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Orthofix International N.V.

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

AND

PROXY STATEMENT

Meeting Date:

             , 2012

at      (local time)

Meeting Place:

Orthofix International N.V.

7 Abraham de Veerstraat

Curaçao

Dear Shareholders:

We will hold the 2012 Annual General Meeting of Shareholders (the “Annual General Meeting”) on             , 2012, at      (local time) at Orthofix’s offices, located at 7 Abraham de Veerstraat, Curaçao.

This booklet includes the notice of Annual General Meeting and the proxy statement.  The proxy statement describes the business that we will conduct at the meeting.

Your vote is important.  Please refer to the proxy card or other voting instructions included with these proxy materials for information on how to vote by proxy or in person.

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NOTICE AND PROXY STATEMENT

for Shareholders of

ORTHOFIX INTERNATIONAL N.V.

7 Abraham de Veerstraat

Curaçao

for

2012 ANNUAL GENERAL MEETING OF SHAREHOLDERS

to be held on             , 2012

This notice and the accompanying proxy statement are being furnished to the shareholders of Orthofix International N.V., a Curaçao company (“Orthofix” or the “Company”), in connection with the upcoming 2012 Annual General Meeting of Shareholders (the “Annual General Meeting”) and the related solicitation of proxies by the Board of Directors of Orthofix (the “Board of Directors” or “Board”) from holders of outstanding shares of common stock, par value $0.10 per share, of Orthofix for use at the Annual General Meeting and at any adjournment thereof.  In this notice and the accompanying proxy statement, all references to “we,” “our” and “us” refer to the Company, except as otherwise provided.

Time, Date and Place of Annual General Meeting

Notice is hereby given that the Annual General Meeting will be held on             , 2012 at     , local time, at Orthofix’s offices, located at 7 Abraham de Veerstraat, Curaçao.

Purpose of the Annual General Meeting

1.           Election of Board of Directors.  Shareholders will be asked to consider, and, if thought fit, approve a resolution to elect the following persons to the Board of Directors:  James F. Gero, Dr. Guy J. Jordan, Michael R. Mainelli, Davey S. Scoon, Robert S. Vaters, Dr. Walter P. von Wartburg and Kenneth R. Weisshaar.  The Board of Directors recommends that shareholders vote FOR each of the foregoing nominees for director.

2.           Approval of Orthofix International N.V. 2012 Long-Term Incentive Plan.  Shareholders will be asked to consider, and, if thought fit, approve the Orthofix International N.V. 2012 Long-Term Incentive Plan.  The Board of Directors recommends that shareholders vote FOR the proposal to approve the Orthofix International N.V. 2012 Long-Term Incentive Plan.

3.           Approval of Financial Statements for the Year Ended December 31, 2011.  Shareholders will be asked to consider, and, if thought fit, approve the balance sheet and income statement at and for the year ended December 31, 2011.  The Board of Directors recommends that shareholders vote FOR the proposal to approve the balance sheet and income statement at and for the year ended December 31, 2011.

4.           Ratification of the Selection of Ernst & Young LLP.  Shareholders will be asked to consider, and, if thought fit, approve a resolution to ratify the selection of Ernst & Young LLP as the independent registered public accounting firm for Orthofix and its subsidiaries for the fiscal year ending December 31, 2012.  The Board of Directors recommends that shareholders vote FOR the proposal to ratify the selection of Ernst & Young LLP as the independent registered public accounting firm.

5.           Advisory and Non-Binding Resolution on Executive Compensation.  Shareholders will be asked to consider, and, if thought fit, approve an advisory and non-binding resolution on executive compensation.  The Board of Directors recommends that shareholders vote FOR the proposal to approve the advisory and non-binding resolution on executive compensation.

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6.           Miscellaneous.  Shareholders will be asked to transact such other business as may come before the Annual General Meeting or any adjournment thereof.

Please read a detailed description of proposals 1 through 5 stated above beginning on page        of the proxy statement.

Shareholders Entitled to Vote

All record holders of shares of Orthofix common stock at the close of business on April 25, 2012 have been sent this notice and will be entitled to vote at the Annual General Meeting.  Each record holder on such date is entitled to cast one vote per share of common stock.

Documents Available for Inspection

A copy of the financial statements for the year ended December 31, 2011 have been filed at the offices of Orthofix at 7 Abraham de Veerstraat, Curaçao and are available for inspection by shareholders until the conclusion of the Annual General Meeting.

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PROXY STATEMENT FOR THE ORTHOFIX INTERNATIONAL N.V.

2012 ANNUAL GENERAL MEETING OF SHAREHOLDERS

THIS PROXY STATEMENT AND THE ENCLOSED PROXY ARE BEING MAILED TO SHAREHOLDERS ON OR ABOUT             , 2012.

ABOUT VOTING

Who can vote?

All record holders of shares of Orthofix common stock at the close of business on April 25, 2012 (the “Record Date”) have been sent this notice and will be entitled to vote at the Annual General Meeting.  Each record holder on such date is entitled to cast one vote per share of common stock.  As of the Record Date, there were                  shares of Orthofix common stock outstanding.

Quorum, vote required

The presence, in person or by proxy, of the holders of fifty percent (50%) of the shares of Orthofix common stock outstanding on the Record Date is required to constitute a quorum at the Annual General Meeting.  An absolute majority of the votes cast will be required in order to approve the proposals before the Annual General Meeting, except that the directors shall be elected by a plurality of the votes cast.  Abstentions and “broker non-votes” are counted as shares that are present and entitled to vote on the proposals for purposes of determining the presence of a quorum, but abstentions and broker non-votes will not have any effect on the outcome of voting on the proposals.  A broker “non-vote” occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner.

Proxies

This proxy statement is being furnished to holders of shares of Orthofix common stock in connection with the solicitation of proxies by and on behalf of the Board of Directors for use at the Annual General Meeting.

All shares of Orthofix common stock that are represented at the Annual General Meeting by properly executed proxies received prior to or at the Annual General Meeting and which are not validly revoked, will be voted at the Annual General Meeting in accordance with the instructions indicated on such proxies.  If no instructions are indicated on a properly executed proxy, such proxy will be voted in favor of each of the proposals.  The Board of Directors does not know of any other matters that are to be presented for consideration at the Annual General Meeting.

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted.  Proxies may be revoked by (1) filing with Orthofix, at or before the taking of the vote at the Annual General Meeting, a written notice of revocation bearing a later date than the proxy, or (2) duly executing a subsequent proxy relating to the same shares of Orthofix common stock and delivering it to Orthofix before the Annual General Meeting.  Attending the Annual General Meeting will not in and of itself constitute the revocation of a proxy.  Any written notice of revocation or subsequent proxy should be sent so as to be delivered to:  Orthofix International N.V., 7 Abraham de Veerstraat, Curaçao, at or before the taking of the vote at the Annual General Meeting.

Voting is confidential

We maintain a policy of keeping all proxies and ballots confidential.

The costs of soliciting these proxies and who will pay them

We will pay all the costs of soliciting these proxies.  Although we are mailing these proxy materials, our directors and employees may also solicit proxies by telephone, fax or other electronic means of communication, or in person.  We will reimburse banks, brokers, nominees and other fiduciaries for the expenses they incur in forwarding the proxy materials to you. Georgeson Inc. is assisting us with the solicitation of proxies for a fee of $9,000 plus out-of-pocket expenses.

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Obtaining an Annual Report on Form 10-K

We have filed our Annual Report on Form 10-K for the year ended December 31, 2011 with the U.S. Securities and Exchange Commission (the “SEC”).  Our Form 10-K is included in our Annual Report that we are sending you with this proxy statement.  Our Form 10-K is also available on our website at www.orthofix.com.  If you would like to receive a separate copy of our Form 10-K, we will send you one without charge.  Please write to:

Orthofix International N.V.

3451 Plano Parkway
Lewisville, TX 75056

Attention:  Mr. Mark Quick,
Director of Investor Relations and Business Development

You may also contact Mr. Quick at (214) 937-2924 or at MarkQuick@orthofix.com.

The voting results

We will publish the voting results from the Annual General Meeting in a Current Report on Form 8-K, which we will file with the SEC after the conclusion of the meeting.  You will also be able to find the Form 8-K on our website at www.orthofix.com.

Whom to call if you have any questions

If you have any questions about the Annual General Meeting, voting or your ownership of Orthofix common stock, please contact Mr. Quick at (214) 937-2924 or at MarkQuick@orthofix.com.  For directions to the meeting please consult the Company’s website at www.orthofix.com/investors/annuals.asp.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on             , 2012.

·                  The 2012 Proxy Statement and the 2011 Annual Report to Shareholders are available at www.orthofix.com/investors/annuals.asp.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS

Who are the principal owners of Orthofix common stock?

The following table shows each person, or group of affiliated persons, who beneficially owned, directly or indirectly, at least 5% of Orthofix common stock as of the Record Date. Our information is based on reports filed with the SEC by each of the firms or individuals listed in the table below. You may obtain these reports from the SEC.

The Percent of Class figures for the common stock are based on shares of our common stock outstanding as of the Record Date. Except as otherwise indicated, each shareholder has sole voting and dispositive power with respect to the shares indicated.

*                             Information will be provided/updated as of the Record Date in the definitive proxy statement.

(1)                      Information obtained from Schedule 13G/A filed with the SEC by Capital Research Global Investors (collectively “Capital Research”) on February 9, 2012. The Schedule 13G/A discloses that Capital Research has sole voting power and sole dispositive power over all of these shares.

(2)                      Information obtained from Schedule 13G/A filed with the SEC by FMR LLC (“FMR”) on April 10, 2012. The Schedule 13G/A discloses that, of these shares, FMR has sole power to vote or direct the vote of 492,956 shares and sole power to dispose or to direct the disposition of all of these shares.

(3)                      Information obtained from a Schedule 13G filed with the SEC by The Vanguard Group, Inc. (“Vanguard”) on February 8, 2012.  The Schedule 13G discloses that Vanguard has sole power to vote or direct the vote of 23,099 shares, sole power to dispose of or to direct the disposition of 926,428 shares, and shared power to dispose or to direct the disposition of 23,099 shares.

