NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

May 26, 2010

MERIT MEDICAL SYSTEMS, INC.

You are cordially invited to attend the Annual Meeting of Shareholders of Merit Medical Systems, Inc. (the “Company”), which will be held on Wednesday, May 26, 2010, at 3:00 p.m., at the Company’s corporate offices at 1600 West Merit Parkway, South Jordan, Utah, 84095 (the “Annual Meeting”), for the following purposes:

(1)           To elect three directors of the Company, to serve until the Annual Meeting of the Company’s Shareholders in 2013 and until their respective successors have been duly elected and qualified;

(2)           To consider and vote upon a proposal to ratify the appointment of Deloitte & Touché LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2010; and

(3)           To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on April 6, 2010 as the record date for the determination of shareholders entitled to receive notice of and to vote at the Annual Meeting and at any adjournment or postponement thereof.

IMPORTANT

Whether you plan to attend the Annual Meeting or not, we urge you to vote your shares as soon as possible.  Please either sign and return the accompanying card in the postage-paid envelope or instruct us via the Internet as to how you would like your shares voted.  This will ensure representation of your shares at the Annual Meeting if you are unable to attend.  Instructions on how to vote your shares via the Internet are on the proxy card or voting instruction card.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 26, 2010:

This Proxy Statement and the accompanying annual report to shareholders are available at: www.proxyvote.com

Among other things, this Proxy Statement contains information regarding:

·      Date, time and location of the Annual Meeting;

·      Matters being submitted to the shareholders; and

·      Information concerning voting in person at the Annual Meeting.

METHOD FOR ELECTRONIC VIEWING, PRINTING OF THE PROXY MATERIALS:

The record date for the Annual Meeting is April 6, 2010.  Shareholders of record on the record date will be entitled to notice and to vote, in person or by proxy, at the Annual Meeting and any adjournments or postponements thereof.

The Company has chosen the Internet as a method of providing access to its proxy materials, including its Annual Report, to each shareholder of record in a fast and efficient manner.  This reduces the amount of paper necessary to produce these materials, as well as the costs associated with mailing these materials to all shareholders.

Accordingly, on April 14, 2010, the Company will begin mailing Notices Regarding Internet Availability of Proxy Materials (the “Notices”), to all shareholders of record as of April 6, 2010, and post its proxy materials on the website referenced in the Notices (www.proxyvote.com).

As described in the Notices, all shareholders may choose to access the Company’s proxy materials on the website referred to in the Notice or may request to receive a printed set of the Company’s proxy materials.  In addition, the Notices and websites provide information regarding how shareholders may request to receive proxy materials in printed form by either mail or sign-up electronically for e-mail delivery in the future.  This proxy statement contains additional information regarding the proposals to be considered at the Annual Meeting, and shareholders are encouraged to read it in its entirety.

METHODS OF VOTING

The method of voting by proxy differs for shares registered directly in a shareholder’s name, considered the shareholder of record, and shares held in “street name,” which means shares held of record by a trustee or in an account at a brokerage firm, bank, dealer, or other similar organization.  If the shareholder holds shares as a record holder, the shareholder may either vote the shares by proxy on www.proxyvote.com, by means of the telephone or by mail by requesting a printed copy of this Proxy Statement and then voting by telephone or mail, or by attending the Annual Meeting and voting in person.  If a shareholder requests a printed copy of this Proxy Statement, a proxy card (the “Proxy”) will also be mailed to the shareholder.  If a shareholder votes his, her or its proxy by telephone, the Internet or by returning the Proxy to the Company before the Annual Meeting, the individuals designated in the Proxy will vote as the Proxy directs. If a shareholder votes by telephone or over the Internet, the shareholder does not need to return the Proxy.  Telephone and Internet voting facilities for shareholders will be available 24 hours a day, and will close at 11:59 p.m., Eastern Time, on May 25, 2010.

If a shareholder holds shares of the Company’s common stock in “street name,” the shareholder must either instruct his, her or its broker or nominee as to how to vote such shares or obtain a Proxy, executed by the broker or nominee, to be able to vote at the Annual Meeting.

