year Terms Expiring in 2013

John K. Bakewell has served as one of our directors since April 2006. Mr. Bakewell currently serves as Executive Vice President and Chief Financial Officer of RegionalCare Hospital Partners, Inc., a privately-held acquirer and operator of acute care hospitals in non-urban markets, a position he has held since January 2010. From December 2000 to December 2009, Mr. Bakewell served as Executive Vice President and Chief Financial Officer of Wright Medical Group, Inc., a publicly-held orthopaedic medical device company. From July 1998 until December 2000, Mr. Bakewell served as Chief Financial Officer and Vice President of Finance and Administration with Altra Energy Technologies, Inc., a privately-held software and e-commerce solutions provider to the energy industry. From May 1993 to July 1998, Mr. Bakewell held the position of Vice President of Finance and Administration and Chief Financial Officer of Cyberonics, Inc., a publicly-held manufacturer of medical devices for the treatment of epilepsy and other neurological disorders. From October 1990 to May 1993, Mr. Bakewell served as Chief Financial Officer of ZEOS International Ltd., a publicly-held manufacturer and direct marketer of personal computers and related products. In addition to ev3, Mr. Bakewell currently serves on the board of directors of Keystone Dental, Inc., a privately-held dental implant medical device company. We believe Mr. Bakewell’s qualifications to sit on our board of directors include his significant financial experience, including his service as a chief financial officer of two publicly-held medical device companies.

Richard B. Emmitt has served as one of our directors since June 2005. Mr. Emmitt was a member of the board of managers of ev3 LLC from August 2003 through the date of the merger of ev3 LLC with and into ev3 in June 2005. Since 1989, Mr. Emmitt has been a General Partner, or a principal of a General Partner, of The Vertical Group, L.P., a privately-held investment management and venture capital firm focused on the medical device and biotechnology industries. Mr. Emmitt currently serves on the board of directors of American Medical Systems Holdings, Inc., a publicly-held company, and previously served on the board of directors of public companies including SciMed Life Systems, Wright Medical Group, Inc., and Xomed Surgical. Mr. Emmitt also serves on the board of directors of BioSET, Inc., ENTrigue Surgical, Inc., Galil Medical, Inc., Incumed, Inc., Tepha, Inc. and Tornier B.V. (Dutch), all privately-held companies. We believe Mr. Emmitt’s qualifications to sit on our board of directors include his experience

with a venture capital firm focused on the medical device industry and his current and prior service on multiple other medical device company boards of directors.

Douglas W. Kohrs has served as one of our directors since August 2008. Mr. Kohrs currently serves as President and Chief Executive Officer of Tornier B.V., a privately-held global orthopedic company, a position he has held since July 2006. Mr. Kohrs served as Chief Executive Officer of American Medical Systems Holdings, Inc., a publicly-held company, from April 1999 until January 2005. He served on the board of directors of American Medical Systems Holdings from 1999 to May 2006, and served as chairman of the board from March 2004 to May 2006. In addition to ev3, Mr. Kohrs currently serves on the board of directors of Tornier B.V., a privately-held company, and The Institute for Health Technology Studies (InHealth), a not-for-profit medical device research organization. During the past five years, Mr. Kohrs previously served on the board of directors of Kyphon Inc., which was then a publicly-held company. Mr. Kohrs previously served as one of our directors from June 2005 until October 2007 at which time Mr. Kohrs voluntarily resigned in order to facilitate the completion of our merger with FoxHollow Technologies, Inc. We believe Mr. Kohrs’s qualifications to sit on our board of directors include his prior service as the chief executive officer of a publicly-held medical device company and his current service as the chief executive officer of a global orthopedic company, his current and prior service on several other medical device company boards of directors.

Class III Directors Not Standing for Election this Year Whose Terms Expire in 2011

Daniel J. Levangie has served as our Chairman of the Board since April 2008 and as one of our directors since February 2007. Mr. Levangie currently serves as a member of the board of directors and the President and Chief Executive Officer of Keystone Dental, Inc., a privately-held dental implant medical device company, and serves as a Managing Partner of Constitution Medical Investors, Inc., a Boston-based private investment firm focused on healthcare sector-related acquisitions. From July 2006 to October 2007, Mr. Levangie served as the President, Surgical Products Division, and as an Executive Vice President and director of Cytyc Corporation, a publicly-held leading provider of surgical and diagnostic products targeting women’s health and cancer, since July 2006. Prior to July 2006, Mr. Levangie held several positions with Cytyc, including Executive Vice President and Chief Operating Officer from July 2000 to June 2002, Chief Executive Officer and President of Cytyc Health Corporation from July 2002 to December 2003 and Executive Vice President and Chief Commercial Officer from January 2004 to June 2006. In addition to ev3, Mr. Levangie currently serves on the board of directors of Dune Medical Devices Ltd., a privately-held medical device company. During the past five years, Mr. Levangie previously served on the board of directors of Cytyc Corporation and Hologic Inc., a publicly-held company. We believe Mr. Levangie’s qualifications to sit on our board of directors include his prior service as an executive officer and director of a publicly-held medical device company, his current service as the chief executive officer of a medical device company, and his service on several other medical device company boards of directors.

Robert J. Palmisano has served as our President and Chief Executive Officer and as one of our directors since April 2008. Mr. Palmisano served as President and Chief Executive Officer of IntraLase Corp., a publicly-held company engaged in the design, development and manufacture of laser products for vision correction, from April 2003 to April 2007, when IntraLase was acquired by Advanced Medical Optics, Inc. From April 2001 to April 2003, Mr. Palmisano was the President, Chief Executive Officer and a director of MacroChem Corporation, a privately-held development stage pharmaceutical corporation. From April 1997 to January 2001, Mr. Palmisano served as President and Chief Executive Officer and a director of Summit Autonomous, Inc., a publicly-held global medical products company that was acquired by Alcon, Inc. in October 2000. Prior to 1997, Mr. Palmisano held various executive positions with Bausch & Lomb Incorporated, a then publicly-held global eye care company. Mr. Palmisano earned his B.A. in Political Science from Providence College. Mr. Palmisano serves on the board of directors of

Osteotech, Inc., a publicly-held company, Bausch & Lomb Incorporated and LenSx Lasers Inc., both privately-held companies and is a member of the Board of Trustees for Providence College in Providence, Rhode Island. During the past five years, Mr. Palmisano previously served on the board of directors of Abbott Medical Optics Inc., a publicly-held company. We believe Mr. Palmisano’s qualifications to sit on our board of directors include his depth of knowledge of our company and its day-to-day operations and the medical device industry due to his service as our chief executive officer, his current and prior service as a director of multiple medical device companies, and his prior service as an executive officer of multiple medical device companies.

Elizabeth H. Weatherman has served as one of our directors since June 2005. Ms. Weatherman was a member of the board of managers of ev3 LLC from August 2003 through the date of the merger of ev3 LLC with and into ev3 in June 2005. Ms. Weatherman is a General Partner of privately-held Warburg Pincus & Co., a Managing Director of Warburg Pincus LLC and a member of the firm’s Executive Management Group. Ms. Weatherman joined Warburg Pincus in 1988 and is currently responsible for the firm’s U.S. healthcare investment activities. In addition to ev3, Ms. Weatherman currently serves on the board of directors of Adlens Beacon, Inc., Bausch & Lomb, Inc., Keystone Dental, Inc. and Tornier B.V. (Dutch), all privately-held companies. During the past five years, Ms. Weatherman previously served on the board of directors of American Medical Systems Holdings, Inc., Kyphon Inc., Wright Medical Group, Inc., all publicly-held companies, as well as Bacchus Vascular, Inc., Solarent Medical, Inc. and Velocimed LLC, all privately-held companies. We believe Ms. Weatherman’s qualifications to sit on our board of directors include her experience leading the healthcare investment activities at a private equity firm and her service on multiple other medical device company boards of directors.

Class I Directors Not Standing for Election this Year Whose Terms Expire in 2012

Jeffrey B. Child has served as one of our directors since October 2007 when he was elected to our board of directors in connection with our merger with FoxHollow Technologies, Inc. Mr. Child has served as Chief Financial Officer of a family office of a privately-held unaffiliated third party since July 2004. From February 1999 through June 2003, Mr. Child served as a Managing Director, U.S. Equity Capital Markets at Banc of America Securities LLC, a subsidiary of publicly-held Bank of America Corporation. Prior to that time, he served as a Managing Director in the Healthcare Group at Banc of America Securities. Mr. Child currently serves on the board of directors of AMERIGROUP Corporation, a publicly-held multi-state managed healthcare company. Mr. Child also serves as a Trustee of the Menlo Park City School District Board of Education. During the past five years, Mr. Child previously served on the board of directors of FoxHollow Technologies, Inc., a then publicly-held company. We believe Mr. Child’s qualifications to sit on our board of directors include his years of financial experience, including his experience in healthcare investment activities at an investment bank, and his prior experience on the board of directors of a publicly-traded medical device company.

John L. Miclot has served as one of our directors since December 2008. Mr. Miclot currently serves as President and Chief Executive Officer of CCS Medical, Inc., a privately-held provider of home healthcare products, such as insulin pumps, incontinence products and respiratory equipment, a position he has held since November 2008. On July 8, 2009, CCS Medical, Inc. and its 18 related companies filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware seeking reorganization relief under the provisions of Chapter 11 of Title 11 of the United States Bankruptcy Code. Prior to joining CCS Medical, Inc., Mr. Miclot served as Chief Executive Officer of Phillips Home Healthcare Solutions, a privately-held company, since March 2008, when Phillips acquired Respironics, Inc., a provider of sleep and respiratory products. From December 2003 to March 2008, Mr. Miclot served as President and Chief Executive Officer of Respironics, Inc., a publicly-held company. Prior to that position, Mr. Miclot served in various positions at Respironics, Inc. from 1998 to 2003, including Chief Strategic Officer and President of the Homecare Division. His previous employer, Healthdyne Technologies, Inc., a medical

device company, was acquired by Respironics, Inc. in 1998. Mr. Miclot served in various positions at Healthdyne Technologies, Inc., including Senior Vice President, Sales and Marketing, from 1995 to 1998. He began his career at DeRoyal Industries, Inc., a privately-held company, and Baxter International Inc., a publicly-held company. In addition to ev3, Mr. Miclot currently serves on the board of directors of Pittsburgh Zoo & PPG Aquarium, Burger King Cancer Caring Center and the American Association for Homecare, all private companies, and Wright Medical Group, Inc., a public company. During the past five years, Mr. Miclot previously served on the board of directors of Medwave, Inc., a publicly-held company. We believe Mr. Miclot’s qualifications to sit on our board of directors his significant experience in the medical device industry, including his current and prior service as a chief executive officer of multiple medical device companies, and his service on several other medical device company boards of directors.

Thomas E. Timbie has served as one of our directors since June 2005. Mr. Timbie served as a Vice President of ev3 from April 2005 until June 2005 and as ev3’s Interim Chief Financial Officer from January 2005 until April 2005. Mr. Timbie was a member of the board of managers of ev3 LLC from March 2004. Since 2000, Mr. Timbie has been the President of Timbie & Company, LLC, a privately-held financial and management consulting firm that he founded. During 2000, Mr. Timbie was the Interim Vice President and Chief Financial Officer of e-dr. Network, Inc., a privately-held company, and from 1996 to 1999 he was the Vice President and Chief Financial Officer of Xomed Surgical Products, Inc., a then publicly-held company. In addition to ev3, Mr. Timbie currently serves on the board of directors of American Medical Systems Holdings, Inc., a publicly-held company, and Genoa Healthcare Group, LLC, a privately-held healthcare services company. During the past five years, Mr. Timbie previously served on the board of directors of Wright Medical Group Inc. and Acclarent, Inc., both publicly-held companies. We believe Mr. Timbie’s qualifications to sit on our board of directors include his years of financial experience in the medical device industry, including his prior experience as the chief financial officer of publicly-held companies, and his current and prior experience on the board of directors of other publicly-traded medical device companies.

CORPORATE GOVERNANCE

Corporate Governance Guidelines

Our board of directors has adopted corporate governance guidelines. A copy of these corporate governance guidelines can be found on the Investors—Corporate Governance section of our corporate website at www.ev3.net . Among the topics addressed in our corporate governance guidelines are:

	•		Board size, composition and qualifications
	•		Majority voting for directors and resignation policy
	•		Board leadership and lead independent director duties
	•		Board and committee meetings
	•		Executive sessions of independent directors
	•		Appropriate information and access
	•		Conflicts of interest
	•		Change of principal occupation and board memberships
	•		Board compensation
	•		Loans to directors and executive officers
	•		Board and committee evaluations
	•		Succession planning
	•		Selection of director nominees
	•		Director attendance at annual meetings of stockholders
	•		Meeting attendance by directors and non-directors
	•		Limitations on other directorships
	•		Board committees
	•		Ability to retain advisors
	•		Retirement and term limits
	•		Stock ownership by directors and executive officers
	•		Board interaction with corporate constituencies
	•		CEO evaluation
	•		Director continuing education
	•		Communication with directors

Director Independence

The board of directors has affirmatively determined that eight of our nine current directors — John K. Bakewell, Jeffrey B. Child, Richard B. Emmitt, Douglas W. Kohrs, Daniel J. Levangie, John L. Miclot, Thomas E. Timbie and Elizabeth H. Weatherman — are “independent directors” under the Listing Rules of the NASDAQ Stock Market. The Listing Rules of the NASDAQ Stock Market provide a non-exclusive list of persons who are not considered independent. For example, under these rules, a director who is, or during the past three years was, employed by the company or by any parent or subsidiary of the company, other than prior employment as an interim chairman or chief executive officer, would not be considered independent. No director qualifies as independent unless the board of directors affirmatively determines that the director does not have a material relationship with the listed company that would interfere with the exercise of independent judgment. In making an affirmative determination that a director is an “independent director,” the board of directors reviewed and discussed information provided by these individuals and by us with regard to each of their business and personal activities as they may relate to us and our management.