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Common stock owned by Orthofix’s directors and executive officers

The following table sets forth the beneficial ownership of our common stock, including stock options currently exercisable and exercisable within 60 days of the Record Date, by each director, each nominee for director, each executive officer listed in the Summary Compensation Table and all directors and executive officers as a group.  The percent of class figure is based on shares of our common stock outstanding as of the Record Date.  All directors and executive officers as a group beneficially owned shares of Orthofix common stock as of such date.  Unless otherwise indicated, the beneficial owners exercise sole voting and/or investment power over their shares.

*                      Information will be provided as of the Record Date in definitive proxy statement.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers and directors, and holders of more than 10% of our common stock (collectively, the “Reporting Persons”) to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock.  Such persons are required by regulations of the SEC to furnish us with copies of all such filings.  Based on our review of these reports from the Reporting Persons, we believe that during the fiscal year ended December 31, 2011 all Section 16(a) filing requirements applicable to the Reporting Persons were complied with.

INFORMATION ABOUT DIRECTORS

The Board of Directors and Committees of the Board

The Board of Directors currently has eight members, though one of our current directors, Alan W. Milinazzo, is retiring from the Board effective at the Annual General Meeting, and the Board has resolved to set the size of the Board at seven members effective at the Annual General Meeting.  The directors are elected at each Annual General Meeting by a plurality of the votes cast, in person or by proxy by the shareholders.  Directors are elected for one-year terms.  Because we are required by Curaçao law to hold the Annual General Meeting in Curaçao, we do not have a policy regarding director attendance at the Annual General Meeting of Shareholders.  No directors were present at our 2011 Annual General Meeting of Shareholders.  Our Articles of Association currently provide that the Board shall consist of not less than six and no more than fifteen directors, the exact number to be determined by resolution of the Board.

Our Board usually meets at least four times per year in person at regularly scheduled two-day meetings, but will meet more often in person if necessary.  In addition, the Board typically holds several additional meetings each year by telephone conference as events require.  The Board met nine times during 2011, four of which meetings were two-day in-person meetings and five of which were telephonic meetings.  The Board has three standing committees:  the Audit Committee, the Compensation Committee and the Nominating and Governance Committee.  Each Director serving during 2011 attended more than 75% of the aggregate of all meetings held during the year by the Board of Directors and the Committees on which he or she served.

Of the seven directors standing for election at the Annual General Meeting, the Board has determined that Messrs. Gero, Mainelli, Scoon and Weisshaar, and Drs. Jordan and von Wartburg are independent under the current listing standards of the Nasdaq Global Select Market.  A list of our director nominees and background information for each of them is presented in the section “Proposal 1:  Election of Directors,” beginning on page       .

Board Leadership Structure

Mr. Gero, who is an independent director, serves as the Chairman of the Board.  Mr. Vaters, who is also a director, serves as the Company’s President and Chief Executive Officer.  The Board believes that the separation of these two critical roles best serves our Company at this time because it allows our President and Chief Executive Officer to focus on providing leadership over our day-to-day operations while our independent Chairman focuses on leadership of the Board.

The Audit Committee

Our Audit Committee is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended.  The committee oversees the Company’s financial reporting process on behalf of the Board.  The committee is responsible for the selection, compensation, and oversight of the Company’s independent registered public accounting firm.  The committee reviews matters relating to the Company’s internal controls, as well as other matters warranting committee attention.  In addition, the committee assists the Board in overseeing the Company’s Corporate Compliance and Ethics Program.  The committee also meets privately, outside the presence of Orthofix management, with our independent registered public accounting firm.  The Audit Committee’s Report for 2011 is printed below at page       .

The Board has adopted a written charter for the Audit Committee, a copy of which is available for review on our website at www.orthofix.com.

The Audit Committee met nine times during 2011 (four of which meetings were in-person meetings and five

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of which were telephonic meetings).

Messrs. Mainelli, Scoon and Weisshaar and currently serve as members of the Audit Committee, with Mr. Scoon serving as the Chairman.  Under the current rules of the Nasdaq Global Select Market and pursuant to Rule 10A-3 of Schedule 14A under the Securities Exchange Act of 1934, as amended, all of the current members of the committee, as well as all other members who served during 2011, are independent.  Our Board of Directors has determined that Messrs. Scoon and Weisshaar are “audit committee financial experts” as that term is defined in Item 407(d) of Regulation S-K.

The Compensation Committee

The Compensation Committee is responsible for establishing compensation policies and determining, approving and overseeing the total compensation packages for our executive officers and other key employees, including all elements of compensation.  The committee administers our Amended and Restated 2004 Long-Term Incentive Plan, as amended (the “2004 LTIP”), the primary equity incentive plan under which we have previously made equity-related awards, and the 2012 Long-Term Incentive Plan (the “2012 LTIP”), which will become our primary equity incentive plan for future issuances if approved by shareholders at the Annual General Meeting.  In addition, the committee administers our Amended and Restated Stock Purchase Plan (the “SPP”), an equity plan under which most of our employees and directors are eligible to purchase common stock of the Company.  The committee also administers prior plans that continue to have outstanding awards, but under which we no longer grant awards.  See “Compensation Discussion and Analysis — Elements of Executive Compensation — Long-Term Equity-Based Incentives” for information on these plans.

The Compensation Committee met eight times during 2011 (four of which were in-person meetings and four of which were telephonic meetings).

The Board has adopted a written charter for the Compensation Committee, a copy of which is available for review on our website at www.orthofix.com.

Drs. Jordan and von Wartburg and Mr. Mainelli currently serve as members of the Compensation Committee, with Dr. Jordan serving as Chairman.  All current members of the committee, and all others persons who served on the committee during 2011, (i) are non-employee, non-affiliated, outside directors who have been determined by the Board to be independent under the current rules of the Nasdaq Global Select Market and the SEC and (ii) satisfy the qualification standards of Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and Section 16 of the Exchange Act.

No interlocking relationship, as defined in the Exchange Act, currently exists, nor existed during 2011, between our Board or Compensation Committee and the board of directors or compensation committee of any other entity.

The Nominating and Governance Committee

The Nominating and Governance Committee assists the Board in identifying qualified individuals to become Board members, recommends to the Board nominees for election at each annual general meeting of shareholders, develops and recommends to the Board the Company’s corporate governance principles and guidelines, and evaluates potential candidates for executive positions as appropriate.  In connection with this role, the committee periodically reviews the composition of the Board in light of the characteristics of independence, skills, experience and availability of service, with an emphasis on the particular areas of skill and experience needed by the Board at any given time.  The committee also periodically reviews with the Chairman of the Board and the President and Chief Executive Officer succession planning, makes recommendations to the Board in connection with succession planning.

The Nominating and Governance Committee met five times in 2011 (four of which were in-person meetings and one of which was a telephonic meeting).

The Board has adopted a written charter for the Nominating and Governance Committee, a copy of which is available for review on our website at www.orthofix.com.

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Messrs. Scoon and Weisshaar and Drs. Jordan and von Wartburg currently serve as members of the Nominating and Governance Committee, with Mr. Weisshaar serving as Chairman.  All current members of the committee, and all others persons who served on the committee during 2011, have been determined by the Board to be independent under the current rules of the Nasdaq Global Select Market and the SEC.

Code of Conduct and Ethics

All Orthofix employees, directors and executive officers are required to comply with the Code of Conduct and Ethics that we have adopted.  The goals of our Code of Conduct and Ethics, as well as our corporate compliance program (which we branded the Integrity Advantage™ Program), are to deter wrongdoing and to promote (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, (ii) the full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us, (iii) compliance with applicable governmental laws, rules and regulations, (iv) the prompt internal reporting of violations of the Code of Conduct and Ethics, and (v) accountability for adherence to the Code of Conduct and Ethics.  Our Code of Conduct and Ethics applies to all areas of professional conduct, including customer relationships, conflicts of interest, financial reporting, use of company assets, insider trading, intellectual property, confidential information and workplace conduct.  Under the Code of Conduct and Ethics, employees, directors and executive officers are responsible for promptly reporting potential violations of any law, regulation or the Code of Conduct and Ethics to appropriate personnel or a hotline we have established.

Our Code of Conduct and Ethics is available for review on our website at www.orthofix.com under the Corporate Governance caption in the Investors section.

Board’s Role in Risk Oversight

One of the important roles of our Board of Directors is to oversee various risks that we may face from time to time. While the full Board has primary responsibility for risk oversight, it utilizes its committees, as appropriate, to monitor and address the risks that may be within the scope of a particular committee’s expertise or charter. For example, the Audit Committee oversees our financial statements and compliance with certain legal and regulatory requirements. The Board believes that the composition of its committees, and the distribution of the particular expertise of each committee’s members, makes this an appropriate structure to more effectively monitor these risks.

An important feature of the Board’s risk oversight function is to receive updates from its committees and management, as appropriate.  In that regard, the Board regularly receives updates from the President and Chief Executive Officer, Chief Financial Officer, Chief Compliance Officer and General Counsel, including in connection with material litigation and legal compliance matters.  The Board also receives updates at quarterly in-person Board meetings on committee activities from each committee chairman.  In addition, the president or other senior executive of each Company division or business unit periodically reviews and assesses the most significant risks associated with his or her division or unit.  These assessments are then aggregated by our management team and presented to our Board of Directors.  The Board regularly discusses with management these risk assessments and includes risk management and risk mitigation as part of its on-going strategic planning process.

Shareholder Communication with the Board of Directors

To facilitate the ability of shareholders to communicate with the Board of Directors, we have established an electronic mailing address and a physical mailing address to which communications may be sent: boardofdirectors@orthofix.com, or The Board of Directors, c/o Mr. James F. Gero, Chairman of the Board of Directors, Orthofix International N.V., 3451 Plano Parkway, Lewisville, TX 75056.