·      Voting by Mail.  If a shareholder chooses to vote by mail, simply mark the enclosed Proxy and complete, sign, date and mail it in the postage-paid envelope provided.  The Proxy must be completed, signed and dated by the shareholder or the shareholder’s authorized representative.

·      Voting by Telephone.  Shareholders of record can vote by phone by following the instructions on the Proxy or

by calling toll-free at 1-800-690-6903. Voice prompts will instruct shareholders to vote their shares and confirm that their vote has been properly recorded.  If the shares are registered in street name, you can vote by telephone when you receive your materials by mail using the toll-free phone number located on your Proxy.  A large number of banks and brokerage firms are participating in the Broadridge Investor Communications Solutions, Inc. (“Broadridge”) online program.  This program provides eligible shareholders the opportunity to vote via the internet or by telephone.  If your bank or brokerage firm is participating in Broadridge’s program, your voting form will provide instructions.

·      Voting over the Internet.  Registered shareholders can vote on the Internet by following the instructions included in the Notices and accessing the Internet at www.proxyvote.com.  As with telephone voting, shareholders can confirm that their votes have been properly recorded.

·      Voting in Person at the Annual Meeting.  If a shareholder plans to attend the Annual Meeting and vote in person, the Company will provide a ballot at the Annual Meeting. Shareholders of record have the right to vote in person at the Annual Meeting.  If a shareholder holds shares in street name and the shareholder wishes to vote at the Annual Meeting, the shareholder will need to bring to the Annual Meeting a legal proxy from the broker or other nominee authorizing the shareholder to vote those shares.

The Company provides Internet proxy voting to allow shareholders to vote their shares on-line, with procedures designed to ensure the authenticity and correctness of proxy vote instructions.  However, please be aware that shareholders must bear any costs associated with their Internet access, such as usage charges from Internet access providers and telephone companies.

If a shareholder receives multiple Notices, the shareholder’s shares are registered in more than one name or are registered in different accounts.  Shareholders should follow the voting instructions on each Notice to ensure that all of their shares are voted.

MERIT MEDICAL SYSTEMS, INC.

1600 West Merit Parkway

South Jordan, Utah  84095

PROXY STATEMENT

Annual Meeting of Shareholders

May 26, 2010

SOLICITATION OF PROXIES

This Proxy Statement is being furnished to the shareholders of Merit Medical Systems, Inc., a Utah corporation (the “Company”), in connection with the solicitation by the Board of Directors of the Company of proxies from holders of outstanding shares of the Company’s common stock, no par value (the “Common Stock”), for use at the Annual Meeting of Shareholders of the Company to be held on Wednesday, May 26, 2010, at 3:00 p.m., at the Company’s corporate offices at 1600 West Merit Parkway, South Jordan, Utah, and at any adjournment or postponement thereof (the “Annual Meeting”).  This Proxy Statement, the Notice of Annual Meeting of Shareholders and the accompanying form of proxy are first being mailed or made available to shareholders of the Company on or about April 14, 2010.

The Company will bear all costs and expenses relating to the solicitation of proxies, including the costs of preparing, printing and mailing to shareholders this Proxy Statement and accompanying materials, as well as the expense of making this Proxy Statement and accompanying materials available on the Internet.  In addition to the solicitation of proxies by use of the mail and the Internet, the directors, officers and employees of the Company, without receiving additional compensation, may solicit proxies personally or by telephone, electronic mail or facsimile.  Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of the shares of Common Stock held by those persons, and the Company will reimburse those brokerage firms, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection therewith.

VOTING

The Board of Directors has fixed the close of business on April 6, 2010 as the record date for determination of shareholders entitled to receive notice of and to vote at the Annual Meeting (the “Record Date”).  As of the Record Date, there were issued and outstanding 28,180,527 shares of Common Stock.  The holders of record of the shares of Common Stock on the Record Date entitled to be voted at the Annual Meeting are entitled to cast one vote per share on each matter submitted to a vote at the Annual Meeting.

Proxies

Shares of Common Stock that are entitled to be voted at the Annual Meeting and are represented by properly executed proxies will be voted in accordance with the instructions on those proxies.  If no instructions are indicated, those shares will be voted FOR the election of each of the three director nominees identified in this Proxy Statement, FOR the ratification of the appointment of Deloitte & Touché LLP (“Deloitte”) to serve as the Company’s independent registered public accounting firm for the year ending December 31, 2010, and, in the discretion of the proxy holder, as to any other matters that may properly come before the Annual Meeting.  The Company is not currently aware of any other matters to be presented at the Annual Meeting.