Board Leadership Structure

Under our corporate governance guidelines, the office of Chairman of the Board and Chief Executive Officer may or may not be held by one person. The board of directors believes it is best not to have a fixed policy on this issue and that it should be free to make this determination based on what it believes is best under the circumstances. However, the board of directors does strongly endorse the concept of an independent director being in a position of leadership. Under our corporate governance guidelines, if at

any time the Chief Executive Officer and Chairman of the Board positions are held by the same person, our board of directors will elect an independent director as a lead independent director. The lead independent director will have the following duties and responsibilities in addition to such other duties and responsibilities as may be determined by the board of directors from time to time:

	•		chairing the executive sessions of the board’s independent directors and calling meetings of the independent directors;
	•		determining the agenda for the executive sessions of the independent directors, and participating with the Chairman of the Board in establishing the agenda for board meetings;.
	•		coordinating feedback among the independent directors and our chief executive officer;
	•		overseeing the development of appropriate responses to communications from stockholders and other interested persons addressed to the independent directors as a group; and
	•		retaining, on behalf of the independent directors, legal counsel or other advisors as they deem appropriate in the conduct of their duties and responsibilities.

Robert J. Palmisano currently serves as our President and Chief Executive Officer and Daniel J. Levangie serves as our non-executive Chairman of the Board. Because the Chief Executive Officer and Chairman of the Board positions currently are not held by the same person, we do not have a lead independent director. We currently believe this leadership structure is in the best interests of our company and our stockholders and strikes the appropriate balance between the Chief Executive Officer’s responsibility for the strategic direction, day-to day-leadership and performance of our company and the Chairman’s responsibility to provide oversight of our company’s corporate governance and guidance to our chief executive officer and to set the agenda for and preside over board meetings.

At each regular board meeting, our independent directors meet in executive session with no company management present during a portion of the meeting. After each such executive session, our Chairman of the Board provides our Chief Executive Officer with actionable feedback from our independent directors.

Board Meetings and Attendance

Our board of directors held seven meetings during 2009. All of our directors attended 75 percent or more of the aggregate meetings of the board of directors (held during the period for which they had been a director) and all committees on which they served during 2009 (during the period that they served).

Board Committees

Our board of directors has three standing committees: audit committee, compensation committee and nominating, corporate governance and compliance committee. Each of these committees has the composition and responsibilities described below. Our board of directors may from time to time establish other committees to facilitate the management of our company and may change the composition and the responsibilities of our existing committees. Each committee has a charter which can be found on the Investors — Corporate Governance section of our corporate website at www.ev3.net .

The following table summarizes the current membership of each of our three board committees. Each of the members of the audit committee, compensation committee and nominating, corporate governance and compliance committee is an “independent director” under the Listing Rules of the NASDAQ Stock Market.

						Nominating,
						Corporate Governance
Director		Audit		Compensation		and Compliance
John K. Bakewell		—		—		ü
Jeffrey B. Child		ü		—		Chair
Richard B. Emmitt		ü		—		—
Douglas W. Kohrs		—		ü		—
Daniel J. Levangie		—		—		ü
John L. Miclot		—		Chair		—
Robert J. Palmisano		—		—		—
Thomas E. Timbie		Chair		—		—
Elizabeth H. Weatherman		—		ü		ü

Audit Committee

Responsibilities . Our audit committee oversees a broad range of issues surrounding our accounting and financial reporting processes and audits of our financial statements. More specifically, our audit committee’s duties and responsibilities include, among others:

	•		assist our board of directors in monitoring the integrity of our financial statements, our compliance with legal and regulatory requirements as they relate to our financial statements and financial reporting obligations, our independent registered public accounting firm’s qualifications and independence, and the performance of our internal audit function and independent registered public accounting firm;
	•		assume direct responsibility for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged for the purpose of performing any audit, review or attest services and for dealing directly with any such independent registered public accounting firm;
	•		provide a medium for consideration of matters relating to any audit issues; and
	•		prepare the audit committee report that the SEC rules require be included in our annual proxy statement or annual report on Form 10-K.

The audit committee reviews and evaluates, at least annually, the performance of the audit committee and its members, including compliance of the audit committee with its charter.

Composition . The current members of our audit committee are Messrs. Child, Emmitt and Timbie. Mr. Timbie is the chair of our audit committee.

Each current member of our audit committee qualifies as “independent” for purposes of membership on audit committees pursuant to the Listing Rules of the NASDAQ Stock Market and the rules and regulations of the SEC and is “financially literate” as required by the Listing Rules of the NASDAQ Stock Market. In addition, our board of directors has determined that Mr. Timbie qualifies as an “audit committee financial expert” as defined by the rules and regulations of the SEC and meets the qualifications of “financial sophistication” under the Listing Rules of the NASDAQ Stock Market as a result of his previous experience as a chief financial officer of two public companies. These designations related to our audit committee members’ experience and understanding with respect to certain accounting and auditing matters are disclosure requirements of the SEC and the NASDAQ Stock Market and do not impose upon any of them any duties, obligations or liabilities that are greater than those generally imposed on a member of our audit committee or of our board of directors.

Meetings and Other Information . The audit committee met nine times during 2009. At four of these meetings, the audit committee met in private session with our independent registered public accounting firm. Additional information regarding our audit committee and our independent registered public accounting firm is disclosed under the “—Audit Committee Report” and “Proposal Four—Ratification of Selection of Independent Registered Public Accounting Firm” sections of this proxy statement.

Audit Committee Report

This report is furnished by the audit committee of our board of directors with respect to our consolidated financial statements for the year ended December 31, 2009.

One of the purposes of our audit committee is to oversee our accounting and financial reporting processes and the audit of our annual financial statements. Our management is responsible for the preparation and presentation of complete and accurate financial statements. Our independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing a report on their audit.

In performing its oversight role, our audit committee has reviewed and discussed our audited financial statements for the fiscal year ended December 31, 2009 with our management. Management represented to the audit committee that our financial statements were prepared in accordance with generally accepted accounting principles. Our audit committee has discussed with Ernst & Young LLP, our independent registered public accounting firm, the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, Communication With Audit Committees , as adopted by the Public Company Accounting Oversight Board in Rule 3200T and in effect for our fiscal year ended December 31, 2009. Our audit committee has received the written disclosures and the letter from Ernst & Young LLP required by the Public Company Accounting Oversight Board independence and ethics rule, Rule 3526 (Communication with Audit Committees Concerning Independence), as in effect for our fiscal year ended December 31, 2009. The audit committee has discussed with Ernst & Young LLP its independence and concluded that the independent registered public accounting firm is independent from our company and our management.

Based on the review and discussions of the audit committee described above, in reliance on the unqualified opinion of Ernst & Young LLP regarding our audited financial statements, and subject to the limitations on the role and responsibilities of the audit committee described above and in the audit committee’s charter, the audit committee recommended to our board of directors that our audited financial statements for the fiscal year ended December 31, 2009 be included in our annual report on Form 10-K for the year ended December 31, 2009 for filing with the Securities and Exchange Commission.

This report is dated as of February 23, 2010.

Audit Committee

Thomas E. Timbie, Chair
Jeffrey B. Child
Richard B. Emmitt

Compensation Committee

Responsibilities . Our compensation committee discharges our board’s responsibilities relating to compensation of our directors, officers and certain other executives and our overall compensation and benefits structure. More specifically, our compensation committee’s duties and responsibilities include, among others:

	•		review and approve goals and objectives relevant to our chief executive officer and executive officer compensation and evaluate our chief executive officer and other executive officers’ performance in light of those goals and objectives;
	•		review and approve any and all compensation for our chief executive officer and other executive officers;
	•		review and make recommendations to our board concerning the adoption of and any amendment to our compensation plans for all directors and executive officers, including incentive compensation plans and equity-based plans, and perform the administrative functions of such plans;
	•		review and discuss with management the “Compensation Discussion and Analysis” section of our annual meeting proxy statement and based on such review and discussions make a recommendation to our board as to whether the “Compensation Discussion and Analysis” section should be included in our annual report on Form 10-K and annual meeting proxy statement in accordance with applicable rules and regulations of the SEC and any other applicable regulatory bodies;
	•		review and make recommendations to our board concerning compensation for non-employee members of our board, including retainers, meeting fees, committee fees, committee chair fees, equity compensation, benefits and perquisites; and
	•		review and discuss with our chief executive officer and report periodically to the board of directors plans for executive officer development and corporate succession plan for our chief executive officer and other key executive officers and employees.

The compensation committee reviews and evaluates, at least annually, the performance of the compensation committee and its members, including compliance of the compensation committee with its charter.

Composition . The current members of our compensation committee are Mr. Kohrs, Mr. Miclot and Ms. Weatherman. Mr. Miclot is the chair of our compensation committee. Each of the three current members of our compensation committee is an “independent director” under the Listing Rules of the NASDAQ Stock Market and an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended. Each of Mr. Kohrs and Mr. Miclot is a “non-employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended.

Processes and Procedures for Consideration and Determination of Executive Compensation . As described in more detail above under the heading “—Responsibilities,” our board has delegated to our compensation committee the responsibility, among other things, to approve any and all compensation payable to our executive officers, including annual salaries, incentive compensation, long-term incentive compensation and any special or supplemental benefits or perquisites, and to administer our equity and incentive compensation plans applicable to our executive officers. Our board has retained, however, the

authority to approve the adoption of and any amendment to our compensation plans for all directors and executive officers, including incentive compensation plans and equity-based plans.

Under the terms of its written charter, the compensation committee has the power and authority, to the extent permitted by our bylaws and applicable law, to delegate all or a portion of its duties and responsibilities to a subcommittee of the compensation committee; provided, that any actions taken pursuant to any such delegation are reported to the compensation committee at its next meeting. The compensation committee has delegated its power and authority to review and approve the grant of stock options, restricted stock and other discretionary awards under our equity-based plans to a subcommittee of the compensation committee consisting solely of our “non-employee directors,” who are currently Mr. Kohrs and Mr. Miclot. The compensation committee did not delegate any other duties and responsibilities to the chair, a subcommittee or any other members of the compensation committee during 2009.

In terms of the process of determining executive compensation, our compensation committee typically reviews the base salaries for all of our executive officers, including our named executive officers, at its annual December meeting. Final decisions concerning any salary changes are made at the compensation committee meeting in either December or January. Historically, at the December meeting, our compensation committee also establishes goals for the following year for our cash incentive plan, generally based on and consistent with the annual operating plan typically adopted by the board at that meeting. At its meeting in January of each year, our compensation committee typically determines the individual payout amounts under our cash incentive plan for the prior year and any base salary changes. Commencing in 2010, individual annual performance recognition grants under our equity incentive plan will be made sometime mid-year instead of in January in order to give the compensation committee another formal opportunity during the year to review executive compensation and recognize executive and other key employee performance.

Three members of our executive team play a role in our executive compensation process and regularly attend meetings of our compensation committee. Our Senior Vice President, Human Resources assists our compensation committee primarily by gathering compensation related data regarding our named executive officers and coordinating the exchange of such information and other executive compensation information among the members of our compensation committee, our compensation committee’s compensation consultant and management in anticipation of compensation committee meetings. Our Senior Vice President, Secretary and Chief Legal Officer assists our compensation committee primarily by educating the committee on executive compensation trends and best practices from a corporate governance perspective. Our President and Chief Executive Officer assists our compensation committee primarily by making formal recommendations regarding the amount and type of compensation to be paid to our executives (other than himself) and in so doing, shares information with the compensation committee from the annual performance reviews conducted with each of our executives. From time to time, our compensation committee also may request informal input on compensation related decisions from our Senior Vice President, Human Resources and our Senior Vice President, Secretary and Chief Legal Officer in light of their close participation in the process.

Our compensation committee has engaged a compensation consultant, Mercer (US) Inc., to provide information, analyses and advice regarding executive compensation. In so doing, at the request of the compensation committee, Mercer recommends a peer group of companies, collects relevant market data from these companies to allow the compensation committee to compare elements of our compensation program to those of our peers, provides information on executive compensation trends and implications for our company and makes other recommendations to the compensation committee regarding certain aspects of our executive compensation program. The compensation committee values especially Mercer’s benchmarking information and input regarding best practices and trends in executive compensation

matters. To help determine the appropriate levels of compensation for each principal element of our executive compensation program, our compensation committee annually reviews the compensation levels of our named executive officers and other executives against the compensation levels of comparable positions with companies similar to ev3 in terms of products, operations and revenues. The compensation committee believes that compensation paid by peer group companies is representative of the compensation required to attract, retain and motivate ev3’s executive talent, which is why one of the goals and philosophies of the compensation committee is to target base compensation and total compensation at the 50 ^th to 75 ^th percentile of companies in our peer group.

In addition to the executive compensation work performed by Mercer for the compensation committee during 2009, for which Mercer was paid approximately $124,964, management engaged Mercer to provide other compensation consulting services, for which Mercer was paid approximately $12,813. The compensation committee has established procedures that it considers adequate to ensure that Mercer’s advice to the compensation committee remains objective and is not influenced by our management. These procedures include: the compensation committee has the sole authority to hire and fire Mercer; a direct reporting relationship of the Mercer consultant to the compensation committee including a summary of the work performed for our company during the preceding 12 months; and written assurances from Mercer that, within the Mercer organization, the Mercer consultant who performs services for our company has a reporting relationship and compensation determined separately from Mercer’s other lines of business and from its other work for our company. The compensation committee believes that the provision of such other services by Mercer does not compromise Mercer’s ability to provide the compensation committee an objective perspective on executive compensation. Our management, principally our Senior Vice President, Human Resources and the chair of our compensation committee, regularly consult with representatives of Mercer and generally meet with Mercer representatives prior to each compensation committee meeting. A representative of Mercer is invited on a regular basis to attend, and usually does attend, meetings of our compensation committee. All of the recommendations and decisions by our compensation committee and board of directors with respect to determining the amount or form of executive compensation under our executive compensation program were made by the compensation committee and board of directors, as the case may be, alone and may reflect factors and considerations other than the information and advice provided by Mercer.