Mr. Gero reviews all correspondence addressed to the Board of Directors and presents to the Board a summary of all such correspondence and forwards to the Board or individual directors, as the case may be, copies of all correspondence that, in the opinion of Mr. Gero, deals with the functions of the Board or committees thereof or that he otherwise determines requires their attention.  Examples of communications that would be logged, but not automatically forwarded, include solicitations for products and services or items of a personal nature not relevant to us or our shareholders.  Directors may at any time review the log of all correspondence received by Orthofix that is addressed to members of the Board and request copies of any such correspondence.

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Nomination of Directors

As provided in its charter, the Nominating and Governance Committee identifies and recommends to the Board nominees for election or re-election to the Board and will consider nominations submitted by shareholders.  The Nominating and Governance Committee Charter is available for review on our website at www.orthofix.com.

The Nominating and Governance Committee seeks to create a Board of Directors that is strong in its collective diversity of skills and experience with respect to finance, research and development, commercialization, sales, distribution, leadership, technologies and industry knowledge.  The Nominating and Governance Committee reviews with the Board, on an annual basis, the current composition of the Board in light of the characteristics of independence, skills, experience and availability of service to Orthofix of its members and of anticipated needs.  If necessary, we will retain a third party to assist us in identifying or evaluating any potential nominees for director.  When the Nominating and Governance Committee reviews a potential new candidate, it looks specifically at the candidate’s qualifications in light of the needs of the Board at that time given the then current mix of director attributes.

As provided for in our Corporate Governance Guidelines, in nominating director candidates, the Nominating and Governance Committee strives to nominate directors that exhibit high standards of ethics, integrity, commitment and accountability.  In addition, our Corporate Governance Guidelines state that all nominations should attempt to ensure that the Board shall encompass a range of talent, skills and expertise sufficient to provide sound guidance with respect to our operations and activities.  Other than as set forth in the Corporate Governance Guidelines with respect to the Board’s objective in seeking directors with a range of talent, skills and expertise, the Board and the Nominating and Governance Committee do not have a formal policy with respect to the diversity of directors.

Under our Corporate Governance Guidelines, directors must inform the Chairman of the Board and the Chairman of the Nominating and Governance Committee in advance of accepting an invitation to serve on another company’s board of directors.  In addition, no director may sit on the board of directors of, or beneficially own a significant financial interest in, any business that is a material competitor of Orthofix.  The Nominating and Governance Committee reviews any applicable facts and circumstances relating to any such potential conflict of interest and determines in its reasonable discretion whether a conflict exists.

To recommend a nominee, a shareholder shall send notice to the Board c/o Kenneth R. Weisshaar, Chairman of the Nominating and Governance Committee, Orthofix International N.V., 3451 Plano Parkway, Lewisville, TX 75056.  This notice should include the candidate’s brief biographical description, a statement of the qualifications of the candidate, taking into account the qualification requirements set forth above and the candidate’s signed consent to be named in the proxy statement and to serve as a director if elected.  The notice must be given not later than 180 days before the first anniversary of the last Annual General Meeting of Shareholders.  Once we receive the recommendation, the Nominating and Governance Committee will determine whether to contact the candidate to request that he or she provide us with additional information about the candidate’s independence, qualifications and other information that would assist the Nominating and Governance Committee in evaluating the candidate, as well as certain information that must be disclosed about the candidate in our proxy statement, if nominated.  Candidates must respond to our inquiries within the time frame provided in order to be considered for nomination by the Nominating and Governance Committee.

The Nominating and Governance Committee has not received any nominations for director from shareholders for the 2012 Annual General Meeting of Shareholders.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Compensation Committee Interlocks and Insider Participation

The Compensation Committee, comprised entirely of independent, non-management directors, is responsible for establishing and administering the Company’s policies involving the compensation of its executive officers. No employee of the Company serves on the Compensation Committee. The Committee members have no interlocking relationships as defined by the SEC.

Procedures for Approval of Related Person Transactions

The Company’s policies and procedures for the review, approval or ratification of related-party transactions are set forth in our Code of Conduct and Ethics.  Our policy is that the Audit Committee will review and approve all related party transactions that meet the minimum threshold for disclosure under the relevant SEC rules (generally, transactions involving amounts exceeding $120,000 in which a related person has a direct or indirect material interest).  The Company did not have any related party transactions meeting this threshold during 2011.

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COMPENSATION DISCUSSION AND ANALYSIS

Compensation Philosophy and Overview

Our Compensation Committee, or the Committee, discharges the responsibilities of the Board relating to all compensation of the Company’s executive officers, including equity-based compensation.  The Committee guides itself in large part by our executive compensation philosophy.  This philosophy reflects a “pay-for-performance” outlook in consideration of our growth (whether internal or as a result of acquisitions) and our objectives of attracting, retaining and motivating executive officers and other key employees while increasing shareholder value.  We must attract talent for us to grow successfully.  At the same time, we must retain and motivate talent in order to engage them to help us achieve our goals.  Finally, we must consider all these elements in the context of our ultimate objective of enhancing the value of the Company for our shareholders.

Based on this philosophy, the Committee’s goal is to fairly compensate executive officers with an emphasis on providing incentives that balance the promotion of both our short- and long-term objectives.  As described in more detail below, achievement of short-term objectives is rewarded through base salary and cash incentive awards, while grants of stock options and restricted stock encourage executive officers to focus on our long-term goals.  The Committee may choose to materially increase or decrease compensation based on performance and the achievement of the above objectives.  These core components remain the basis for our executive compensation philosophy as we continue to grow.

In implementing this overall compensation philosophy for the Company’s executive officers, the Committee is guided by the following principles:

·                  Pay for Performance - The Committee places considerable emphasis on variable elements of pay within the executive compensation program.  These elements consist of the Company’s annual incentive plan, which is intended to reward executive officers for achieving specific operating and financial objectives, as well as stock options, to the extent that options are available to grant.  The Committee seeks to provide rewards through the annual incentive plan by measuring performance based on key pre-established measures reflecting positive financial performance by the Company and its business units and divisions. The Committee seeks to provide strong linkage between executives and shareholders with grants of stock options, as stock options only have realizable value to the extent that the market value of the Company’s common stock increases.

·                  Competitive Target Pay Opportunities - The Committee believes that the Company must offer competitive target total compensation to recruit and retain key executive talent.  As such, our executive compensation program has been structured to provide total direct compensation (base salary plus target cash opportunities plus long-term incentive grants) at or near the 50th percentile of competitive market practices of our industry peers.  To ensure that our pay levels are calibrated to reward performance, our programs are designed to deliver actual amounts of pay that are consistent with the Company’s performance.

·                  Encourage Executive and Outside Director Share Ownership - The Committee believes that a significant portion of each executive’s and outside director’s compensation should be tied to the Company’s financial performance and share price.  We seek to award stock options and restricted stock pursuant to our long-term incentive plan so that over a period of time, a significant portion of an executive officer’s actual compensation is provided in the form of share-based compensation.  We also facilitate the purchase of our common stock by executive officers pursuant to a stock purchase plan, and encourage ownership of our common stock by our President and Chief Executive Officer and outside directors pursuant to stock ownership guidelines we have adopted.

·                  Provide Moderate Health and Welfare Benefits - The Committee considers these benefits to be important for each employee, and seeks to provide a moderate level of these benefits to executive officers, generally consistent with the level of health and welfare benefits provided to all Company employees.

Governance of Executive Compensation

As described further below, executive compensation for our executive officers is reviewed and established annually by the Committee, which consists solely of independent directors.  The Committee’s compensation

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decisions are intended to reflect its ongoing commitment to strong compensation governance, which the Committee believes are reflected in the following elements of our executive compensation:

·              Stock Ownership Guidelines Align Our CEO and Outside Directors with Shareholders.  We have adopted stock ownership guidelines that apply to our President and Chief Executive Officer and outside directors.

·              No Promotion of Excessive Risk Taking.  We believe that our compensation programs do not encourage excessive risk taking.  For example, we do not provide uncapped bonuses under our annual incentive program, and we have never made “mega” annual equity grants to any of our current management team members.  We also utilize multiple performance metrics under our annual incentive plan.

·              No Repricing of Stock Options.  Equity awards, including stock options, are never issued with below-market exercise prices, and the repricing of stock options without stockholder approval is expressly prohibited under both our current and newly proposed long-term incentive plan.  The Committee believes that the issuance of discount stock options and authorization of post-grant date repricings are each not performance-based pay practices, and therefore inconsistent with the Committee’s commitment to pay for performance.

·              50th Percentile of Peer Total Compensation Target.  Our base salaries and target total compensation for named executive officers is targeted to be at approximately the 50th percentile of companies in a peer group approved by the Committee.  This peer group is comprised of organizations within our industry and that are within range of our company size taking into consideration strong pay correlation elements such as revenues and market capitalization.  These are also companies with which we may compete directly for executive talent.

·              Pay At Risk Based on Performance.  As our programs are designed using a pay for performance philosophy, actual pay realized (earned) by our executives is predominantly at risk through our performance-based annual incentive program and though our long-term incentive grants that consist of both stock options (which will only provide value to executives if our stock price appreciates) and restricted shares.

Compensation Process

The Committee is responsible for establishing and evaluating compensation policies and determining, approving and evaluating employee compensation, including the total compensation packages for our executive officers and other key employees and compensation under the Company’s equity incentive plans and other Company compensation policies and programs.  The Committee specifically considers and approves the compensation for the Chief Executive Officer and other executive officers.  It is also responsible for making recommendations to the Board regarding the compensation of directors.  The Committee relies on select senior executive officers to make recommendations on certain aspects of compensation as discussed below.  The Committee acts under a written charter adopted by the Board.  The Committee reviews its charter annually and recommends any changes to the Board.  The Committee last amended its charter in November 2009.  The charter is available on our website at www.orthofix.com.  Drs. Jordan and von Wartburg and Mr. Mainelli currently serve as members of the Compensation Committee, with Dr. Jordan serving as Chairman.  During 2011, each member of the Board who served on the Committee was an independent, non-employee, non-affiliated, outside director while he or she served on the Committee.  The Committee has furnished its report below.