In making final decisions regarding the form and amount of compensation to be paid to our named executive officers (other than our President and Chief Executive Officer), our compensation committee considers the recommendations of our President and Chief Executive Officer but also considers other factors, such as those listed under the heading “Compensation Discussion and Analysis—Setting Executive Compensation—Role of Compensation Committee.” The compensation committee gives great weight to the recommendations of our President and Chief Executive Officer recognizing that due to his reporting and otherwise close relationship with each executive, the President and Chief Executive Officer often is in a better position than the compensation committee to evaluate the performance of each executive (other than himself). In making its final decision regarding the form and amount of compensation to be paid to our President and Chief Executive Officer, the compensation committee considers the results of the President and Chief Executive Officer’s self-review and his individual annual performance review by the compensation committee and the recommendations of other board members. Final deliberations and decisions regarding the compensation to be paid to each of our executives are made by the compensation committee without the presence of such executive.

Processes and Procedures for Consideration and Determination of Director Compensation . As described in more detail above under the heading “—Responsibilities,” our board of directors has delegated to our compensation committee the responsibility, among other things, to review and make recommendations to our board concerning compensation for non-employee members of our board, including retainers and any other cash compensation, equity compensation, benefits and perquisites. Decisions regarding director

compensation made by our compensation committee are not considered final and are subject to final review and approval by our entire board. Under the terms of its written charter, the compensation committee has the power and authority, to the extent permitted by our bylaws and applicable law, to delegate all or a portion of its duties and responsibilities to a subcommittee of the compensation committee; provided, that any actions taken pursuant to any such delegation are reported to the compensation committee at its next meeting. The compensation committee has not generally delegated any of its duties and responsibilities regarding director compensation to subcommittees, the chair or any other members of the compensation committee, but rather has taken such actions as a committee, as a whole.

Our Senior Vice President, Human Resources assists the compensation committee in gathering compensation related data regarding director compensation. In making final recommendations to the board regarding compensation to be paid to our non-employee directors, the compensation committee considers general market information regarding director compensation, including benchmarking information gathered by Mercer, and other factors that may be relevant.

Our compensation committee has engaged Mercer to provide information, analyses and advice regarding director compensation. In so doing, at the request of the compensation committee, Mercer collected relevant market data from the same peer group of companies used in connection with our determination of executive compensation to allow the compensation committee to compare elements of our director compensation program to those of our peers, provided information on director compensation trends and implications for our company and made other recommendations to the compensation committee regarding certain aspects of our director compensation program. In setting director compensation, our compensation committee targets director compensation at the 50 ^th to 75 ^th percentile of companies in our peer group. As with executive compensation, the compensation committee values Mercer’s benchmarking information and input regarding best practices and trends in director compensation matters.

In making final decisions regarding compensation to be paid to our non-employee directors, the board gives considerable weight to the recommendations of our compensation committee.

Meetings and Other Information . Our compensation committee met nine times during 2009. Additional information regarding our compensation committee is disclosed under the “Compensation Discussion and Analysis” and “Executive Compensation—Compensation Committee Report” sections of this proxy statement.

Nominating, Corporate Governance and Compliance Committee

Responsibilities. Our nominating, corporate governance and compliance committee provides assistance to our board in fulfilling its responsibilities relating to the nomination of directors and the oversight of corporate governance processes of our company and our compliance efforts with respect to legal and regulatory requirements and relevant company policies and procedures, including our Code of Business Conduct and Corporate Compliance Program, other than with respect to matters relating to our financial statements and financial reporting obligations and any accounting, internal accounting controls or auditing matters, which remain within the purview of our audit committee.

More specifically, our nominating, corporate governance and compliance committee’s duties and responsibilities include, among other things:

•

review and make recommendations to our board regarding the structure and composition of the board and its members;

	•		identify individuals qualified to become members of our board;
	•		make recommendations to the board regarding nominees for director for each annual meeting of our stockholders and to fill any vacancies that may occur between meetings of our stockholders;
	•		make recommendations to our board regarding corporate governance matters and practices, including any revisions to our corporate governance guidelines; and
	•		oversee our compliance efforts with respect to legal and regulatory requirements and relevant policies and procedures, including our Code of Business Conduct and Corporate Compliance Program, other than with respect to matters relating to our financial statements and financial reporting obligations and any accounting, internal accounting controls or auditing matters (which are within the purview of the audit committee).

The nominating, corporate governance and compliance committee reviews and evaluates, at least annually, the performance of the nominating, corporate governance and compliance committee and its members, including compliance of the nominating, corporate governance and compliance committee with its charter.

Composition. The current members of our nominating, corporate governance and compliance committee are Mr. Bakewell, Mr. Child, Mr. Levangie and Ms. Weatherman. Mr. Child is the chair of our nominating, corporate governance and compliance committee. Each of the four members of our nominating, corporate governance and compliance committee is an “independent director” under the Listing Rules of the NASDAQ Stock Market.

Processes and Procedures for Selecting Nominees for Our Board of Directors . In selecting director nominees for recommendation to our board of directors, the nominating, corporate governance and compliance committee first determines whether the incumbent directors whose terms expire at the meeting are qualified to serve, and wish to continue to serve, on the board. Our board believes that our company and stockholders benefit from the continued service of qualified incumbent directors because those directors have familiarity with and insight into our corporate affairs that they have accumulated during their tenure with the company. Appropriate continuity of board membership also contributes to our board’s ability to work as a collective body. Accordingly, it is the general practice of the nominating, corporate governance and compliance committee to recommend to our board and our board to re-nominate an incumbent director whose term expires at the upcoming annual meeting of stockholders if the director wishes to continue his or her service with our board, the director continues to satisfy our board’s criteria for membership on the board, the nominating, corporate governance and compliance committee believes the director continues to make important contributions to the board, and there are no special, countervailing considerations against re-nomination of the director.

In identifying and evaluating new candidates for election to our board, the nominating, corporate governance and compliance committee first solicits recommendations for nominees from persons whom the committee believes are likely to be familiar with candidates having the qualifications, skills and characteristics required for board nominees from time to time. Such persons may include current members of our board and our senior management. In addition, from time to time, if appropriate, the nominating, corporate governance and compliance committee may engage a search firm to assist it in identifying and evaluating qualified candidates.

The nominating, corporate governance and compliance committee reviews and evaluates each candidate whom it believes merits serious consideration, taking into account available information concerning the

candidate, any qualifications or criteria for board membership established by the nominating, corporate governance and compliance committee, the existing composition of the board, and other factors that it deems relevant. In conducting its review and evaluation, the nominating, corporate governance and compliance committee may solicit the views of our management, our board members and any other individuals it believes may have insight into a candidate. The nominating, corporate governance and compliance committee may designate one or more of its members and/or other board members to interview any proposed candidate.

The nominating, corporate governance and compliance committee will consider recommendations for the nomination of directors submitted by our stockholders that comply with the procedural requirements set forth in our bylaws. For more information, see the information set forth under the heading “Other Matters — Director Nominations for 2011 Annual Meeting.” The nominating, corporate governance and compliance committee will evaluate candidates recommended by stockholders in the same manner as those recommended as stated above.

There are no formal requirements or minimum qualifications that a candidate must meet in order for our nominating, corporate governance and compliance committee to recommend the candidate to the board. The nominating, corporate governance and compliance committee believes that each nominee should be evaluated based on his or her merits as an individual, taking into account the needs of our company and the board at the time. However, in evaluating candidates, there are a number of criteria that the nominating, corporate governance and compliance committee generally view as relevant and are likely to consider. Some of these factors include:

	•		whether the candidate is an “independent director” under the Listing Rules of the NASDAQ Stock Market and meets any other applicable independence tests under the federal securities laws and rules and regulations of the SEC;
	•		whether the candidate is “financially sophisticated” and otherwise meets the requirements for serving as a member of an audit committee under the Listing Rules of the NASDAQ Stock Market;
	•		whether the candidate is an “audit committee financial expert” under the rules and regulations of the SEC;
	•		the needs of our company with respect to the particular talents and experience of our directors;
	•		the personal and professional integrity and reputation of the candidate;
	•		the candidate’s level of education and business experience;
	•		the candidate’s broad-based business acumen;
	•		the candidate’s level of understanding of our business and its industry and other industries relevant to our business;
	•		the candidate’s ability and willingness to devote adequate time to work of our board and its committees;

	•		the fit of the candidate’s skills and personality with those of other directors and potential directors in building a board that is effective, collegial and responsive to the needs of our company;
	•		whether the candidate possesses strategic thinking and a willingness to share ideas;
	•		the candidate’s diversity of experiences, expertise and background; and
	•		the candidate’s ability to represent the interests of all stockholders and not a particular interest group.

While we do not have a stand-alone diversity policy, in considering whether to recommend any director nominee, including candidates recommended by stockholders, the nominating, corporate governance and compliance committee will consider the factors above, including the candidate’s diversity of experiences, expertise and background. The nominating, corporate governance and compliance committee seeks nominees with a broad diversity of experience, expertise and backgrounds. The nominating, corporate governance and compliance committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. We believe that the backgrounds and qualifications of the directors, considered as a group, should provide a significant mix of experience, knowledge and abilities that will allow the board to fulfill its responsibilities.

The nominating, corporate governance and compliance committee may, in its discretion, form a subcommittee to assist the committee with the identification and review of potential director candidates. Any such subcommittee may be comprised of members of our board who do not serve on the nominating, corporate governance and compliance committee and shall report directly to the committee.

Meetings. Our nominating, corporate governance and compliance committee met four times during 2009.

Code of Business Conduct

Our Code of Business Conduct applies to all of our employees, officers and directors, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and meets the requirements of the SEC. A copy of our Code of Business Conduct is available on the Investors—Corporate Governance section of our corporate website at www.ev3.net.

Stock Ownership Guidelines

In 2009, we established stock ownership guidelines for directors and executive officers. The intent of the guidelines is to align the interests of our directors and executives with the interests of our stockholders and to demonstrate our continued commitment to sound corporate governance. Stock ownership targets for directors are set at an aggregate market value equal to four times the amount of the annual retainer for directors, or $144,000. Stock ownership targets for executives are set at that number of shares of our common stock with a value equal to a multiple of the executive’s annual base salary, with the multiple equal to two times for senior vice presidents, three times for executive vice presidents and four times for our chief executive officer.

Until the applicable stock ownership target is achieved, each director and executive subject to the guidelines is required to retain an amount equal to 75% of the net shares received as a result of the exercise of stock options or the vesting of restricted stock or restricted stock units. Because directors and executives must retain a percentage of shares resulting from any exercise of ev3 stock options or the

vesting of restricted stock or restricted stock units until they achieve the specified target, there is no minimum time period required to achieve the applicable stock ownership target.

Stock ownership targets are determined by including stock acquired through the open market, upon stock option exercises, purchased under our employee stock purchase plan, deferred compensation payable solely in shares of our common stock, shares held in benefit plans and restricted stock (both vested and unvested) that vests based on the passage of time. If there is a significant decline in our stock price that causes directors or executives to be out of compliance, such directors and executives will be subject to the 75% retention ratio, but will not be required to purchase additional shares to meet the applicable target.

Our compensation committee reports on compliance with the guidelines at least annually to our board of directors. Stock ownership targets are evaluated and adjusted as necessary on January 1st each year and also whenever an executive’s annual base salary changes. As of January 1, 2010, all of our directors and executives met their respective individual stock ownership guideline, except for Mr. Palmisano, Mr. McCormick, Mr. Girin and Mr. Wall. As of such date, Mr. Palmisano, Mr. McCormick and Mr. Wall had only been executives of our company for approximately 20 months, 11 months and two months, respectively. In addition, unlike other executives, until recently Mr. Girin because of his French residence received restricted stock units, or RSUs, as opposed to restricted stock. Unlike restricted stock, RSUs, like stock options, do not count toward our stock ownership guidelines. If Mr. Girin’s RSUs counted toward the guidelines, he would have been in compliance with his individual stock ownership guideline.

Board Oversight of Risk

The board of directors as a whole has responsibility for risk oversight, with more in-depth reviews of certain areas of risk being conducted by the relevant board committees that report on their deliberations to the full board. The oversight responsibility of the board and its committees is enabled by management reporting processes that are designed to provide information to the board about the identification, assessment and management of critical risks and management’s risk mitigation strategies. The areas of risk that we focus on include regulatory, compliance, legal, compensation, competitive, operational, financial (accounting, credit, liquidity and tax), health, safety and environment, economic, political and reputational risks.

The board’s standing committees oversee risks associated with their respective principal areas of focus. The audit committee’s role includes a particular focus on the qualitative aspects of financial reporting to stockholders, on our processes for the management of business and financial risk, and for compliance with significant applicable legal, ethical and regulatory requirements as they relate to our financial statements and financial reporting obligations. The audit committee, along with management, is also responsible for developing and participating in a process for review of important financial and operating topics that present potential significant risk to our company. The compensation committee is responsible for overseeing risks and exposures associated with our compensation programs and arrangements, including our executive and director compensation programs and arrangements, and management succession planning. The nominating, corporate governance and compliance committee oversees risks relating to our compliance efforts with respect to legal and regulatory requirements and relevant company policies and procedures, including our Code of Business Conduct and Corporate Compliance Program, and risks related to our corporate governance matters and policies and director succession planning.