Throughout this proxy statement, the following persons are referred to collectively as our “named executive officers”: (i) Robert S. Vaters, our President and Chief Executive Officer (who served as our Executive Vice President and Chief Operating Officer from January 10, 2011 to August 1, 2011 and our Executive Vice President and Chief Financial Officer prior to January 10, 2011), (ii) Brian McCollum, our Senior Vice President of Finance and Chief Financial Officer, (iii) Vicente Trelles, our Executive Vice President of Worldwide Operations and Shared Services, (iv) Bryan McMillan, our President, Global Spine Business Unit, (v) Luigi Ferrari, our President, Global Orthopedics Business Unit, and (vi) Alan W. Milinazzo, our former President and Chief Executive Officer prior to August 1, 2011.

Role of Executive Officers

At the Committee’s request, from time to time certain of our senior management present

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compensation-related initiatives to the Committee.  For instance, while the Committee approves all elements of compensation for executive officers, the Committee requests on an annual basis that senior management aid the Committee in fulfilling its duties by facilitating the gathering of information relating to potential targets and goals under our annual incentive program as well as possible stock option or restricted stock grants, and possible cash retention bonuses.  This information is prepared in accordance with the market-based compensation data developed by the Committee’s outside compensation consultant, Towers Watson, and approved by the Committee.  The Committee then reviews this information in connection with it setting the annual incentive targets and goals.  The Chief Financial Officer is generally responsible for the compensation process within the Company, and provides input to the Committee in such capacity.  The President and Chief Executive Officer also provides the Committee with additional input and perspective in connection with the Committee’s salary determinations for named executive officers.  The President and Chief Executive Officer and Chief Financial Officer frequently attend meetings of the Committee in these respective capacities.  To the extent required or advisable, these executive officers are excluded from any Committee discussions or votes regarding their compensation.

Compensation Consultant

The Committee has the authority under its charter to retain, at the Company’s expense, outside compensation consultants to assist in evaluating compensation.  The Committee also has the authority to terminate those engagements.  In accordance with this authority and to aid the Committee in fulfilling its duties, the Committee has engaged Towers Watson since 2004 as its outside compensation consultant.

In its role as compensation consultant, Towers Watson has worked with the Committee to develop our executive and director compensation philosophy, and Towers Watson periodically conducts reviews and updates of our executive officer and director compensation programs and long-term incentive practices at the request of the Committee.

In 2010, the Committee engaged Towers Watson to conduct an in depth review of our peer group and recommend changes based on the Company’s financial profile, business focus and complexity of business operations.  In 2011, the Committee asked Towers Watson to review the peer group again as certain organizations were no longer available for comparison due to subsequent mergers and acquisitions.  The 2011 peer group was realigned modestly to ensure that Orthofix continued to compare executive pay levels against companies of similar financial profile, business focus and operations complexity.  Further discussion of the 2011 peer group is outlined below in the “Benchmarking” section of this discussion.

At the Committee’s request, in 2010 and 2011, Towers Watson conducted an assessment of compensation levels for our top five executive positions as well as key business unit leadership positions.  Towers Watson compared Orthofix executive pay levels versus the competitive market to determine whether they remain consistent with our compensation philosophy.  In conducting these assessments, Towers Watson made comparisons to our then current peer group and considered the compensation levels and program design for executive officers of those peer group companies based upon publicly-available disclosure regarding the compensation arrangements at those companies. This information indicated that, on average, base salary compensation for our named executive officers was within range of the 50th percentile. Actual total cash levels (base salary plus annual incentive awards) paid in 2011 for 2010 Company performance was aligned with the 25th percentile.  In addition, as Orthofix had very limited equity in the share pool to grant to executives, Towers Watson did not benchmark equity levels as recent grants were limited and, therefore, total direct compensation levels (which is the sum of actual total cash and equity compensation) were less than competitive at the 50th percentile.

During 2011, other analyses that were conducted by Towers Watson included:

·              A competitive market analysis of outside director pay practices and levels such that the Committee could determine if our current outside director compensation program was aligned with the competitive market. Consistent with the findings of the executive compensation assessment, this analysis indicated that outside director cash compensation levels were aligned with the market median but equity grants, limited by share pool availability, were below the peer group 25th percentile.

·              A review of the Company’s equity share utilization and overhang in support of developing a new strategy for long-term incentive compensation.

·              A review of management’s proposed 2012 long-term incentive program to confirm that it is aligned with

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competitive market practice.

·              A review and realignment of the Company’s peer group (discussed in the “Benchmarking” section below).

·              A governance review of the Company’s executive compensation programs to assess whether they are aligned with governance best practices.  This review recommended that outside director share guidelines be realigned with current market practices.  Towers Watson worked with the Committee to develop updated guidelines, which were subsequently implemented in December 2011.

·              Other ad hoc assessments, as requested by the Committee.

The Role of Shareholder Say-on-Pay Votes.

The Company provides its shareholders with the opportunity to cast an annual advisory vote on executive compensation (a “say-on-pay proposal”).  At the Company’s annual general meeting of shareholders held in August 2011, 98% of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal.  The Committee believes this affirms shareholders’ support of the Company’s approach to executive compensation.  The Committee evaluated the results of the 2011 say-on-pay proposal at its September 2011 meeting.  The Committee also considered many other factors in evaluating the Company’s executive compensation programs as discussed in this Compensation Discussion and Analysis, including the Committee’s assessment of the interaction of our compensation programs with our corporate business objectives, evaluations of our programs by our compensation consultant, and review of data of a comparator group of peer companies, each of which is evaluated in the context of the Committee’s fiduciary duty to act as the directors determine to be in shareholders’ best interests.  While each of these factors bore on the Compensation Committee’s subsequent decisions regarding our named executive officers’ compensation during 2011 and 2012, the Committee did not make any changes to our executive compensation program and policies as a result of the 2011 say-on-pay proposal voting results.  The Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for its named executive officers.

Recoupment Policy

The Dodd-Frank Act requires companies to adopt a policy that will recapture excess incentive compensation that was paid to executive officers if based on erroneous financial statements (“clawback”).  The Act mandates the SEC to issue rules implementing the clawback requirements.  The Company intends to adopt a formal clawback policy when the SEC promulgates the final rules.  The Company believes it is prudent and efficient to ensure that we adopt a policy in proper form that is fully compliant with the laws and rules, rather than implementing a policy that may require amendment when the final rules are promulgated.

Benchmarking

Decisions related to executive compensation program design and pay levels are informed, in part, by the practices and pay levels of comparable peer organizations.  During 2011, the Committee engaged Towers Watson to conduct an executive compensation analysis that provided summarized data on market competitive levels of total compensation.  In conducting the 2011 benchmarking, Towers Watson utilized a selection of peer companies, which was reviewed and approved by the Committee in May 2011 to ensure that it represented organizations of the appropriate size and complexity based upon key financial factors such as annual gross revenues, shareholder return and market capitalization.  This peer group contained the following seventeen medical technology and device manufacturers and distributors with which we may compete against for executive talent.

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* Denotes that the company has subsequently been acquired, but was considered as part of the Company’s 2010 and 2011 benchmarking surveys.

Elements of Executive Compensation

Overview

Our compensation program for executive officers and other key employees consists of three primary elements:

·                  annual salary;

·                  performance-based incentives in the form of annual cash bonuses; and

·                  long-term equity-based incentives under our long-term incentive plan.

The Committee reviews annually what portion of an executive officer’s compensation should be in the form of salary, potential annual performance-based cash bonuses and long-term equity-based incentive compensation.  The Committee believes an appropriate mix of these elements, commensurate with our compensation philosophy, will assist the Committee in meeting its compensation objectives.  See “—Executive Compensation Philosophy” below for more information on the Committee’s guidelines for each element of executive compensation. As part of its decision making process, the Committee reviews information setting forth all components of the compensation and benefits received by our named executive officers.  This information includes a specific review of dollar amounts for salary, bonus, perquisites and long-term equity-based incentive compensation.

In addition, during 2010 and 2011, the Committee considered, and ultimately implemented in February 2011, retention cash bonuses to certain executive officers due to special circumstances.  In determining to grant these bonuses, the Committee took into account that the Committee had not made any stock option or restricted stock based awards to executive officers during 2010 due to limitations on share availability under the 2004 LTIP, and that the amount of stock option and restricted stock awards made in 2011 would be limited by share availability under the 2004 LTIP.  In addition, the Committee considered the significant additional demands and management challenges that resulted, in the near term, from several government investigation and litigation matters facing the Company at that time.  The Committee’s intent in making these awards was to compensate executive officers for the Committee’s expectation that aggregate equity-based awards in 2010 and 2011 would be below the Company’s 50th percentile of peer target due to plan availability limitations.

With respect to incentive compensation, the (i) setting of performance goals for the attainment of cash bonuses and the determination of awards thereunder and (ii) determination of the number and type of annual equity-based compensation awards are typically done at different times during the year (though in recent years, the

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timing of equity-based compensation awards has sometimes been delayed due to limited share capacity available in the 2004 LTIP).  The Committee believes that the separation of the timing of these grants and awards provides for increased incentives for the recipients.  These incentives are based on financial objectives that are important to the Company, including income or cash flow attainment and sales attainment.  Individual performance is also taken into account.  The consideration of individual performance enables the Committee to differentiate among executive officers and emphasize the link between personal performance and compensation.

Certain executive officers are eligible to participate in the Orthofix Deferred Compensation Plan, whereby such eligible participants may elect to defer a portion of their earnings each year.  Executive officers and directors are also eligible to participate in our SPP.  We also provide our executive officers and directors with certain limited perquisites discussed below.

Executive Compensation Philosophy

The Committee has approved a “pay-for-performance” executive compensation philosophy.  This philosophy takes into account the results of our periodic benchmarking, using both the peer group and survey sources, and assumes that the Company has met its performance goals.  This compensation philosophy emphasizes pay at risk through awards made under the cash-based annual incentive plan as well as grants made under the long-term equity compensation program as outlined above.

(1)                                 Total cash compensation equals annual salary plus annual cash incentives.

(2)                                 Actual award levels will vary within a set range developed around a target based upon primarily company performance goals, but also individual performance goals.

(3)                                 As noted below, the equity grants may be higher or lower than the market 50th percentile based upon a variety of factors.