We recognize that a fundamental part of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the company. The involvement of our full board of directors in setting our business

strategy is a key part of the board’s assessment of management’s appetite for risk and also a determination of what constitutes an appropriate level of risk for our company.

We believe our current board leadership structure is appropriate and helps ensure proper risk oversight for our company for a number of reasons, including: (1) general risk oversight by our full board of directors in connection with its role in reviewing our five-year strategic plan and reviewing and approving our annual operating plan that sets forth our key business strategies and then monitoring on an on-going basis the implementation of our annual operating plan and key business strategies; (2) more detailed oversight by our standing board committees that are currently comprised of and chaired by our independent directors; and (3) the focus of our Chairman of the Board on allocating appropriate Board agenda time for discussion regarding the implementation of our annual operating plan and key business strategies and specifically risk management.

Policy Regarding Director Attendance at Annual Meetings of Stockholders

It is the policy of our board of directors that directors standing for re-election should attend our annual meeting of stockholders, if their schedules permit. One of our nine then current directors, Mr. Palmisano, attended our annual meeting of stockholders in May 2009.

Process Regarding Stockholder Communications with Board of Directors

Stockholders may communicate with our board of directors or any one particular director by sending correspondence, addressed to our Corporate Secretary, ev3 Inc., 3033 Campus Drive, Plymouth, Minnesota 55441, with an instruction to forward the communication to our board or one or more particular directors. Our Corporate Secretary will promptly forward all such stockholder communications to our board or the one or more particular directors, with the exception of any advertisements, solicitations for periodical or other subscriptions and other similar communications.

DIRECTOR COMPENSATION

Summary of Cash and Other Compensation

The following table provides summary information concerning the compensation of each individual who served as a director of our company during the year ended December 31, 2009, other than Robert J. Palmisano, our President and Chief Executive Officer, whose compensation is set forth under the heading “Executive Compensation.”

DIRECTOR COMPENSATION – 2009

		Fees Earned or Paid				Stock				Option				All Other
Name		in Cash ($)				Awards ($) (1)(2)				Awards ($) (3)(4)				Compensation($) (5)				Total ($)
John K. Bakewell		$	63,500			$	74,996			$	75,948			$	—			$	214,444
Jeffrey B. Child			41,000				74,996				75,948				—				191,944
Richard B. Emmitt			43,500				74,996				75,948				—				194,444
Douglas W. Kohrs			41,000				74,996				75,948				—				191,944
Daniel J. Levangie			71,833				74,996				75,948				—				222,777
John L Miclot			43,917				74,996				75,948				—				194,861
Thomas E. Timbie			58,500				74,996				75,948				—				209,444
Elizabeth H. Weatherman			46,000				74,996				75,948				—				196,944

								Number of Shares to				Number of Shares to				Number of Shares to				Number of Shares to
		Grant		Total Number of				Vest on				Vest on				Vest on				Vest on
Name		Date		Unvested Shares				May 1, 2010				August 1, 2010				December 2, 2010				May 1, 2011
John K. Bakewell		05/26/09			8,296				4,148				—				—				4,148
		05/20/08			3,788				3,788				—				—				—
Jeffrey B. Child		05/26/09			8,296				4,148				—				—				4,148
		05/20/08			3,788				3,788				—				—				—
Richard B. Emmitt		05/26/09			8,296				4,148				—				—				4,148
		05/20/08			3,788				3,788				—				—				—
Douglas W. Kohrs		05/26/09			8,296				4,148				—				—				4,148
		08/01/08			3,731				—				3,731				—				—
Daniel J. Levangie		05/26/09			8,296				4,148				—				—				4,148
		05/20/08			3,788				3,788				—				—				—
John L. Miclot		05/26/09			8,296				4,148				—				—				4,148
		12/02/08			3,648				—				—				3,648				—
Thomas E. Timbie		05/26/09			8,296				4,148				—				—				4,148
		05/20/08			3,788				3,788				—				—				—
Elizabeth H. Weatherman		05/26/09			8,296				4,148				—				—				4,148
		05/20/08			3,788				3,788				—				—				—

(3)

On May 26, 2009, each director received a stock option to purchase 19,841 shares of our common stock at an exercise price of $9.04 per share granted under the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan, the material terms of which are described in more detail under the heading “Executive Compensation — Grants of Plan-Based Awards — ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan.” Such option expires on May 25, 2019 and vests with respect to 50 percent of the underlying shares of our common stock on each of the following dates, so long as the individual remains a director of our company as of such date: May 1, 2010 and May 1, 2011. Amount reported represents the aggregate grant date fair value for option awards granted to each director in 2009 computed in accordance with FASB ASC Topic 718. The grant date fair value is determined based on our Black-Scholes option pricing model. The grant date value per share for the option granted on May 26, 2009 was $3.8278 and was determined using the following specific assumptions:

Expected

Risk Free

Expected

Expected

Dividend

Interest Rate

Life

Volatility

Yield

1.72%

3.85 years

54.0%

0

(4)

The following table provides information regarding the aggregate number of options to purchase shares of our common stock outstanding at December 31, 2009 and held by each of the directors listed in the above table:

Aggregate Number of

Range of

Range of

Securities

Exercisable/

Exercise

Expiration

Name

Underlying Options

Unexercisable

Price(s)

Date(s)

John K. Bakewell

90,537

55,348/35,189

$

9.04-17.71

04/05/2016-05/26/2019

Jeffrey B. Child

125,257

90,068/35,189

9.04-23.65

06/20/2015-05/26/2019

Richard B. Emmitt

75,777

40,588/35,189

6.47-16.66

07/26/2011-05/26/2019

Douglas W. Kohrs

105,942

72,589/33,353

8.82-16.66

03/01/2015-05/26/2019

Daniel J. Levangie

90,537

47,848/42,689

9.04-20.06

02/23/2017-05/26/2019

John L. Miclot

39,175

4,833/34,342

5.14-9.04

12/02/2018-05/26/2019

Thomas E. Timbie

227,201

192,012/35,189

8.82-16.66

03/09/2014-05/26/2019

Elizabeth H. Weatherman

75,777

40,588/35,189

6.47-16.66

07/26/2011-05/26/2019

(5)

We do not generally provide perquisites and other personal benefits to our directors. Any perquisites or personal benefits actually provided to any director were less than $10,000 in the aggregate.

Overview

Compensation for our “outside” directors is designed to attract and retain experienced and knowledgeable directors and to provide equity-based compensation in order to align the interests of our directors with those of our stockholders. Our outside directors are those directors who are not our employees or consultants. The following individuals served as outside directors during 2009: John K. Bakewell, Jeffrey B. Child, Richard B. Emmitt, Douglas W. Kohrs, Daniel J. Levangie, John L. Miclot, Thomas E. Timbie and Elizabeth H. Weatherman. Robert J. Palmisano, our President and Chief Executive Officer, served as a director during 2009 but was not considered an outside director. Mr. Palmisano did not receive any additional compensation for his director service in 2009. For a description of our compensation arrangements with Mr. Palmisano during 2009, we refer you to the headings entitled “Executive Compensation” and “Compensation Discussion and Analysis.”

In setting director compensation, we follow the process and procedures described under the heading “Corporate Governance—Compensation Committee—Processes and Procedures for Consideration and Determination of Director Compensation.” From time to time, our compensation committee engages an independent consultant to review our outside director compensation. In 2009, our compensation committee engaged Mercer to review our outside director compensation. In so doing, Mercer analyzed the outside director compensation levels and practices of our peer companies. Mercer used the same April 2008 peer group of 20 peer companies as were used to gather compensation information for our executive officers at that time. We refer you to the information under the heading “Compensation Discussion and Analysis—Setting Executive Compensation—Use of Peer Group and Other Market Data”

for more information regarding the peer companies. In setting director compensation, we target compensation at the 50 ^th to 75 ^th percentile of companies in our peer group. Based on Mercer’s analysis of our director compensation program, our total direct compensation for the average director is aligned with the 75 ^th percentile of our peer group, average total cash compensation for our directors is in line with the 50 ^th percentile and the value of our equity director compensation is between the 50 ^th and 75 ^th percentile.

Our compensation for our outside directors for 2009 was comprised of both cash compensation and equity-based compensation. Our cash compensation was in the form of annual retainers for our board members, chairman of the board, committee chairs and committee members. Our equity-based compensation was in the form of initial and annual stock option and restricted stock grants. Each of these components is described in more detail below. We do not generally provide perquisites and other personal benefits to our outside directors.

Cash Compensation

The cash compensation paid to our outside directors consists of annual cash retainers paid to each board member, our chairman of the board, each board committee chair and each board committee member. The following table sets forth the annual cash retainers paid to our outside directors:

Description		Annual Cash Retainer
Board Member		$	36,000
Chairman of the Board*			25,000
Lead Independent Director*			10,000
Audit Committee Chair			20,000
Compensation Committee Chair			10,000
Nominating, Corporate Governance and Compliance Committee Chair			10,000
Audit Committee Member (including Chair)			7,500
Compensation Committee Member (including Chair)			5,000
Nominating, Corporate Governance and Compliance Committee Member (including Chair)			5,000

The annual cash retainers are paid in the beginning of each calendar quarter. For example, the retainers paid in the beginning of the first calendar quarter are for the period from January 1 through March 31.

Daniel J. Levangie has served as our Chairman of the Board since April 2008 and the table under the heading “Corporate Governance—Board Committees” shows on which board committees the individual directors currently serve and the current chair of each board committee. In December 2009, we changed the composition of our board committees and our board chairs. Mr. Timbie became chair of our audit committee replacing Mr. Bakewell who was removed from the audit committee; Mr. Child became chair of our nominating, corporate governance and compliance committee replacing Mr. Timbie who was removed from the nominating, corporate governance and compliance committee; and Mr. Miclot became chair of our compensation committee replacing Mr. Levangie who was removed from the compensation committee. With respect to other changes in board committee composition, Mr. Child joined the audit committee and Messrs. Bakewell and Levangie joined the nominating, corporate governance and compliance committee.

In 2009, we did not pay our outside directors separate fees for attending board and board committee meetings and we currently do not pay such separate meeting fees.

We reimburse each member of our board of directors, including directors who are not outside directors, for out-of-pocket expenses incurred in connection with attending our board and board committee meetings.

Equity-Based Compensation

A substantial portion of our outside director compensation is linked to our common stock performance. Under our current policy regarding equity-based compensation for directors, outside directors, upon their initial election to our board, automatically receive $75,000, one-half of which is paid in stock options and the remaining one-half of which is paid in restricted stock. In addition, our outside directors automatically receive on an annual basis, effective as of the date of our annual meeting of stockholders, $150,000, one-half of which is paid in stock options and the remaining one-half of which is paid in restricted stock. All of these equity awards are granted under the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan. All of these initial and annual stock options have a term of 10 years. The initial stock options and restricted stock grants vest over a two-year period, with 50 percent of the underlying shares vesting on the one-year anniversary of the date of grant and the remaining shares vesting on the two-year anniversary of the date of grant, in each case so long as the director is still a director as of such date. The annual stock options and restricted stock grants vest over a two-year period, with 50 percent of the underlying shares vesting on May 1 of the first calendar year following the date of grant and the remaining shares vesting on May 1 of the second calendar year following the date of grant, in each case so long as the director is still a director as of such date.

We refer you to notes 1 and 3 to the Director Compensation table above for a summary of all equity-based incentive awards granted to our directors, excluding Mr. Palmisano, during the fiscal year ended December 31, 2009. We refer you to notes 2 and 4 to the Director Compensation table above for a summary of all equity-based incentive awards held by our directors, excluding Mr. Palmisano, as of December 31, 2009. Information regarding all equity-based incentive award grants to Mr. Palmisano during the fiscal year ended December 31, 2009 is set forth under the heading “Executive Compensation—Grants of Plan-Based Awards” and information regarding all equity-based incentive awards held by Mr. Palmisano as of December 31, 2009 is set forth under the heading “Executive Compensation—Outstanding Equity Awards at Fiscal Year End.”

Indemnification Agreements

We have entered into agreements with all of our directors under which we are required to indemnify them against expenses, judgments, penalties, fines, settlements and other amounts actually and reasonably incurred, including expenses of a derivative action, in connection with an actual or threatened proceeding if any of them may be made a party because he or she is or was one of our directors. We will be obligated to pay these amounts only if the director acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to our best interests. With respect to any criminal proceeding, we will be obligated to pay these amounts only if the director had no reasonable cause to believe his or her conduct was unlawful. The indemnification agreements also set forth procedures that will apply in the event of a claim for indemnification.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

This Compensation Discussion and Analysis describes the material elements of the compensation awarded to, earned by or paid to:

•

our current President and Chief Executive Officer, Robert J. Palmisano;

•

our current Senior Vice President and Chief Financial Officer, Shawn McCormick;

•

our former Senior Vice President and Chief Financial Officer, Patrick D. Spangler;

•

our current Executive Vice President and Chief Operating Officer, Pascal E.R. Girin;

•

our current Executive Vice President and President, Worldwide Peripheral Vascular, Stacy Enxing Seng; and

•

our current Senior Vice President and President, International, Brett A. Wall.

These individuals are referred to in this proxy statement as our “named executive officers.” The discussion below focuses on the information contained in the tables and related footnotes and narrative primarily for 2009 under the heading “Executive Compensation” found elsewhere in this proxy statement, but also describes compensation actions taken during 2008 and 2010 to the extent we believe such disclosure enhances the understanding of our executive compensation disclosure for 2009.

Compensation Objectives and Philosophy

Our executive compensation program is designed to:

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attract and retain executives important to the success of our company and the creation of value for our stockholders;

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reinforce our corporate mission, vision and values;

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motivate our executives to help fulfill our corporate mission and vision, including more specific and focused company performance objectives, while incorporating our shared values;

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align the interest of our executives with the interests of our stockholders; and

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reward our executives for progress toward our corporate mission and vision, the achievement of company performance objectives, the creation of stockholder value in the short and long term and their contributions, in general, to the success of our company.

In order to achieve these objectives, our compensation committee makes compensation decisions based on the following philosophies and principles:

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We target base compensation and total compensation at the 50 th to 75 th percentile of companies in our peer group, with the opportunity to earn total compensation above the market median when the performance of our business meets or exceeds our plan targets.

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As a performance-driven company, we favor having a significant component of compensation that is variable and tied to results and achievement over solely fixed compensation.

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The portion of an executive’s total compensation that varies with performance and is therefore at risk should increase with the level of an individual’s responsibility.

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In order to foster cooperation and communication among our executives and among their respective teams, our compensation committee places primary emphasis on company and business unit performance as measured against goals approved by our compensation committee rather than individual performance.

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We seek to align the interests of our executives with those of our stockholders by providing a significant portion of compensation in stock-based awards.

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We seek to limit the use of perquisites and believe they should not be a significant component of executive compensation. Perquisites are provided when customary in a specific geography (non-U.S. executives) or when necessary to attract and retain key executive talent.

Our compensation committee reviews and approves our compensation objectives and philosophy on an annual basis.

Business Context in Which 2009 Compensation Decisions Were Made

Our top business goals for 2009 were to grow at or above market rates, achieve sustained profitability, generate cash and expand our global position in the peripheral vascular and neurovascular markets to deliver superior long-term value to our stockholders. During 2009, we achieved GAAP profitability and cash generation, and our operating results reflected above market sales growth in both our peripheral vascular and neurovascular segments, continued expansion of our international business, significant improvement in our gross margins and continued expense control. Our net product sales increased 12% to $449.1 million for the year ended December 31, 2009 compared to the year ended December 31, 2008 driven by strong results across all product categories, with the exception of our plaque excision products. We added several breakthrough products to our broad endovascular portfolio that we believe will contribute to our sales in 2010, including our Pipeline Embolization Device™, which we acquired in connection with our acquisition of Chestnut Medical Technologies, Inc. during the second quarter 2009, and our TurboHawk™ Peripheral Plaque Excision System, which we commercially introduced during the third quarter 2009. Our stock price increased over 118% during 2009 and closed at $13.34 per share on December 31, 2009.

We believe our executive compensation strategy to attract, retain, motivate and reward executives was effective in 2009. We attracted new talent by hiring a new Senior Vice President and Chief Financial Officer. We retained talent by promoting three of our other named executive officers and providing them appropriate and reasonable compensation. And we motivated our executives to achieve our business goals and priorities by setting corporate and divisional financial performance objectives of revenue, operating profit, days sales outstanding and inventory days on hand and additional individual specific management objectives, most of which were achieved at or near, or in some cases, above targeted performance.

Setting Executive Compensation

Role of Compensation Committee. The responsibilities of our compensation committee include approving the compensation payable to our executive officers, including our President and Chief Executive Officer,

and administering our equity and incentive compensation plans. Although final decisions regarding executive officer compensation, including compensation to be paid to our President and Chief Executive Officer, are typically made by our compensation committee, at times, our full board of directors will approve such arrangements upon recommendation of the compensation committee. For example, with respect to the compensation package for our current President and Chief Executive Officer, our full board of directors approved such arrangement upon recommendation of the compensation committee. The compensation committee determined to present its approval of the then new CEO compensation package as a recommendation to the full board of directors as opposed to final approval in light of the significance of the position to our company, the nature and total amount of the compensation package and, to a lesser extent, the fact that the board of directors was convening on the same day to approve the appointment of the CEO.

Information about our compensation committee and its composition, processes and responsibilities can be found under the heading “Corporate Governance—Board Committees—Compensation Committee.” In setting executive compensation for our named executive officers, the compensation committee considers the following primary factors:

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each executive’s position within the company and the level of responsibility;

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the ability of the executive to impact key business initiatives;

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the executive’s individual experience and qualifications;

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compensation paid to executives of comparable positions by companies similar to ev3;

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an assessment of the risk that the executive would leave our company and the harm to our company’s business initiatives if the executive left;

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company performance, on an overall basis and, in the case of some executives on a divisional basis, as compared to specific pre-established objectives;

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individual performance, generally and as compared to specific pre-established objectives;

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the executive’s current and historical compensation levels;

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advancement potential and succession planning considerations;

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the retention value of executive equity holdings, including outstanding stock options and stock grants;

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the dilutive effect on our shareholders of equity-based long-term incentive awards;

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anticipated compensation expense as determined under applicable accounting rules; and

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“tally” sheets which detail for each executive his or her annual compensation for the last two years and an estimate for the current year, vested and unvested values of all outstanding equity awards at an assumed stock price and change in control and severance benefits potentially payable in the event of a change in control and under a termination without cause scenario, as described in more detail below under the heading “—Use of Tally Sheets.”

The compensation committee also considers the recommendations of our President and Chief Executive Officer with respect to executive compensation to be paid to other executive officers and the compensation committee’s compensation consultant in determining executive compensation for the President and Chief Executive Officer and other executive officers. The significance of any individual factor described above in setting executive compensation will vary from year to year and may vary among our named executive officers.

Role of Management. Three members of our executive team play a role in our executive compensation process and regularly attend meetings of our compensation committee. Our Senior Vice President, Human Resources assists our compensation committee primarily by gathering compensation related data regarding our named executive officers and coordinating the exchange of such information and other executive compensation information among the members of our compensation committee, our compensation committee’s compensation consultant and management in anticipation of compensation committee meetings. Our Senior Vice President, Secretary and Chief Legal Officer assists our compensation committee primarily by educating the committee on executive compensation trends and best practices from a corporate governance perspective. Our President and Chief Executive Officer assists our compensation committee primarily by making formal recommendations regarding the amount and type of compensation to be paid to our executives (other than himself). From time to time, our compensation committee also may request informal input on compensation related decisions from our Senior Vice President, Human Resources and our Senior Vice President, Secretary and Chief Legal Officer in light of their close participation in the process.

Our President and Chief Executive Officer makes recommendations to our compensation committee regarding the compensation to be paid to each executive (other than himself). In making such recommendations, our President and Chief Executive Officer considers many of the same factors listed above that the compensation committee considers in setting executive compensation. In particular, the President and Chief Executive Officer considers the peer group or market data and the results of each executive’s individual annual performance review.

After the end of each fiscal year, each executive participates in an annual performance review with our President and Chief Executive Officer to provide input about the executive’s performance for the year. During this review, the achievement level of the executive’s individual management performance objectives (known internally as MBOs) established in connection with our short-term cash incentive plan are discussed and determined, as well as the executive’s general business job performance and performance specifically in furtherance of ev3’s mission, values and vision and its quality policy. As part of this review, each executive assigns an achievement level to each of the MBOs and other performance metrics, including a brief narrative report supporting the ratings, and an overall achievement level. Our President and Chief Executive Officer next assigns an achievement level to each of the MBOs and other performance metrics, includes a brief narrative report supporting the ratings and reviews each executive’s overall achievement level for the MBOs and the overall achievement level for executive’s general performance review to ensure that it is correct. In so doing, the President and Chief Executive Officer and each executive have a discussion about their assigned achievement levels. The President and Chief Executive Officer then shares the results for each executive with the compensation committee and makes recommendations to the compensation committee regarding the form and amount of compensation to be paid to each executive (other than himself).

The performance of our President and Chief Executive Officer is also evaluated after the end of each fiscal year by our compensation committee. In connection with such review, our President and Chief Executive Officer performs a self-review that is circulated to the members of the compensation committee. In evaluating the performance of our President and Chief Executive Officer, the compensation committee reviews the self-review, discusses the performance of the President and Chief

Executive Officer amongst its members, seeks the input of other members of our board of directors, as well as other members of our executive team. In assessing the performance of our President and Chief Executive Officer, the compensation committee evaluates primarily our corporate financial performance, our progress towards fulfilling our business initiatives and the President and Chief Executive Officer’s leadership.

In making its final decision regarding the form and amount of compensation to be paid to our named executive officers (other than our President and Chief Executive Officer), our compensation committee considers the recommendations of our President and Chief Executive Officer. The compensation committee gives great weight to the recommendations of our President and Chief Executive Officer recognizing that due to his reporting and otherwise close relationship with each executive, the President and Chief Executive Officer often is in a better position than the compensation committee to evaluate the performance of each executive (other than himself). In making its final decision regarding the form and amount of compensation to be paid to our President and Chief Executive Officer, the compensation committee considers the results of the President and Chief Executive Officer’s self-review and his individual annual performance review by the compensation committee and the recommendations of other board members. Final deliberations and decisions regarding the compensation to be paid to each of our executives are made by the compensation committee without the presence of such executive.

Annual Compensation Process. Typically, our compensation committee reviews the base salaries for all of our executive officers, including our named executive officers, at its annual December meeting. In so doing, the compensation committee benchmarks the base salaries of our executives with the most recent peer group or other market data gathered by the compensation committee’s compensation consultant as described in more detail below under the headings “—Role of Compensation Consultants” and “—Use of Peer Group and Other Market Data.” Final decisions concerning any salary changes are made at the compensation committee meeting in either December or January. Historically, at the December meeting, our compensation committee also establishes goals for the following year for our annual incentive plan, generally based on and consistent with the annual operating plan typically adopted by the board at that meeting. At its meeting in January of each year, the compensation committee determines the individual payout amounts under our annual incentive plan for the prior year, any base salary changes and historically individual annual performance recognition grants under our equity incentive plan, which grants are paid in a combination of stock options and stock grants. Commencing in 2010, individual annual performance recognition grants paid in a combination of options and stock grants will be made sometime mid-year in order to give the compensation committee another formal opportunity during the year to review executive compensation and recognize executive and other key employee performance.

Role of Compensation Consultants. Our compensation committee has retained the services of Mercer (US) Inc. to provide advice with respect to executive compensation. Mercer’s engagement by the compensation committee includes reviewing and advising on all significant aspects of executive compensation. This includes base salaries, short-term cash incentives, long-term equity incentives and perquisites for executive officers, and cash compensation and long-term equity incentives for non-employee directors. In so doing, at the request of the compensation committee, Mercer recommended a peer group of companies, collected relevant market data from these companies to allow the compensation committee to compare elements of our compensation program to those of our peers, provided information on executive compensation trends and implications for our company and made other recommendations to the compensation committee regarding certain aspects of our executive compensation program. Our management, principally our Senior Vice President, Human Resources and the chair of our compensation committee, regularly consult with representatives of Mercer and generally meet with Mercer representatives prior to each compensation committee meeting. A representative of Mercer is invited on a regular basis to attend, and usually attends, meetings of our compensation committee.

In making its final decision regarding the form and amount of compensation to be paid to our executives, our compensation committee considers the information gathered by and recommendations of Mercer. The compensation committee values especially Mercer’s benchmarking information and input regarding best practices and trends in executive compensation matters.

Use of Peer Group and Other Market Data. To help determine the appropriate levels of compensation for certain elements of our executive compensation program, our compensation committee annually reviews the compensation levels of our named executive officers and other executives against the compensation levels of comparable positions with companies similar to ev3 in terms of products, operations and revenues. The elements of our executive compensation program to which the compensation committee “benchmarks” or uses to base or justify a compensation decision or to structure a framework for compensating executives include our base salary, short-term cash incentive opportunity and our long-term equity incentives. With respect to other elements of our executive compensation program such as perquisites, severance and change in control arrangements and stock ownership guidelines, our compensation committee “benchmarks” these elements on a periodic or as needed basis and in some cases uses peer group or market data more as a “market check” after determining the compensation on some other basis. For example, some of the perquisites paid to our President and Chief Executive Officer, such as the housing and car allowance and travel reimbursements, were specifically negotiated in connection with us hiring him as an executive and were specifically agreed upon in order to attract him to become our President and Chief Executive Officer and move to our corporate headquarters in Minnesota during the week from his principal residences located in Massachusetts and Florida.

The compensation committee believes that compensation paid by peer group companies is representative of the compensation required to attract, retain and motivate ev3’s executive talent, which is why one of the goals and philosophies of the compensation committee is to target base compensation and total compensation at the 50 ^th to 75 ^th percentile of companies in our peer group, as described in more detail below under the heading “—Market Positioning.” Our compensation committee believes that use of a peer group generally provides more relevant comparisons for purposes of benchmarking than broader survey data since the compensation committee believes that the compensation paid by the peer companies which are in the same business, with similar products and operations, and with revenues in a range similar to those of ev3 is typically more representative than broader survey data.

In May 2008, Mercer worked with our compensation committee to revise our peer group since eight of the 19 companies in the peer group created in August 2007 had been acquired or fell out of the comparative group due to mergers and acquisitions activity. Mercer recommended and our compensation committee approved the use of a revised peer group of 20 companies, 11 of which were in our previous peer group. Companies in the May 2008 peer group were public companies in the health care equipment and supplies business with products and operations similar to those of ev3, and which had annual revenues generally within the range of one-half to two times ev3’s annual net sales. For purposes of compiling the May 2008 peer group, ev3’s then estimated annual net sales were assumed to be approximately $425-430 million based on ev3’s guidance in the beginning of May 2008. ev3’s actual net sales for the year ended December 31, 2008 were $422.1 million. The May 2008 peer group includes the following companies, which had the following respective net sales or revenues for their then most recent 12 months (each in millions):

The May 2008 peer group was used to benchmark base salaries, annual cash incentives and long-term equity incentives for most of our named executive officers for 2009, and provide a market check for our executive perquisites, severance and change in control arrangements and stock ownership guidelines. With respect to the base salary information, the peer group data was aged 3.6 percent, which represented the average 2008 base salary increase for executives in the durable manufacturing industry, to reflect average annual base salary increases and thus presumably more current base salary data.