(4)                                 Total direct compensation equals total cash plus annualized expected value of long-term incentives.

Our target percentiles are guidelines.  The annual salary, annual incentive awards and equity awards may be higher or lower than the 50th percentile for certain individuals based upon company and individual performance, competitive market practice, shareholder alignment, availability of shares for equity grants and the need for executive retention.  The Committee may depart from the target percentiles for other purposes based upon particular facts and circumstances that apply to an individual, entity or a division at the time, including adjustments due to market conditions, the promotion of employees and other factors.

The Committee generally engages a compensation consultant to provide peer group benchmarking survey information every few years.  In years when benchmarking survey information is not procured, the Committee uses

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data provided to the Committee during the prior year, and makes cost-of-living or other adjustments as it deems appropriate.  The Committee obtained benchmarking survey information from Towers Watson in September 2010, which was used in the Committee’s determination of compensation levels for 2011.

In September 2011, the Committee obtained updated benchmarking survey information from Towers Watson.  This information indicated that, on average, base salary compensation for our named executive officers was within range of the 50th percentile.  However, actual total cash levels were at or below 25th percentile levels.  Furthermore, equity levels and total direct compensation levels (which is the sum of cash and equity compensation) were not competitive as Orthofix had made limited recent grants of equity awards to the named executive officers as the Company had minimal shares left in the shareholder-approved equity pool.  Based on this information, the Committee determined that the Company’s current executive compensation levels were below the 50th percentile targeted amounts for peer companies.  The Committee considered this information when setting annual salaries in March 2012, as well as in connection with the Committee’s determination in February 2011 to institute retention cash bonuses due to special circumstances.

Annual Salary

The Committee makes annual determinations with respect to the salaries of executive officers.  In making these decisions, the Committee considers each executive officer’s performance, the market compensation levels for comparable positions within and outside our peer group, performance goals and objectives and other relevant information, including recommendations of the Chief Executive Officer.

The Committee approved 2012 salary increases for our named executive officers in December 2011 and, in the case of Mr. Vaters, in March 2012.  These increases were designed to bring base salary amounts in line with the 50th percentile of our industry peer group based on the September 2011 benchmarking data obtained by the Committee from Towers Watson.  The 2012 annual base salary amounts for our named executive officers are as follows:

(1)  Amount for Mr. Vaters became effective as of March 9, 2012.  All other amounts became effective as of January 1, 2012.

Cash Performance-Based Incentives - Annual Incentive Program

The Committee believes that a significant portion of the compensation for each executive officer should be in the form of annual performance-based cash bonuses.  Short-term incentives, like our annual incentive program, tie executive compensation to our immediate financial performance as well as, to a certain extent, individual performance.  Each executive officer generally participates in our annual incentive program as it is our primary means of providing for an annual cash bonus.

The annual incentive program is based on goals determined by the Committee in line with annual budgets approved by the full Board.  Under our program, at the outset of each year the Committee establishes target performance goals and a range of performance around the target performance goals for which a bonus would be paid as described below.  We set the performance goals with the intent that it will be challenging for a participant to receive 100% of his or her incentive opportunity target award.  However, an executive officer can earn from 25% to 150% of his or her targeted bonus based upon actual performance measured against the range of established performance goals.  Varying bonuses are paid for the attainment of specified goals within that range.  For named

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executive officers the maximum bonus is a percentage of that person’s salary.  See “Agreements with Named Executive Officers” below for more information on the target opportunities for each named executive officer under the annual incentive plan.

In general, we establish separate performance goals for each of (i) Orthofix and its subsidiaries on a consolidated basis, and (ii) each of our business units on an individual basis.  Each participant in the program is assigned to one or more of these categories.  The Chief Financial Officer is responsible for overseeing the process of determining proposed goals for the Company and each of its business units.

The proposed goals and related matrix are then provided to the Committee for review and approval.  To calculate the bonus amount, the achievement percentage for each component is multiplied by its component’s percentage weight.  The products are added together to produce a resulting weighted percentage.  For each participant, this percentage is used to determine what amount of the pre-established bonus goal amount will be paid.  The weighted percentage is then multiplied by the target amount of bonus for which that participant is eligible.  The following is an illustration only of how this calculation may work using sample attainment percentages and maximum eligible bonus numbers:

Target Bonus:  50% of base salary of $200,000 = $100,000

Bonus Calculation: $100,000 (at target) multiplied by 87.5% (weighted percentage attainment) = $87,500 bonus

The Committee has the discretion to review an entity’s or business unit’s actual results (or an individual’s or division’s performance) and consider certain mitigating factors, such as one-time costs or events such as acquisitions or other unique corporate (or personal) events not contemplated at the time the goals were established.  These may be excluded from the financial information used in connection with the determination of bonuses or the financial (or individual) information may be otherwise adjusted in light of these mitigating factors.

Typically, the goals are set in February or March for the current year and payments are made the following March for the previous fiscal year.  All members of the Committee participated in the determination of the cash bonus amounts to be paid to the named executive officers for their performance and services during 2011.  Executive officers are typically notified of the goals and bonus eligibility for any given year when the plan is approved.  The terms of the awards generally require that the executive officer be an employee on the date of payment in order to be paid any compensation under the annual incentive program.

2011 Performance Goals for Named Executive Officers

The annual incentive program in 2011 consisted of the following performance goal components and were weighted as follows for Messrs.Vaters, McCollum and Milinazzo:

·                  50% — based on the attainment of a specified dollar amount of revenue on a consolidated basis (described as “Revenue” in the table below and further described in footnote 1 below); and

·                  50% — based on the attainment of a specified EBITDA target on a consolidated basis (described as “EBITDA” in the table below and further described in footnote 3 below).

For Mr. Ferrari, the two “consolidated” components described directly above were given 12.5% weight each, while 37.5% weighting was given to each of “Revenue” and “Adjusted Operating Income” for the Global Orthopedics Business Unit.

Mr. McMillan became an executive officer on October 1, 2011 when he was promoted to the position of President, Global Spine Business Unit.  In connection with this promotion, the Committee approved Mr. McMillan’s participation in the executive officer annual incentive program on a pro rated basis from October 1, 2011 through December 31, 2011.  In addition, Mr. McMillan remained eligible to participate in the program

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applicable to non-executive officers for the period from January 1, 2011 through September 30, 2011.  On a combined basis, this resulted in Mr. McMillan goal components being weighted as follows:

·                  12.5% — based on the “consolidated” Revenue component described above;

·                  12.5% — based on the “consolidated” EBITDA component described above;

·                  37.5% — based on “Adjusted Operating Income” for the Global Spine Business Unit for the full fiscal year of 2011;

·                  28.1% — based on “Revenue” for the Implants and Biologics components of the Spine Global Business Unit for the first three fiscal quarters of 2011; and

·                  9.4% — based on “Revenue” for the Global Spine Business Unit during the fourth fiscal quarter of 2011.

Pursuant to the terms of his hiring arrangement in April 2011, Mr. Trelles was guaranteed a 9-month pro rated bonus for 2011 calculated as if he had achieved 100% of all targets under the program.  Beginning in 2012, Mr. Trelles will no longer receive any guaranteed minimum achievement.

We developed these weightings with the intent of linking most of the bonus to quantifiable entity or business unit performance measures.  The performance range for each of the goals is 25% to 150%.  The table below describes the goals for each of the categories assigned to our Named Executive Officers.  Each goal is shown as (i) percent growth from 2010 or (ii) amount US Dollars (in millions).

(1) The Committee’s approval of targeted goals provided that effects from acquisitions or divestitures during the calendar year, as well as any reorganization or restructuring programs during such calendar year, would be excluded from achievement calculations.  Consistent with the foregoing, the targeted goals were adjusted to reflect the following subsequent events: (i) the revised definition of “Consolidated EBITDA” contained in amendment number one, dated May 4, 2011, to the Company’s credit agreement, (ii) the acquisition by Breg in 2011 of its new Omni Motion subsidiary, (iii) an insurance dispute between Breg and one of its insurance carriers regarding certain product liability matters, and (iv) certain charges related to an FCPA matter involving our Promeca subsidiary.

(2) All results are calculated on a constant currency basis.

(3) EBITDA is calculated for this purpose pursuant to the definition of “Consolidated EBITDA” contained in the Company’s credit agreement, dated August 30, 2010, as amended by the first amendment thereto dated May 4, 2011.  Under this definition, EBITDA is calculated by adjusting reported net income to eliminate extraordinary items of income or loss, gains or losses resulting from non-ordinary course asset sales or disposition, and non-cash gains or losses (subject to certain exceptions as further defined in the definition).  The credit agreement was filed as Exhibit 10.1 to a current report on Form 8-K filed by the Company on August 31, 2010, and the first amendment thereto was filed as Exhibit 2.1 to a current report on Form 8-K filed by the Company on

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May 5, 2011.  Each of these reports can be found at the SEC’s website at www.sec.gov.

(4) Adjusted operating income consists of operating income at the applicable business unit plus depreciation, amortization and stock-based compensation expense, as adjusted to eliminate any extraordinary items.

2011 Performance Goal Results for Named Executive Officers

In February 2012, after reviewing the results achieved in 2011 for each of the relevant components (as shown in the far right column of the table above), the Committee determined that a 80.8% weighted achievement percentage was attained by each of Messrs. Vaters, McCollum and Milinazzo, that a 96.5% achievement percentage was attained by Mr. McMillan, and a 122.5% achievement percentage was attainted by Mr. Ferrari. As described above, Mr. Trelles was awarded a 100% achievement percentage pursuant to the terms of his hiring arrangement in April 2011. These weighted achievement percentages were then multiplied by each officer’s respective base salary and “participation percentage” to calculate the applicable bonus earned. In the case of Messrs. Vaters and McMillan, whose base salaries and “participation percentages” were increased in August 2011 and October 2011, respectively, pro-rated calculations were made with respect to the applicable periods of the year, and then added together to determine the total year bonus. These results are described in the table below.

(1) Represents 7/12th of Mr. Vaters’ annual salary of $456,500 that was in effect from January 1, 2011 through July 31, 2011.