With respect to one of our named executive officers, Mr. Girin, the data from our May 2008 peer group was not helpful for purposes of benchmarking his compensation prior to his promotion to Executive Vice President and Chief Operating Officer in light of his then dual role as head of both our neurovascular division and our international business. There were no executives of comparable positions to Mr. Girin in the proxy statements of the companies in our peer group. Accordingly, the benchmarking data from Mercer with respect to this executive used alternative survey or other market data. For Mr. Girin, Mercer used market data reflecting compensation levels for positions with levels of responsibilities similar to Mr. Girin’s position (i.e., chief operating officer, head of division, head of business development and head of sales) among French multinationals in the high tech industry. Compensation data for executives of specifically French medical device companies could not be obtained. With respect to the market and survey data not relating to our peer group that was used with respect to Mr. Girin’s compensation, the identities of the individual companies included in the market data and surveys were not provided to the compensation committee, and the compensation committee did not refer to individual compensation information for such companies. Instead, Mercer only referred to the statistical summaries of the compensation information for the companies included in such market data and surveys. For purposes of benchmarking Mr. Girin’s compensation in connection with his promotion to Executive Vice President and Chief Operating Officer, the data from our peer group created in April 2009 and described below was used, which compared Mr. Girin’s compensation to other Executive Vice Presidents and Presidents.

In April 2009, Mercer worked with our compensation committee to revise our peer group since two of the 20 companies in the May 2008 peer group had been acquired or fell out of the comparative group due to mergers and acquisitions activity and an additional two companies were too large for the comparative group. Mercer recommended and our compensation committee approved the use of a revised peer group of 20 companies, 16 of which were in our previous May 2008 peer group. As with the May 2008 peer group, companies in the April 2009 peer group were public companies in the health care equipment and supplies business with products and operations similar to those of ev3, and which had annual revenues generally within the range of one-half to two times ev3’s annual net sales. For purposes of compiling the April 2009 peer group, ev3’s net sales for the then trailing 12 months were used ($408 million). The April 2009 peer group includes the following companies, which had the following respective net sales or revenues for their then most recent 12 months (each in millions):

The April 2009 peer group was used to benchmark base salaries, annual cash incentives and long-term equity incentives for our named executive officers for 2010, and provide a market check for our executive perquisites and executive employment, severance and change in control arrangements. With respect to the base salary information, the peer group data was aged 1.6 percent, which represented the average 2009 base salary increase for executives in the medical equipment and supplies industry, to reflect average annual base salary increases and thus presumably more current base salary data.

In reviewing benchmarking data, our compensation committee recognizes that benchmarking may not always be appropriate as a stand-alone tool for setting compensation due to the aspects of our business and objectives that may be unique to our company. Nevertheless, our compensation committee believes that gathering this information is an important part of its compensation-related decision-making process. The compensation committee believes that compensation paid by peer group companies is representative of the compensation required to attract, retain and motivate ev3’s executive talent. However, where a sufficient basis for comparison does not exist between the peer group or survey data and an executive, the compensation committee gives less weight to the peer group and survey data. For example, relative compensation benchmarking analysis does not consider individual specific performance or experience.

Market Positioning . We target base compensation and total compensation (base compensation, annual cash incentives and the grant value of long-term equity incentives) at the 50 ^th to 75 ^th percentile of companies in our peer group, with the opportunity to earn total compensation above the market median when the performance of our business meets or exceeds our plan targets. We believe that median to above-average positioning attracts and retains the best executive talent in a highly competitive market. At the same time, however, we are cognizant of our cost structure, especially with respect to fixed base compensation. The actual target compensation for each individual executive may be higher or lower than the targeted market position based on individual skills, experience, contribution, performance, internal equity or other factors that the compensation committee may take into account that are relevant to the individual executive. In addition, actual compensation results (e.g., amounts earned and paid each year) may be higher or lower than target based on our corporate and divisional financial and individual performance.

Use of Tally Sheets. Our compensation committee annually reviews all components of our named executive officers’ compensation as presented in tally sheets. The tally sheets provide a comprehensive view of each named executive officer’s compensation, broken down into the following components:

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A summary of annual compensation, including target total cash compensation, the total estimated value of annual long-term incentive awards and the value of benefits and perquisites received by each named executive officer, for the last two years and an estimate for the current year;

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A summary of the vested and unvested values of all outstanding equity awards held by each named executive officer at an assumed stock price; and

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A summary of the change in control and severance benefits potentially payable to each named executive officer in the event of a change in control and under a termination without cause scenario.

The tally sheets provide the compensation committee with context for the decisions it makes in relation to total direct compensation. The tally sheets allow the compensation committee to holistically assess total direct compensation and the relationship of various components of the total compensation program to each other. The tally sheets also enable the compensation committee to determine how much wealth creation opportunity exists through equity-based compensation and how strong the retention power is as a result of unvested value. The tally sheets also may influence the compensation committee’s views on a variety of issues, such as changes to change in control arrangements and employment agreements, special equity grants to promote retention, or changes in long-term equity incentives.

Executive Compensation Components

The principal elements of our executive compensation program for 2009 were:

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base salary;

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short-term cash incentive compensation;

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long-term equity-based incentive compensation, in the form of stock options and restricted stock awards (or units); and

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other compensation arrangements, such as benefits made generally available to our other employees, limited executive benefits and perquisites, and severance and change in control arrangements.

In determining the form of compensation to pay our named executive officers, our compensation committee views these elements of our executive compensation program as related but distinct. Our compensation committee does not believe that significant compensation derived by an executive from one element of our compensation program should necessarily result in a reduction in the amount of compensation the executive receives from other elements. At the same time, our compensation committee does not believe that minimal compensation derived from one element of compensation should necessarily result in an increase in the amount the executive should receive from one or more other elements of compensation. As an example, the compensation committee did not increase substantially executives’ base salaries, short-term cash incentive compensation or long-term equity-based incentive compensation for 2009 so as to compensate for the substantial decrease in executives’ equity-based incentive compensation in 2008 as a result of the significant decrease in the value of our common stock during 2008.

Except as described below, our compensation committee has not adopted any formal or informal policies or guidelines for allocating compensation between long-term and currently paid out compensation, between cash and non-cash compensation, or among different forms of non-cash compensation. However, our compensation committee’s philosophy is to make a greater percentage of an executive’s compensation performance-based, and therefore at risk, as the executive’s position and responsibility increases given the influence more senior level executives generally have on company performance. Thus, individuals with greater roles and responsibilities associated with achieving our company’s objectives should bear a greater proportion of the risk that those goals are not achieved and should receive a greater proportion of the reward if objectives are met or surpassed. For example, this philosophy is illustrated by the higher cash incentive targets and equity-based awards of our President and Chief

Executive Officer, our Executive Vice President and Chief Operating Officer and our other Executive Vice President as compared to other executives.

Total Compensation Mix and Pay for Performance

The table below illustrates how total compensation for our named executive officers for 2009 was allocated between performance and non-performance based components, how performance based compensation is allocated between short-term and long-term components and how total compensation is allocated between cash and equity components.

		Total Compensation Mix
		(base salary, short-term cash incentives, long-term
		equity incentives and executive benefits and perquisites)
		% of Total								% of Performance Based								% of Total
		Compensation that is:								Total Compensation that is:								Compensation that is:
																						Equity
		Performance Based (1)				Fixed (2)				Annual (3)				Long-Term (4)				Cash Based (5)				Based (6)
Robert J. Palmisano			70	%			30	%			35	%			65	%			55	%			45	%
Shawn McCormick			77	%			23	%			38	%			62	%			52	%			48	%
Patrick D. Spangler			0	%			100	%			N/A				N/A				100	%			0	%
Pascal E.R. Girin			50	%			50	%			42	%			58	%			71	%			29	%
Stacy Enxing Seng			77	%			23	%			19	%			81	%			38	%			62	%
Brett A. Wall			73	%			27	%			20	%			80	%			41	%			59	%

Consistent with the philosophy of our executive compensation program, the majority of compensation for 2009 paid to our named executive officers other that Patrick D. Spangler, our former Senior Vice President and Chief Financial Officer, was performance-based. As a performance driven culture we favor having a significant component of compensation be variable and tied to results and achievement over solely fixed compensation. To align the interests of our named executive officers with the interests of our stockholders, a substantial majority of the performance-based compensation paid to our named executive officers in 2009 was in the form of long-term equity incentives and a significant part of the total compensation paid to our named executive officers was equity based. The compensation paid in 2009 to Pascal E.R. Girin, our Executive Vice President and Chief Operating Officer, included a larger cash-based element and smaller performance-based element than the other named executive officers because of the mobility premium payments under French tax laws relating to travel by Mr. Girin outside of France prior to his relocation from Paris, France to Irvine, California and the secondment benefits we agreed to provide Mr. Girin in order to induce him to relocate, which are described in more detail under the headings “– Executive Benefits and Perquisites and All Other Compensation” and “Executive Compensation—Summary of Cash and Other Compensation—Employment Agreement—Pascal E.R. Girin.” Because Mr. Spangler resigned in January 2009, he did not receive a short-term cash incentive payment or any long-term equity incentive grants, but he was paid non-performance based severance benefits, which increased his non-performance based and cash-based compensation relative to our other executives.

Based on compensation data gathered by Mercer in October 2009, which used our April 2009 peer group, Mercer concluded that our pay mix is reasonable compared to market practices. According to the Mercer

October 2009 data, the majority of our executive compensation is delivered through short-term and long-term incentives. Target total cash compensation (base salary plus target annual bonus) for 2009 was closer to the 75 ^th percentile than the market median due primarily to higher than market short-term incentive targets. Target total direct compensation (target total cash compensation plus target long-term incentive) was in line with the market median for most executives, other than Mr. Girin, which was at the 75 ^th percentile. Actual total direct compensation (which used short-term cash incentive data from 2008) was slightly below the market median due primarily to actual long-term incentive grants in 2009 being substantially below the market in large part due to the dilution constraints contained in our long-term equity incentive grant guidelines. Mercer also concluded that the relative total compensation levels of Robert J. Palmisano, our President and Chief Executive Officer, which included only one year of data since he was hired in April 2008, were well aligned with our company’s relative performance.

Base Salary

Overview . We provide a base salary for our named executive officers, which, unlike some of the other elements of our executive compensation program, is not subject to company or individual performance risk. We recognize the need for most executives to receive at least a portion of their total compensation in the form of a guaranteed base salary that is paid in cash regularly throughout the year.

Setting Initial Salaries for New Executives . We initially fix base salaries for our executives at a level we believe enables us to hire and retain them in a competitive environment and to reward satisfactory individual performance and a satisfactory level of contribution to our overall business objectives. During 2009, two of our named executive officers, Mr. McCormick and Mr. Wall, were hired, or in the case of Mr. Wall, promoted, as new executive officers of ev3.

In January 2009, we hired Mr. McCormick as our new Senior Vice President and Chief Financial Officer replacing Mr. Spangler who resigned from that position. In establishing Mr. McCormick’s base salary at $350,000, our compensation committee considered Mr. McCormick’s prior financial and other experience, including in particular his corporate development experience; his success in serving in those positions; his most recent compensation at his prior employer and the base salaries of chief financial officers of companies in our May 2008 peer group. Based on salary data gathered by Mercer in December 2008, Mr. McCormick’s base salary of $350,000 was at the 75 ^th percentile of base salaries for chief financial officers of companies in our peer group. Based on salary data gathered by Mercer in October 2009, Mr. McCormick’s base salary of $350,000 was slightly above the 50 ^th percentile of base salaries for chief financial officers of companies in our April 2009 peer group. Consistent with our compensation objectives, the compensation committee believed that Mr. McCormick was important to the success of our company and the creation of value for our stockholders in light of not only his strong financial background but also his extensive corporate development background and that paying Mr. McCormick a base salary at the 75 ^th percentile was necessary to attract Mr. McCormick to ev3, especially in light of his base salary at his prior employer.

In October 2009, we promoted Mr. Wall, who was not previously an executive officer of ev3 but served as Vice President, Sales and Marketing for ev3 Neurovascular, to Senior Vice President and President, International. In establishing Mr. Wall’s base salary at $300,000, our compensation committee considered Mr. Wall’s then current base salary, his experience serving in other positions within the company, his success in serving in those positions, the base salaries of other similar executives of companies in our May 2008 peer group and Mr. Wall’s lack of experience serving as a head of a business unit. Based on salary data gathered by Mercer in December 2008 and again in October 2009, Mr. Wall’s base salary of $300,000 was below the 25 ^th percentile of base salaries for divisional presidents of companies in our peer group. The compensation committee believed it was appropriate to pay Mr. Wall an initial base salary below the 25 ^th percentile for several reasons: (1) Mr. Wall had not previously served as an executive

officer of ev3 and thus his previous base salary was lower than other similar executives who had served in their positions for a longer period of time; (2) Mr. Wall had not served in a similar position with similar responsibilities at either ev3 or any other employer and thus did not have the experience level of our other two divisional presidents or other similar executives of companies in our peer group; and (3) Mr. Wall would be responsible for a smaller business from an operational standpoint, unlike our other two divisional presidents who were responsible for larger businesses in terms of overall operations.

Salary Increases in Connection with Promotions . We typically increase the base salaries of our named executive officers in connection with promotions to compensate our executives for their assumption of increased roles and responsibilities and to bring their base compensation closer to those for executives in comparable positions at similar companies.