(2) Represents 5/12th of Mr. Vaters’ annual salary of $600,000 that was in effect from August 1, 2011 through December 31, 2011.

(3) Represents 9/12th of Mr. Trelles annual salary of $360,000, which reflects the portion of the year that Mr. Trelles was employed after joining the Company in April 2011.

(4) Represents 9/12th of Mr. McMillan’s annual salary of $295,000 that was in effect from January 1, 2011 through September 30, 2011.

(5) Represents 3/12th of Mr. McMillan’s annual salary of $350,000 that was in effect from October 1, 2011 through December 31, 2011.

(6) Per the terms of his June 2011 letter agreement with the Company, this amount represents fifty percent (50%) of Mr. Milinazzo’s full year annual salary of $567,840, reflecting that he only served as an officer of the Company during a portion of the year.

Payouts to the named executive officers under the annual incentive program are reflected in column (g) of the “Summary Compensation Table.”

Other Bonus Payments

2011 Cash Retention Bonuses

In February 2011, the Committee approved a cash retention bonus program for certain executive officers and key employees of the Company due to the special circumstances described below.  In determining to grant these bonuses, the Committee took into account that the Committee had not made any stock option or restricted stock based awards to executive officers during 2010 due to limitations on share availability under the 2004 LTIP, and that the amount of stock option and restricted stock awards made in 2011 would be limited by availability under the 2004 LTIP.  The Committee recognized the competitive disadvantage of not having this key compensation tool fully available to provide a well-balanced performance-based compensation package. In addition, the Committee

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considered the significant additional demands and management challenges that resulted, in the near term, from several government investigation and litigation matters facing the Company at that time.  The Committee’s intent in making these awards was to compensate executive officers for the Committee’s expectation that aggregate equity-based awards in 2010 and 2011 would be below the Company’s 50th percentile of peer target due to plan availability limitations.  Fifty percent (50%) of each participant’s special cash retention bonus award was payable on December 31, 2011, and fifty percent (50%) of such awards are payable on June 30, 2012.  In each case, payment of the applicable bonus installment was and is contingent upon the applicable participant remaining an employee of the Company or one of its subsidiaries as of the respective payment date.  If a participating executive or employee is not employed on an applicable payment date, the bonus installment in question will be forfeited and not payable.  The Company’s named executive officers participate in the plan as follows:

The Committee believes that equity is an essential compensation element that enables the Company to provide a balanced and performance-oriented compensation package to executives.  At the same time, the Committee recognizes the importance of retaining executive talent should equity compensation not be available for grant. We ask that the shareholders support our commitment to a balanced performance-based compensation program by approving Proposal 2 which enables Orthofix to replenish its share pool with                  shares which can then be used judiciously to provide competitive levels of long-term incentives.

Discretionary, Hiring and/or Promotion Bonuses

Outside of the annual incentive program, in any year the Committee has and does exercise its discretion to grant bonuses for performance or for other circumstances in any year, such as in the cases of new hires and promotions.  During 2011, the Committee approved the following discretionary, hiring and/or promotion bonus (in addition to the previously-described retention bonuses):

·                  Mr. Vaters was awarded a promotion bonus of $115,000 in January 2011 in connection with his promotion to Executive Vice President and Chief Operating Officer.

·                  A signing bonus of $100,000 for Mr. Trelles was approved in March 2011 in connection with his hiring and to compensate him in connection with his relocation.  Fifty percent (50%) of the bonus was contingent upon him completing three months of employment with the Company, and fifty percent (50%) was contingent upon him completing twelve months of employment with the Company.  These amounts were each earned and paid in July 2011 and April 2012, respectively.

·                  Mr. McMillan was granted a promotion bonus of $150,000 in September 2011 in connection with his promotion to President, Global Spine Business Unit.  Fifty percent (50%) of this bonus was paid upon his promotion in October 2011, and fifty percent (50%) is payable in June 2012 upon the satisfaction of certain spine business unit integration metrics.

Long-Term Equity-Based Incentives

Our primary equity compensation plan for executive officers in recent years has been the 2004 LTIP and, if approved by shareholders at the Annual Meeting, our primary equity compensation plan in upcoming years will be the 2012 LTIP.  Some current and former executive officers continue to hold outstanding awards under one or more of our prior equity-compensation plans, namely our Staff Share Option Plan and Performance Accelerated Stock Option Inducement Grants.  We no longer grant awards under these plans.  All executive officers and directors are also eligible, at their discretion, to purchase shares of common stock pursuant to our SPP.  Each plan is described below.  The Committee administers each of these plans (other than the Staff Share Option Plan) and only the Committee makes long-term incentive plan grants to named executive officers.  In addition, the Committee has authority to make inducement grants to newly hired employees, as it did in 2008 and 2011 in connection with the hiring of Messrs. Vaters and Trelles, respectively.  These inducement grants were made on terms that were substantially the same as grants made under our 2004 LTIP.

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The Committee’s date of approval of a stock option or restricted stock grant is typically the first or second quarterly in-person Board meeting of the fiscal year.  The grant date of a stock option or restricted stock is on or after the approval date and typically is the last business day of June for any options approved at the second Board meeting.  Actual grant dates are determined, among other factors, in accordance with past practice for annual grants, the Committee’s determination of an appropriate grant date, as well as our communications policy.  Under this policy, employees are alerted to their option grants and grants of restricted stock.  We also take into account that approvals may be required in advance of expected acquisitions, new hires or other transactions.  For example, in connection with expected new hires, the grant approval may be included in an offer letter even though the actual date of grant is typically not until the employee’s first day of employment.  Our policy, in accordance with the terms of each of the 2004 LTIP and the 2012 LTIP, is that the closing price of the stock on the date of grant will be used to price stock options.

The Committee generally grants stock options and restricted stock as noted above and does not specifically take into consideration the release of material non-public information when determining whether and in what amount to make stock option grants and grants of restricted stock.  In addition, the Committee does not have a specific policy of setting grant dates in coordination with the release of material non-public information and we do not have a policy of timing our release of material non-public information for the express purpose of affecting the value of executive compensation.

Current Equity Compensation Plans

2004 Long-Term Incentive Plan

The 2004 LTIP is a long term incentive plan that was originally adopted by the Board on April 15, 2004.  The original plan was approved by shareholders on June 29, 2004 and was amended and restated on November 5, 2004 and on June 20, 2007 and amended further on June 19, 2008.  As of March 31, 2012, 32,800 shares remain available for issuance pursuant to future awards under the 2004 LTIP.  Awards can be in the form of a stock option, restricted stock, restricted share unit, performance share unit, or other award form determined by the Board.  Awards expire no later than 10 years after the date of the grant.  To date, we have granted only non-qualified stock options and restricted stock under the plan.  Stock options and restricted stock generally vest equally in one-third increments beginning on the first anniversary of the date of grant, so long as the grantee remains an employee of the Company, but the Committee may provide different vesting provisions depending on the nature of and reason for the grant (or in the event of a change of control or termination of employment).

The goal of our 2004 LTIP has been to create an ownership interest in the Company in order to align the interests of executive officers with shareholders, to more closely tie executive compensation to our performance and to create long-term performance and service incentives for executive officers and other key employees.  Stock options and restricted stock awards are granted to executive officers and other employees:

·             in conjunction with the first or second quarterly in-person Board meeting of the fiscal year;

·             as new-hire incentives or in connection with promotion to a new position;

·             in connection with our acquisitions; and

·             otherwise in connection with retention, reward or other purposes based on the particular facts and circumstances determined by the Committee.

In 2011, pursuant to the 2004 LTIP, 386,000 stock options and 94,000 shares of restricted stock were granted to our employees and directors in connection with our long-term equity grant program, for new hire equity grants, promotional equity grants, as well as ongoing equity grants, of which 88,000 stock options and 61,000 shares of restricted stock were granted to our executive officers, and 60,000 stock options were granted to our non-employee directors.

The Company maintains a Stock Option and Restricted Stock Delegation Policy under which the Committee has delegated to the President and Chief Executive Officer for 2012 the authority to grant, subject to availability under the plan, up to an aggregate of 125,000 stock options and restricted stock awards (referred to as

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delegated awards) during the calendar year to newly-hired employees, employees who are promoted to new positions within the Company, and employees of the Company deemed eligible due to outstanding or special performance; provided, however, that for purposes of the delegation, any stock option grant counts as one delegated award and any restricted stock award counts as four delegated awards, such that no more than 31,250 restricted stock awards may be made under the delegation in any calendar year.  For example, if one employee is granted 1,000 stock options and 1,000 shares of restricted stock, that grant would count as 5,000 delegated awards.  Any single employee award is limited to a maximum of 15,000 delegated awards (a maximum of 3,750 restricted stock awards).  These grants of delegated awards may not be made to officers obligated to file reports under Section 16(a) of the Exchange Act.

Under the Company’s current stock option agreement form (which has been used since 2009), options vest and become exercisable in one-third increments on each of the first, second and third anniversaries of the grant date (or in the event of a change in control or, under certain circumstances, termination of employment).  The options expire and are no longer exercisable 10 years from the grant date and are subject to early termination as a result of a termination of employment or a change of control of the Company.   Other relevant provisions in the nonqualified stock option agreement are as follows:

·                       If, prior to an option vesting, the optionee’s employment is terminated other than (1) for cause, (2) upon death or permanent disability, or (3) voluntary termination (as defined in the form option agreement but excluding a retirement in accordance with the Company’s retirement policies (if any) or a termination for “good reason” if the optionee has entered into an agreement with the Company providing for a termination for “good reason”), any options that would have been vested as of December 31 of the year in which termination occurs shall automatically vest as of the date of termination and remain exercisable by the optionee for 180 days after the date of such termination of employment.  The options will be cancelled and will revert back to the Company to the extent not exercised within such period.  Any unvested options on the date of termination will also be cancelled and will revert back to the Company on such date.

·                       If the optionee’s employment is terminated by reason of death or permanent disability, all options shall automatically vest and remain exercisable by the optionee (or a transferee under a domestic relations order, the optionee’s estate, personal representative or beneficiary, as applicable) for 12 months after the date of such termination of employment.  The options will be cancelled and will revert back to the Company to the extent not exercised within such period.

·                       If the optionee’s employment is terminated for cause or if the optionee terminates employment under circumstances constituting a voluntary termination, the optionee may exercise the options (only to the extent vested at the date of termination) at any time within three months after the date of such termination in accordance with their terms.  The options will be cancelled and will revert back to the Company to the extent not exercised within such period.  Any unvested options on the date of termination will also be cancelled and will revert back to the Company on such date.

·                       Upon the occurrence of a change of control of the Company, all options shall automatically vest and remain exercisable in accordance with the provisions applicable thereto.  The options will expire and no longer be exercisable to the extent not exercised within 10 years from the grant date.

Certain grants made prior to 2009 include terms that provide that if an executive has an employment agreement with the Company, he or she will have up to 5 years to exercise his or her options in circumstances described above where the optionee has 180 days under the current form.

The Company has historically utilized stock options as the principal means of providing its executive officers and other employees with equity incentive compensation.  However, following the adoption of the amended 2004 LTIP in June 2007, the Compensation Committee began making grants of restricted stock to certain employees who held an employee title of director or below as part of the Company’s compensation strategy of linking long-term benefits to the rate of return received by stockholders and as a retention device.  In February 2011, due to the special circumstances described above (including the limited number of shares available at that time for grant under the 2004 LTIP) the Committee made certain grants of restricted stock to executive officers at such time.

The restricted stock granted by the Company has a vesting period that must be satisfied before the shares are available to the employee.  The restricted shares of stock granted by the Company typically vest with respect to

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one-third of the shares covered by each grant agreement on the first, second and third anniversaries of the grant date (or in the event of a change of control or, under certain circumstances, termination of employment).

2012 LTIP

If approved by shareholders at the Annual Meeting, the 2012 LTIP will become our primary equity compensation plan in future years.  The Board adopted the 2012 LTIP on April       , 2012, subject to shareholder approval.  We propose the approval of the 2012 LTIP to ensure that we have a sufficient number of shares of our common stock available for equity-based awards that we expect to make to eligible individuals over the next several years.  As of the date hereof, there are currently only                  shares of our common stock available for issuance under the 2004 LTIP.  We believe that the ability to make equity-based awards is an essential part of our compensation program and we would be at a significant disadvantage with respect to our competitors if we were unable to offer equity-based awards to our employees, officers, directors, consultants and advisers.  The 2012 LTIP is summarized beginning on page        under “Proposal 2: Approval of the Orthofix International N.V. 2012 Long-Term Incentive Plan.”

Stock Purchase Plan

Our SPP, as amended, provides for the issuance of shares of our common stock to eligible employees and directors of the Company and its subsidiaries that elect to participate in the plan and acquire shares of our common stock through payroll deductions (including executive officers).  During each purchase period, eligible individuals may designate between 1% and 25% (or any other percentage as determined by the Compensation Committee) of their cash compensation to be deducted from that compensation for the purchase of common stock under the plan.  Under the plan, the purchase price for shares is equal to the lower of (i) 85% of the fair market value per share on the first day of the plan year and (ii) 85% of the fair market value of such shares on the last day of the plan year.  The plan year begins on January 1 and ends on December 31.  As amended, up to a total of 1,850,000 shares may be issued under the SPP.

Previous Equity Compensation Plans

Staff Share Option Plan

The Staff Share Option Plan is a fixed share option plan which was adopted in April 1992.  There are no options remaining to be granted under the Staff Share Option Plan and, as of March 31, 2012, only 58,125 stock options granted under it remain outstanding.  All outstanding stock options are vested.  Under the Staff Share Option Plan, we granted options to our employees at the estimated fair market value of such options on the date of grant.  Options granted under the Staff Share Option Plan expire 10 years after date of grant.

Performance Accelerated Stock Option Inducement Agreements or PASOs

On December 30, 2003, in conjunction with the acquisition of Breg, Inc., we granted inducement stock option awards to two key executive officers of Breg, Inc.  The exercise price was fixed at $38.00 per share on November 20, 2003, which was the date Orthofix announced the agreement to acquire Breg, Inc.  As of March 31, 2012, 130,000 of these stock options remain outstanding.  Under the terms of the applicable stock option agreements, these stock options will lapse and be cancelled if not exercised by December 31, 2012.

Other Compensation

Deferred Compensation Plan

In December 2006, the Board approved the adoption of the Orthofix Deferred Compensation Plan by Orthofix Holdings, Inc.  This plan became effective on January 1, 2007, and its terms essentially mirror our 401(k) plan.  Prior to January 1, 2009, all non-employee directors of the Company, Orthofix Holdings, Inc. and any of their subsidiaries (which we refer to as the Parent Group) that have been approved for participation and a select group of management or highly compensated employees of the Parent Group were eligible to participate (including named executive officers).  As a result, a number of our executive officers, as well as Mr. Gero, elected to participate under the plan.  In order to comply with Section 457A of the Code, the plan was amended and restated effective January 1, 2009 to provide, among other things, that following such date, (i) directors are not eligible to defer director’s fees received following January 1, 2009, and (ii) no employee who is a U.S. taxpayer who performs services for the

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Company and who receives compensation for services performed for the Company will be eligible to defer any of such compensation received following such date.  (However, if the U.S. taxpayer performs services for a member of the Parent Group other than the Company and receives compensation for such services, he will be able to participate in the plan with respect to compensation received for services performed for the other members of the Parent Group.)  The treatment of previously deferred amounts by such former participants is described below.  As a result of the amendment, non-employee directors are no longer eligible to make new contributions to the plan.

Under the plan, as amended and restated, participants may elect to defer salary and bonus on a pre-tax basis. The minimum deferral amount is $2,000 per plan year and the maximum deferral amounts are 50% of the participant’s salary and bonuses.  The plan year is the calendar year.  The plan is intended to be an unfunded plan under the provisions of ERISA and although the amounts deferred are considered fully vested, none of the Parent Group members are required to set aside funds for the payment of benefits under the plan, such benefits being paid out of the general assets of the Parent Group member that employs the particular participant receiving the benefit or for which the particular participant serves as a director.  Orthofix Holdings, Inc. has established a rabbi trust to provide funds for the payment of benefits under the plan, and it is currently making discretionary contributions to the rabbi trust in amounts equal to the compensation deferred by plan participants.  While the rabbi trust is an asset of Orthofix Holdings, Inc. and can be revoked by Orthofix Holdings, Inc. at any time, upon a change of control, the rabbi trust will become irrevocable and must be used to pay plan benefits.  Further, if a change of control occurs, Orthofix Holdings, Inc. must make a contribution to the rabbi trust in an amount that is sufficient to pay all plan benefits and the projected fees and expenses of the trustee of the rabbi trust.  It is intended that the terms of the plan will be interpreted and applied to comply with Section 409A of the Internal Revenue Code.

In general, participants may defer compensation under the plan by submitting a Participation Agreement (as defined in the plan) to the plan administrator by December 31 of the calendar year immediately preceding the plan year, and newly eligible participants may participate in a partial year by submitting such an agreement within 30 days of becoming eligible for participation in the plan.  For record keeping purposes, accounts shall be maintained for each participant to reflect the amount of his deferrals and any hypothetical earnings or losses on the deferrals. Participants must designate the portion of their contributions to be allocated among the various independently established funds and indexes chosen by the plan administrator, or Measurement Funds, to measure hypothetical earnings and losses on the deferred amounts.  The balance credited to each participant’s account will be adjusted periodically to reflect the hypothetical earnings and losses.  We are not obligated to invest any amount credited to a participant’s account in such Measurement Funds or in any other investment funds.

A participant may elect to receive an in-service distribution of the balance credited to his plan account in a lump sum or in a series of annual installments over a one, three, five or ten-year period.  In the event a participant terminates employment with the Parent Group for any reason other than retirement or death, the participant will receive a distribution of the entire amount credited to his account in a single lump sum.  In the case of a termination  due to retirement or in the case of a change of control, the participant can elect to receive either a single lump sum or a series of annual installments over a one, three, five or ten year period. In the case of a termination due to death or if a participant experiences a disability, the balance credited to the participant’s account will be paid out in a single lump sum, unless installment payments have already begun at the time a participant dies.  In such a case, such installments shall be continued as originally elected unless the participant’s beneficiary is a trust or estate, in which case the remaining balance will be paid in a lump sum.  In the case of amounts previously deferred by former participants, such amounts will be distributed to each former participant on the earlier of (i) December 31, 2017, payable in a single lump sum, or (ii) the specified date or the installment schedule previously elected by such former participant, or pursuant to the provisions described above in the event of such former participant’s death or disability or a change of control.  Participants may also petition the plan administrator to suspend any deferral contributions being made by the participant and receive a payout from the plan in the event of an unforeseeable emergency (as defined in the plan).  No participant or beneficiary may alienate, transfer, pledge or encumber plan benefits prior to payment.

Currently there are no non-employee directors who make contributions to the plan.

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Relocation and Temporary Living Expenses

In connection with the opening of our new principal office in 2010, we have relocated the principal place of employment of several of our executive officers to Lewisville, Texas.  In connection with these relocations, we have paid, on an after-tax basis, certain moving and other relocation expenses, as well as temporary living expenses, for certain executive officers.  Of the persons constituting named executive officers, only Messrs. Vaters and Ferrari received these benefits during 2011.  During 2011, Mr. Vaters was paid $52,466 for temporary housing allowance expenses.  Under his employment agreement entered into in connection with his promotion to President and Chief Executive Officer as of August 1, 2011, the Company has agreed to pay, on an after-tax basis, certain specified moving, housing, travel and other relocation and living costs in connection with his relocation (including a $3,500 monthly housing and living allowance and reimbursement for bi-monthly air travel in connection with Mr. Vaters commuting from his current primary residence to the Dallas / Fort Worth, Texas metropolitan area until the earlier of August 1, 2013 or the time of the relocation of his primary residence). In addition, Mr. Ferrari was paid $48,462 in 2011 for temporary housing and automobile lease expenses and other travel and relocation costs associated with his relocation during the year from Italy to Lewisville, Texas.