In connection with her promotion to Executive Vice President and President, U.S. Peripheral Vascular in December 2008, Ms. Enxing Seng received a 10 percent increase in her base salary to $356,000. The amount of this increase was intended to compensate Ms. Enxing Seng for her increased responsibilities and to bring her base compensation more in line with executives in comparable positions at similar companies. Based on salary data gathered by Mercer in December 2008 and again in October 2009, Ms. Enxing Seng’s increased base salary after her December 2008 promotion was slightly above the 50 ^th percentile of base salaries for executives in comparable positions with companies in our peer group.

In July 2009, at our request, Mr. Girin agreed to relocate from our Paris, France to our Irvine, California location, and in October 2009, Mr. Girin was promoted to Executive Vice President and Chief Operating Officer effective January 1, 2010. From July 2008 to October 2009, Mr. Girin’s base compensation consisted of a base salary of 259,113 Euro and up to an additional 99,672 Euro paid in “mobility premium” or “expatriation premium” payments. Such mobility premium payments were made to Mr. Girin under French tax law based on the number of days which he worked outside of France on behalf of our company. Because such payments were not subject to company or individual performance risk, we considered such payments as a form of “base compensation” for Mr. Girin. Commencing in October 2009 as a result of his relocation to Irvine, California and status as a U.S. taxpayer, we began to pay Mr. Girin a base salary paid in U.S. dollars and no additional mobility premium payments. Based on the exchange rate of one Euro to 1.5 U.S. dollars, Mr. Girin’s base salary was fixed at $538,178. Based on the market data gathered by Mercer in July 2008 and again in December 2008 reflecting compensation levels for positions with levels of responsibilities similar to Mr. Girin’s position (i.e., chief operating officer, head of division, head of business development and head of sales) among French multinationals in the high tech industry, Mr. Girin’s previous base compensation of 358,785 Euro was above the 50 ^th percentile but below the 75 ^th percentile of base compensation for French multinational executives in comparable positions. Based on the salary data gathered by Mercer in October 2009, which benchmarked Mr. Girin’s base salary (as calculated using an exchange rate of one Euro to 1.30852 U.S. dollars) against base salaries for executives in comparable positions (prior to Mr. Girin’s promotion to Chief Operating Officer) with companies in our peer group, Mr. Girin’s base salary was above the 75 ^th percentile. In light of such market data and the amount of Mr. Girin’s base salary in U.S. dollars of $538,178 relative to the base salary of our President and Chief Executive Officer of $600,000, the compensation committee did not further increase Mr. Girin’s base salary in connection with his promotion to Chief Operating Officer effective in January 2010.

Annual Salary Increases . We typically increase the base salaries of our named executive officers in the beginning of each year following the completion of our prior fiscal year and individual performance reviews in an amount equal to an approximate cost of living adjustment. We do so to recognize annual increases in the cost of living and to ensure that our base salaries remain market competitive. We refer to our typical annual base salary increases as “merit increases.” In addition, we may make additional upward adjustments to a particular executive’s base salary to compensate an executive for assuming

increased roles and responsibilities, to reward an executive for superior individual performance, to retain an executive at risk of recruitment by other companies, and/or to bring an executive’s base salary closer to the 50 ^th to 75 ^th percentile of companies in our peer group.

In lieu of merit increases for our then executive officers for 2009, the compensation committee decided to grant long-term equity incentives to such executives in an amount by which the executive’s base salary would have increased. The compensation committee decided to do this upon recommendation of our President and Chief Executive Officer for a few reasons. First, based on salary data gathered by Mercer in December 2008, the base salaries of all of our executive officers were at or slightly above the 50 ^th percentile of base salaries for executives in comparable positions with companies in our peer group or, in the case of Mr. Girin, companies in the relevant survey or market data. Second, we did not desire to raise our executives’ base salaries at a time when the base salaries of executives of other public companies were being held at the same rate or even decreased in light of the then economic recession. Third, by granting long-term equity incentives in lieu of base salary merit increases, we increased the percentages of the executives’ long-term incentives, which in the case of several of our executives, were below the market median of the comparative data. The additional long-term equity incentives, however, were not granted to Mr. McCormick in light of his then recent hire date or Ms. Enxing Seng in light of a base salary increase she received in December 2008 in connection with her then promotion. Mr. Wall, who was not an executive officer of ev3 at that time in February 2009, received a merit increase of 3.575 percent for 2009, which was representative of the average merit increase received by other ev3 non-executive employees for 2009.

The number of long-term equity incentives granted in lieu of merit increases for 2009 was determined based on the dollar amount of the merit increase. Accordingly, on February 12, 2009, in connection with their individual annual performance recognition grants, the following named executive officers received the following additional equity grants in lieu of the following merit increases. All of these stock options and stock grants vest according to ev3’s standard vesting for individual annual performance recognition grants.

Total Grant Date

% of Base

Dollar Amount of

Fair Value of

Salary Merit

Merit Increase for

Shares Underlying

Shares Underlying

Long-Term Equity

Increase for 2009

2009

Stock Option

Stock Grant

Incentives

Robert J. Palmisano

3.500

%

$

21,000

4,173

1,669

$

21,000

Shawn McCormick

N/A

N/A

N/A

N/A

N/A

Patrick D. Spangler

N/A

N/A

N/A

N/A

N/A

Pascal E.R. Girin (1)

3.750

%

18,005

3,578

1,431

18,005

Stacy Enxing Seng

N/A

N/A

N/A

N/A

N/A

Brett A. Wall

3.575

%

9,653

N/A

N/A

N/A

In December 2009, the compensation committee decided to permit our executive officers to elect to receive any 2010 merit increase in either the form of an increased base salary or in the form of long-term equity incentives divided evenly between stock options and restricted stock grants. The compensation committee decided to do this upon recommendation of our President and Chief Executive Officer for some of the same reasons it decided to do so in 2009. First, the grant of long-term equity incentives in lieu of base salary merit increases would increase the percentages of the executives’ long-term incentives, which in the case of several of our executives, were below the market median of the comparative data, and would assist some of our executives in complying or getting closer to complying with our recently established stock ownership guidelines. Second, based on salary data gathered by Mercer in October

2009, the base salaries of most of our executive officers remained at or slightly above the 50 ^th percentile, and in the case of Mr. Palmisano and Mr. Girin, closer to or above the 75 ^th percentile, of base salaries for executives in comparable positions with companies in our peer group.

All of our executive officers eligible to receive merit increases elected to receive their merit increases in the form of long-term equity incentives. The number of long-term equity incentives granted was determined based on the dollar amount of the merit increase as adjusted upward by a factor of 2.5 to reflect the lost opportunity value associated with a lower base salary. The factor of 2.5 was determined by the compensation committee after consultation with Mercer and taking into account the following considerations: (1) the termination risk since executives whose employment was involuntarily terminated prior to vesting would receive no replacement for the lost merit increase; (2) the reduced total cash opportunity since not only would an executive’s 2010 compensation be lower in terms of base salary, annual incentive opportunity (which is expressed as a percentage of base salary) and long-term equity incentives (which as described below is determined pursuant to ev3’s long-term equity incentive guidelines which base long-term equity incentives on an executive’s percentage of base salary), but the executive’s future compensation would also be lower since the executive’s future base salary and accordingly, annual incentive opportunity and long-term equity incentives, would be lower, thereby having a compounding effect; and (3) the time value of money and the fact that as described below the long-term equity incentives would vest and be realized only after the completion of the full year of vesting as opposed to the merit increase which would be realized during the calendar year. As opposed to the typical four-year vesting on the long-term equity incentives, the compensation committee decided to provide for one-year cliff vesting in recognition of the fact that the long-term equity incentives were being granted in lieu of an annual base salary increase and to reduce the effect of the termination risk and time value of money factors described above.

Accordingly, on January 28, 2010, the following named executive officers received the following equity grants in lieu of the following merit increases. All of the stock options and stock grants will vest in full on January 28, 2011. Mr. Girin was not eligible to receive a merit increase in light of the recent determination of his base salary in connection with his promotion to Chief Operating Officer.

		% of Base				Dollar Amount of												Value of Long-Term
		Salary Merit				Merit Increase for				Shares Underlying				Shares Underlying				Equity
		Increase for 2010				2010				Stock Option				Stock Grant				Incentives (1)
Robert J. Palmisano			4.00	%		$	24,000				5,102				2,041			$	60,000
Shawn McCormick			3.25	%			11,375				2,418				967				28,438
Patrick D. Spangler			N/A				N/A				N/A				N/A				N/A
Pascal E.R. Girin			N/A				N/A				N/A				N/A				N/A
Stacy Enxing Seng			3.50	%			12,460				2,649				1,060				31,150
Brett A. Wall			3.50	%			10,500				2,232				893				26,250

Consistent with our objectives to reinforce our corporate mission, vision and values and motivate our executives to help fulfill our corporate mission and vision while incorporating our shared values, the percentage merit increase for each named executive officer for 2009 and 2010, other than Mr. Palmisano, was determined based on each executive’s overall annual performance review achievement rating (as opposed to achievement of the executive’s MBOs). As discussed above under the heading “Setting Executive Compensation—Role of Management,” the annual performance review used to determine an executive’s annual merit increase evaluates an executive’s base business job performance and

performance specifically in furtherance of ev3’s mission, values and vision and its quality policy. The annual performance review ratings are on a scale of 1 to 4 and the achievement levels are as follows:

Rating		Achievement Level
4 = Exceeded		Executive’s performance is exceptional and is a role model for the assigned section
3 = Achieved		Executive consistently performs at the expected level of contribution. Employee has a solid skill foundation that will allow the executive to succeed
2 = Partially Achieved		Executive is progressing toward expected performance
1 = Not Achieved		Executive’s overall performance does not meet the expected level of contribution

Therefore, as an example, an annual performance review rating of 3.5 for 2009 and 2010 yielded a 3.5 percent merit increase in an executive’s base salary. A performance review rating of 2.0 and below resulted in no merit increase. As reflected in one of the tables above, the annual performance review ratings for our named executive officers for 2008 ranged from 3.25 percent to 3.50 percent, which based on the formula for merit increases for 2009 happened to correspond on a one-for-one basis to the range of their merit increases, and the annual performance review ratings for our named executive officers for 2009 ranged from 3.25 percent to 4.00 percent, which based on the formula for merit increases for 2010 also corresponded on a one-for-one basis to the range of their merit increases.

The percentage merit increase for Mr. Palmisano for 2009 and 2010 was determined based on his performance for the previous year. In evaluating the performance of our President and Chief Executive Officer and the amount of his percentage merit increase for 2009 and 2010, the compensation committee reviewed Mr. Palmisano’s self-review, discussed his performance amongst its members, sought the input of other members of our board of directors, as well as other members of our executive team. In assessing the performance of our President and Chief Executive Officer, the compensation committee evaluated primarily our corporate financial performance, our progress towards fulfilling our business initiatives and the President and Chief Executive Officer’s leadership. Mr. Palmisano’s merit increase for 2009 was 3.5 percent or $21,000. In setting this amount, the compensation committee considered the average percentage merit increase for 2009 which was 3.5 percent, Mr. Palmisano’s then current salary which was above the market median and Mr. Palmisano’s ability during 2008 to re-orient the organization toward a goal of sustained profitability and the establishment and implementation of a high performance management system to assist the organization in the achievement of such goal. Mr. Palmisano’s merit increase for 2010 was 4.0 percent or $24,000. In setting this amount, the compensation committee considered in particular Mr. Palmisano’s excellence in guiding the organization in 2009 resulting in a strong performance in many areas such as financial results, leadership development, delighting the customer and building a strategic framework for the future.

Short-Term Cash Incentive Compensation

Generally . Under the terms of the ev3 Inc. 2009 Employee Performance Incentive Compensation Plan, our named executive officers, as well as other executives and certain employees of our company, earned annual cash bonus payments for 2009 based on financial performance objectives and, to a lesser extent, individual performance objectives. The primary purpose of the plan was to align our short-term incentive compensation program with our financial and operating performance goals and objectives. The plan was designed to provide a direct financial incentive to our executives and certain other employees for the achievement of specific annual financial performance objectives and individual performance objectives.

Each of our named executive officers had an annual incentive target under the plan, expressed as a percentage of his or her base salary, although Mr. Girin’s incentive target was initially based on a percentage of his base salary and mobility premium payments. The level of each incentive target was based on the individual’s level of responsibility within the company. Each executive’s bonus payment

under the plan was determined by multiplying the executive’s target bonus amount for the year (the executive’s incentive target times his or her base salary) by a payout percentage determined based primarily on the achievement of financial performance objectives, and in the case of all of our named executive officers, other than our President and Chief Executive Officer, certain individual performance objectives or MBOs. The maximum payout percentage was 150 percent and the minimum threshold payout percentage was 50 percent, with no payout for performance below the minimum threshold payout percentage of 50 percent. All individual performance objectives, or MBOs, were rated (on a scale from one to five with a rating of three representing target or “on plan” performance) and then weighted based on relative importance in order to obtain a weighted performance rating for each objective. All weighted performance ratings were added together to obtain an overall rating for each executive. An aggregate average for all of the objectives must have met at least a 1.5 to meet the minimum 50 percent payout threshold. Increments between rating levels were interpolated on a linear basis to determine an actual incentive percentage. For example, an overall rating of 3.5 equaled a 112.5 percent incentive percentage. For each executive, the actual incentive percentage was multiplied by the target bonus percentage to calculate the award. For example, a 112.5 percent actual incentive percentage times 50 percent target bonus equaled an award of 56.3 percent of base salary.

2009 Incentive Targets . The incentive target for each named executive officer under the plan for 2009 is as set forth in the table below, as well as the threshold, target and maximum annual bonus opportunity.

		Incentive Target				Annual Bonus Opportunity for Each Executive
Named Executive Officer		(% of Base Salary)				Threshold (50%)				Target (100%)				Maximum (150%)
Robert J. Palmisano			100	%		$	300,000			$	600,000			$	900,000
Shawn McCormick			60	%			99,534				199,068				298,602
Patrick D. Spangler			N/A				—				—				—
Pascal E.R. Girin (1)			65	%			174,908				349,816				524,724
Stacy Enxing Seng			65	%			115,700				231,400				347,100
Brett A. Wall			40%/60	%			66,987				133,973				200,960

The threshold, target and maximum annual bonus opportunity for Mr. McCormick has been prorated to reflect his January 19, 2009 start date. Mr. Spangler did not have an incentive target under the plan since he had departed prior to the adoption of the plan. The threshold, target and maximum annual bonus opportunity for Mr. Wall has been prorated to reflect his increased incentive target to 60 percent and increased base salary received in connection with his promotion to Senior Vice President and President, International on October 5, 2009. His previous incentive target under the plan was 40 percent.

Consistent with our philosophy that executives with greater roles and responsibilities associated with achieving our company’s performance objectives should bear a greater proportion of the risk that those objectives are not achieved and should receive a greater proportion of the reward if the objectives are met or surpassed, Mr. Palmisano, our President and Chief Executive Officer, had the highest incentive target and our executives in charge of our two business segments during 2009 had the next highest incentive targets. The incentive targets of most of our executives were at or slightly above the 50 ^th percentile compared to the incentive targets of executives with comparable positions at companies in our peer group. The incentive target for Mr. Palmisano, our President and Chief Executive Officer, was at the 75 ^th percentile. This is consistent with our philosophy that we target base compensation and total compensation at the 50 ^th to 75 ^th percentile of companies in our peer group, with the opportunity to earn total compensation above the market median when the performance of our business meets or exceeds our plan targets. We believed an incentive target for Mr. Palmisano at the high end of our targeted range was appropriate in light of: (1) Mr. Palmisano’s position as chief executive officer of our company; (2) our

belief that executives, especially those with the most responsibility, should have the opportunity to earn total compensation above the market median when the performance of our business meets or exceeds our plan targets; and (3) Mr. Palmisano’s extensive experience as a seasoned chief executive officer.

2009 Financial Performance Objectives . The financial performance objectives under the plan for 2009 were based on our revenue and operating profit for 2009 and days sales outstanding and inventory days on hand as of December 31, 2009, each as compared with target amounts. Each of the financial performance objectives were assigned the following weightings:

Financial Performance Objectives		Weighting
Revenue			50	%
Operating Profit			30	%
Days Sales Outstanding (DSO)			10	%
Inventory Days on Hand (DOH)			10	%

As with our prior annual incentive plans, we placed primary emphasis on our revenue objectives and a secondary but also important emphasis on our profitability objectives. Our revenue objectives are intended to encourage our executives to focus on bringing new products to market, gaining market share and expanding the existing markets that we serve. Our profitability objectives are intended to encourage our executives to focus not only on increasing revenue, but also on increasing our efficiency, optimizing our cost structure and improving our margins. During 2009, we also had DSO and DOH objectives to encourage our management and employees to focus on working capital and inventory management. We assigned these two financial performance objectives less weight, however, in light of our primary focus on increasing revenue and obtaining sustained profitability.

The table below shows the threshold, target and maximum payout percentages established for each of the four different financial performance objectives, on an overall corporate basis, and the relationship of such financial objectives to our 2009 operating plan. The shaded portion of the table shows our actual results for each of the four different corporate financial performance objectives for 2009, the resulting incentive target percentage and the relationship of such actual results to our 2009 operating plan.

Revenue (50% Weighting)

						% Plan				Incentive %
Threshold		$400.0 million					92.6	%			50.0	%
Target		$431.9 million					100.0	%			100.0	%
Maximum		$475.1 million					110.0	%			150.0	%
Actual		$431.7 million					100.0	%			99.8	%

Operating Profit (30% Weighting)

						% Plan				Incentive %
Threshold		$17.6 million					80.0	%			50.0	%
Target		$22.0 million					100.0	%			100.0	%
Maximum		$28.6 million					130.0	%			150.0	%
Actual		$31.1 million					141.4	%			150.0	%

Days Sales Outstanding (10% Weighting)

						% Plan				Incentive %
Threshold			75				80.0	%			50.0	%
Target			60				100.0	%			100.0	%
Maximum			50				120.0	%			150.0	%
Actual			62				96.8	%			91.9	%

Inventory Days on Hand (10% Weighting)

						% Plan				Incentive %
Threshold			253				80.0	%			50.0	%
Target			202				100.0	%			100.0	%
Maximum			168				120.0	%			150.0	%
Actual			193				104.7	%			111.7	%

The overall corporate payout percentage for 2009 was 115.2 percent. The payout percentages for the three specific businesses were derived from the overall corporate numbers but reflected certain internal allocations and were as follows: worldwide neurovascular (127.4 percent); U.S. peripheral vascular (94.3 percent) and international (104.3 percent).

Under the terms of the plan, the compensation committee may revise one or more of the financial performance measures or otherwise make adjustments to payouts under the plan to take into account any acquisition or disposition by our company not planned for at the time the financial measures were established, any change in accounting principles or standards, or any extraordinary or non-recurring event or item so as to equitably reflect such event or events and such that the criteria for evaluating whether a financial measure has been achieved will be substantially the same following such event as prior to such event. In determining the achievement level of our financial performance objectives for 2009, in accordance with the terms of the plan, we excluded the financial results of Chestnut Medical Technologies, Inc., which we acquired in June 2009. In addition, we excluded any impact from foreign currency exchange rates. We did not make any other adjustments to the financial performance objectives.

2009 Individual Performance Objectives . In order to foster cooperation and communication among our executives and among their respective teams, our compensation committee places primary emphasis on overall corporate and business financial performance as measured against objectives approved by our compensation committee rather than individual performance. Nonetheless, in the case of all of our named executive officers, other than our President and Chief Executive Officer, individual performance, and more specifically, the attainment of certain MBOs also affected the executives’ actual bonus payouts under the 2009 plan.

MBOs are generally three to five written, measurable and specific objectives agreed to and approved by the executive and the President and Chief Executive Officer and the compensation committee. All MBOs were weighted by agreement, with areas of critical importance or critical focus weighted most heavily. As described above, each of our named executive officers participated in a review process during the beginning of 2010 and in connection with such review was rated (on a scale from one to five with a rating of three representing target or “on plan” performance) depending upon whether, and often times, when, their MBOs for 2009 were achieved. These ratings were then used to determine the portion of the final bonus payout attributable to MBOs.

The following table indicates for each named executive officer the percentage of which MBOs determined each executive’s final bonus payout for 2009 and the final MBO rating used in determining each executive’s final bonus payout for 2009:

Named Executive Officer		MBOs Component				Final MBO Rating
Robert J. Palmisano			0%				N/A
Shawn McCormick			10%				3.6
Patrick D. Spangler			N/A				N/A
Pascal E.R. Girin			25%				3.6
Stacy Enxing Seng			25%				3.0
Brett A. Wall			25%				4.0

The MBOs for each executive for 2009 related primarily to the continued implementation of the high performance management system that we established in mid-2008 that focuses executives’ efforts on our vital few programs and action items and objectives to work toward fulfilling our corporate mission and vision. Mr. McCormick’s MBOs related to the accuracy and timing of our financial reports, improvements in communication within the finance and information technology groups, improvements in financial forecasts, completion of a profit and loss benchmarking analysis and development and implementation of a pricing process. Mr. Girin’s MBOs related to the achievement of the revenue objectives for the U.S. neurovascular and international businesses, the commercial launch of certain new products and product improvements, the acquisition or internal development of a flow diversion product and the achievement of certain regulatory milestones associated with our neuro stent. Ms. Enxing Seng’s MBOs related to achievement of the revenue, operating profit, DSO and DOH objectives for the U.S. peripheral vascular business, the number of physicians consistently using our plaque excision products, progress in our DEFINITIVE and DURABILITY clinical trials, the commercial launch of certain new products and the operating performance of the U.S. peripheral vascular senior leadership team. Mr. Wall’s MBOs related to the achievement of the overall corporate and worldwide neurovascular revenue objectives, reorganization of the neurovascular sales and marketing team, the commercial launch of certain new products and product improvements and the achievement of certain regulatory milestones associated with our neuro stent. Mr. Palmisano did not have any MBOs because the compensation committee determined that any annual bonus to be paid to Mr. Palmisano for 2009 should be based solely on the achievement of our 2009 overall corporate financial performance objectives.

2009 Bonus Payouts and Analysis . Bonus payouts made to our named executive officers under our annual incentive plan for 2009 were as follows:

		Dollar Amount of				Final Incentive Percentage
Named Executive Officer		2009 Annual Bonus Payout				or Percent of Target
Robert J. Palmisano (1)		$	691,200				115.2	%
Shawn McCormick			229,377				115.2	%
Patrick D. Spangler			N/A				N/A
Pascal E.R. Girin (2)			458,958				121.2	%
Stacy Enxing Seng			233,627				101.0	%
Brett A. Wall			162,061				121.0	%

The bonus payouts to Mr. Palmisano and Mr. McCormick for financial performance were based solely on overall corporate financial performance since each has responsibilities across all of our businesses. The bonus payout to Mr. Girin for financial performance was based on overall corporate performance and, to a larger extent, the financial performance of our worldwide neurovascular business, the business that he led

during 2009. The bonus payout to Ms. Enxing Seng for financial performance was based on overall corporate financial performance and, to a larger extent, the financial performance of our U.S. peripheral vascular business, which she led during 2009. The bonus payout to Mr. Wall for financial performance was based on overall corporate financial performance and, to a larger extent, the financial performance of our worldwide neurovascular business, and to a lesser extent, the financial performance of our international business, both for which he was, to some extent, responsible during 2009.

The following table summarizes the various components used in determining the final incentive percentage for each named executive officer:

		MBO %/
Named		MBO Rating/				US PV%/				Worldwide Neuro %/				International %/				Overall Corporate %/				Final Incentive
Executive Officer		% Payout				% Payout				% Payout				% Payout				% Payout				% Payout
Robert J. Palmisano			0.0	%			N/A				N/A				N/A				100.0	%			115.2	%
																			115.2	%
Shawn McCormick			10.0	%			N/A				N/A				N/A				90.0	%			115.2	%
			3.60/115.0	%															115.2	%
Patrick D. Spangler			N/A				N/A				N/A				N/A				N/A				N/A
Pascal E.R. Girin			25.0	%			N/A				50.0	%			N/A				25.0	%			121.2	% (1)
			3.60/115.0	%							127.4	%							115.2	%
Stacy Enxing Seng			25.0	%			50.0	%			N/A				N/A				25.0	%			101.0	%
			3.00/100.0	%			94.3	%											115.2	%
Brett A. Wall			25.0	%			N/A				38.0	%			12.0	%			25.0	%			121.0	%
			4.00/125.0	%							127.4	%			104.3	%			115.2	%

Under the terms of the plan, the compensation committee may modify an award by increasing or decreasing it by up to 20 percent if in its subjective judgment a participant has not been equitably treated by the mechanics of the incentive plan. Our compensation committee did not exercise any discretion in either increasing or decreasing the bonus payouts to any of our named executive officers, except in the case of Mr. Girin, who received an 8.2 percent increase in the final bonus payout, which represented a 10.0 percent increase in the amount of his final incentive percent payout. The compensation committee believed Mr. Girin deserved an upward adjustment to his final bonus payout to reward him for the outstanding performance of the worldwide neurovascular business, which exceeded each of its revenue, operating profit, DSO and DOH target objectives and in the aggregate by over 27 percent. The compensation committee also exercised its discretion and granted Mr. Palmisano $100,000 in long-term equity incentives, consisting of an option to purchase 8,503 shares and a stock grant for 3,401 shares. In so doing, the compensation committee reasoned that Mr. Palmisano was overall responsible for achievement of the corporate objectives and deserved an annual bonus in excess of his 115.2 percent payout. The compensation committee decided to grant Mr. Palmisano long-term equity incentives in lieu of an upward adjustment to his annual bonus in order to increase Mr. Palmisano’s equity in our company in furtherance of our stock ownership guidelines.

In terms of the dollar amounts of the 2009 annual bonus payouts, because the President and Chief Executive Officer and the two Executive Vice Presidents have higher incentive targets, their bonus payouts were higher than other executives. In terms of the actual incentive percentages, because the worldwide neurovascular business performed well as compared to our operating plan, executives with payouts tied more directly to the performance of this business, such as Mr. Girin and Mr. Wall, received higher actual incentive percentages used to calculate their bonus payouts.

2010 Short-Term Incentive Compensation Plan; Incentive Targets and Financial Performance Goals . In December 2009, the board of directors, upon recommendation of the compensation committee, approved the ev3 Inc. Employee Performance Compensation Plan for 2010.

The incentive target under the plan for 2010 for each named executive officer is as set forth in the table below, as well as the threshold, target and maximum annual bonus opportunity.

		Incentive Target				Annual Bonus Opportunity for Each Executive
Named Executive Officer		(% of Base Salary)				Threshold (50%)				Target (100%)				Maximum (150%)
Robert J. Palmisano			100%			$	300,000			$	600,000			$	900,000
Shawn McCormick			60%				105,000				210,000				315,000
Pascal E.R. Girin			75%				201,817				403,634				605,450
Stacy Enxing Seng			65%				115,700				231,400				347,100
Brett A. Wall			60%				90,000				180,000				270,000