Perquisites and Other Personal Benefits

Our executive officers are entitled to or may otherwise be the beneficiaries of certain limited perquisites including a car allowance, reimbursement for tax preparation expenses and an annual physical exam.  In addition, our executive officers and directors are entitled to reimbursement of expenses relating to their spouse’s travel in connection with no more than one Board meeting per year.  We do not consider any of these significant or out of the ordinary course for similarly situated companies.

Other Plans

Executive officers participate in our 401(k) plan on the same basis as other similarly situated employees.  Other than the Orthofix Deferred Compensation Plan, we do not have a long-term retirement plan or other deferred compensation plan.

Employment and Other Agreements with the Company

Pursuant to employment agreement guidelines adopted by the Committee, each of Messrs. Vaters, McCollum, Trelles and McMillan have employment agreements.  Mr. Ferrari, who is employed by the Company’s Italian subsidiary, has an employment relationship that is governed by certain Italian laws and collective bargaining arrangements instead of a written employment agreement.  Generally, our employment agreement guidelines provide that executive officers who report directly to the Chief Executive Officer receive full employment agreements that provide for a term of employment, renewal terms, base salary and bonus provisions, eligibility for equity incentive compensation, benefits and restrictive provisions (non-competition, non-solicitation, confidentiality and invention assignment), as well as a variety of payments depending on the circumstances surrounding the executive officer’s separation from the Company.

The Compensation Committee need not review and approve employment agreements which are legally required or normal and customary in certain jurisdictions and which are not considered “full employment agreements” as outlined in the guidelines.

The employment agreement guidelines do not address every situation, and the Committee deviates and makes employment agreement decisions based on particular facts and circumstances.  Any exceptions to these guidelines must be approved by the Committee.

All officers receiving full employment agreements and selected other executive officers or employees that are exposed to legal risk in the performance of their employment, as well as all directors, also receive indemnity agreements from the Company.  See “Agreements with Named Executive Officers” for more information on the terms of particular employment agreements.

Elements of Post-Termination Executive Compensation

In accordance with our employment agreement guidelines, certain of our senior executive officers have employment agreements with one of our subsidiaries (typically Orthofix Inc. in most instances).  These agreements outline the compensation payable to each executive officer, which is consistent with the pay structure described above.  They are also intended as a retention tool for senior executive officers and to remove some of the uncertainty

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surrounding potential change of control transactions.  To that end, the agreements provide for certain payments upon termination (e.g., without cause, for good reason, etc.), which payments increase in certain instances following a change of control.  For instance, following a change of control, the amount payable for termination without cause or for good reason generally increases by 25% to 50%, depending on the executive.  With respect to a change of control, most agreements provide for a “double-trigger” so that a change of control itself does not trigger any payments.  However, under separate option agreements, all stock options immediately vest upon a change of control without reliance on any other triggering event.  The employment agreements, 2004 LTIP and 2012 LTIP each provide specified definitions of what constitutes a “change of control.”

Stock Ownership Guidelines

Upon recommendation of the Compensation Committee, the Board adopted formal stock ownership guidelines in June 2010.  These guidelines were amended in December 2011.  Under these guidelines, the President and Chief Executive Officer and each outside director are encouraged to have an ownership in the Company’s common stock equal to three times his annual salary or director fee amount, as applicable.  These multiples should be achieved by the later of (i) 5 years from appointment or election, as applicable, or (ii) 5 years from the date of adoption of the applicable requirements. Thereafter, each participant is asked to maintain ownership levels at or above these multiples.

Compliance with Section 162(m) of the Internal Revenue Code

Section 162(m) of the Internal Revenue Code limits the deductibility of compensation payments to our named executive officers in excess of $1 million per year per person, unless certain requirements are met.  Although compensation paid to the named executive officers has historically not exceeded deductibility limits under Section 162(m) of the Internal Revenue Code, to the extent that it is practicable and consistent with our executive compensation philosophy, we intend to comply with Section 162(m) of the Internal Revenue Code.  At our 2009 annual general meeting, our shareholders approved the material terms for the payment of incentive compensation to the named executive officers under the Company’s annual incentive program.  As a result, the compensation paid pursuant to such material terms will be fully deductible by the Company under Section 162(m) of the Code even if such compensation exceeds $1 million for year per person.  If compliance with Section 162(m) of the Internal Revenue Code conflicts with our compensation philosophy or is determined not to be in the best interest of our shareholders, the Committee will abide by our compensation philosophy.

REPORT OF COMPENSATION COMMITTEE

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with the members of management of the Company and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s proxy statement.

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SUMMARY COMPENSATION TABLE

The following table sets forth the compensation earned by or paid to our named executive officers with respect to 2009, 2010 and 2011.  Our named executive officers consist of (i) Robert S. Vaters, our President and Chief Executive Officer (who served as our Executive Vice President and Chief Operating Officer from January 10, 2011 to August 1, 2011 and our Executive Vice President and Chief Financial Officer prior to January 10, 2011), (ii) Brian McCollum, our Senior Vice President of Finance and Chief Financial Officer, (iii) Vicente Trelles, our Executive Vice President of Worldwide Operations and Shared Services, (iv) Bryan McMillan, our President, Global Spine Business Unit , (v) Luigi Ferrari, our President, Global Orthopedics Business Unit, and (vi) Alan W. Milinazzo, our former President and Chief Executive Officer prior to August 1, 2011.

(1)                                 Amounts include salary deferred and further described in “Deferred Compensation.”

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(2)                                 2011 amounts described in “Compensation Discussion & Analysis — Elements of Executive Compensation — Other Bonus Payments.  2010 amounts reflect payment of $3,750 to Mr. McCollum for a special quarterly bonus, and a one-time bonus payment of $20,340 to Mr. McMillan.

(3)                                 Amounts shown do not reflect compensation actually received.  Instead, the amounts shown are the 2011 aggregate grant date fair value of equity awards, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (formerly known as Statement of Financial Accounting Standards No. 123(R)), or ASC 718.  There were no equity grants made during 2010; therefore the aggregate grant date fair value of awards made in 2010 was $-.

(4)                                 Amounts shown reflect cash bonuses paid in 2012 and in 2011 for performance in 2011 and in 2010, respectively, pursuant to our annual incentive program.  These bonuses, and the Committee’s criteria for determining the amounts awarded, are described above under “Compensation Discussion and Analysis — Elements of Executive Compensation — Cash Performance-Based Incentives — Annual Incentive Program.”

(5)                                 Excludes perquisites and other personal benefits unless the aggregate amount of such annual compensation exceeded $10,000 for the named executive officer.  In addition, per SEC disclosure rules applicable to plans that are available to all salaried employees, discounts to fair market value on purchases of Orthofix common stock made by named executive officers pursuant to the SPP are not included as compensation in the tables.

(6)                                 This amount includes $52,466 for housing allowance expenses, $10,800 for car allowance, $9,800 for 401k matching and $1,285 and $480 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance, respectively.

(7)                                 This amount includes $39,890 for housing allowance expenses, $10,800 for car allowance, $9,800 for 401k matching and $888 and $480 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance, respectively.

(8)                                 This amount includes $52,783 for housing allowance expenses, $10,800 for car allowance, $9,800 for 401k matching and $1,040 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance.

(9)                                 This amount includes $10,800 for car allowance, $9,800 for 401k matching, $268 and $290 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance.

(10)                           This amount includes $10,800 for car allowance, $9,800 for 401k matching, and $180 and $290 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance, and $33,377 in relocation expense.

(11)                           This amount includes $10,800 for car allowance, $9,800 for 401k matching, and $163 and $290 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance, and $114,879 in relocation expense.

(12)                           This amount includes $8,100 for car allowance, and $1,045 and $318 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance.

(13)                           Mr. Trelles was not employed by the Company during 2010.

(14)                           Mr. Trelles was not employed by the Company during 2009.

(15)                           Luigi Ferrari is paid in Euros.  Amounts shown for Mr. Ferrari are shown in Dollars assuming conversion from Euros to Dollars using the weighted average rates of exchange prevailing during the 2011 calendar year.

(16)                           This amount includes $48,462 for housing and automobile lease expenses and other travel and relocation costs associated with Mr. Ferrari’s relocation from Italy to Lewisville, Texas in 2011, $36,641 for car allowance, $8,401 for pension contributions, and $2,044 for insurance premiums paid by, or on behalf of, the Company with respect to term life insurance.

(17)                           This amount includes $33,563 for car allowance, $5,300 for pension contributions, and $1,458 for insurance premiums paid by, or on behalf of, the Company with respect to term life insurance.

(18)                           This amount includes $38,756 for car allowance, $5,556 in pension contributions and $1,528 for insurance premiums paid by, or on behalf of, the Company with respect to term life insurance.

(19)                           This amount includes $10,800 for car allowance, and $304 and $363 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance.

(20)                           This amount includes $10,800 for car allowance, and $229 and $272 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance, and 134,107 in relocation expense.

(21)                           Mr. McMillan was not employed by the Company during 2009.

(22)                           Under the terms of an agreement between him and the Company, Mr. Milinazzo does not receive additional fees for his services as director.  Since he is listed in this Summary Compensation Table, he is not listed in the Director Compensation Table below.

(23)                           Mr. Milinazzo ceased employment with the Company as of August 1, 2011. Other compensation includes $6,329 for car allowance, $9,800 for 401k matching, $868 and $352 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance, respectively.

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(24)                           This amount includes $10,800 for car allowance, $9,800 for 401k matching, $1,363 and $528 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance, and $685 for family travel expenses in connection with various executive related meetings.

(25)                           This amount includes $10,800 for car allowance, $9,800 for 401k matching, $1,441 for insurance premiums paid by, or on behalf of, the Company with respect to group term and term life insurance, and $4,141 for family travel expenses in connection with various executive related meetings.

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GRANTS OF PLAN-BASED AWARDS

The following table provides information regarding plan-based awards that were granted during the fiscal year ended December 31, 2011 to our named executive officers.