A shareholder who has executed and returned a proxy may revoke it at any time prior to its exercise at the Annual Meeting by executing and returning a proxy bearing a later date by mail, by voting via the Internet, by filing with the

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Secretary of the Company, at the address set forth above, a written notice of revocation bearing a later date than the proxy being revoked, or by voting the Common Stock covered thereby in person at the Annual Meeting.  In order to revoke a proxy executed with respect to shares held in street name, the shareholder must contact the appropriate broker or nominee.

Vote Required

A majority of the issued and outstanding shares of Common Stock entitled to vote, properly represented in person or by proxy, is required for a quorum at the Annual Meeting.  Abstentions and broker non-votes, which are indications by a broker that it does not have discretionary authority to vote on a particular matter, will be counted as “represented” for the purpose of determining the presence or absence of a quorum.  Under the Utah Revised Business Corporations Act, once a quorum is established, shareholder approval with respect to a particular proposal is generally obtained when the votes cast in favor of the proposal exceed the votes cast against the proposal.

Holders of shares of Common Stock are entitled to one vote at the Annual Meeting for each share of Common Stock held of record on the Record Date.  In the election of directors, shareholders will not be allowed to cumulate their votes.  The three nominees receiving the highest number of votes will be elected.  Approval of the proposal to ratify the appointment of Deloitte to serve as the independent registered public accounting firm of the Company for the year ending December 31, 2010 requires that the votes cast in favor of the proposal must exceed the votes cast against the proposal.  Accordingly, abstentions and broker non-votes will not affect the outcome of the election of directors or the proposal to ratify the appointment of the Company’s independent registered public accounting firm.  Any other matter presented for approval by the shareholders at the Annual Meeting will generally be approved if the number of votes cast in favor of a matter exceeds the number of votes cast in opposition.  With respect to any such matter, abstentions and broker non-votes are not likely to affect the outcome of a vote on such matter.

PROPOSAL NO. 1 — ELECTION OF DIRECTORS

At the Annual Meeting, three directors of the Company are to be elected to serve until the annual meeting of the Company’s shareholders in 2013 and until their successors are duly elected and qualified.  If any of the nominees should be unavailable to serve, which is not now anticipated, the proxies solicited by this Proxy Statement will be voted for other persons as may be designated by the Board of Directors.  The three nominees receiving the highest number of votes at the Annual Meeting will be elected.

Classification of Board of Directors

The Company’s Articles of Incorporation, as amended, provide for the classification of the Board of Directors, also known as a “staggered board.”  The directors of the Company are divided into three classes, with the directors in each class serving a three-year term.  The classes are staggered, with the terms of one-third of the directors, as near as possible, expiring at each annual shareholders meeting.  Based upon the existing classification of the Board of Directors, the terms of Rex C. Bean, Richard W. Edelman and Michael E. Stillabower, M.D. are scheduled to expire in connection with the Annual Meeting.

Nominees for Election as Directors

The Board of Directors and its Nominating and Corporate Governance Committee (the “Nominating Committee”) believe that each of the following nominees possesses the experience and qualifications that directors of the Company should possess, as described in detail below, and that the experience and qualifications of each nominee compliments the experience and qualifications of the other nominees.  The experience and qualifications of each nominee, including information regarding the specific experience, qualifications, attributes and skills that led the Board of Directors and the Nominating Committee to conclude that he should be nominated to serve as a director of the Company at the present time, in light of the Company’s business and structure, are set forth below:

Rex C. Bean, 80, has been a director of the Company since 1988.  Mr. Bean retired from the U.S. Air Force in 1987 and is principally engaged in the management of private investments.  Mr. Bean was awarded a Bachelor of Science degree in Electrical Engineering from Utah State University and performed graduate work in electrical engineering at Syracuse University.  Mr. Bean contributes a unique perspective to the Board of Directors, having served as a director of the Company since its early stages.  Mr. Bean’s education and training in electrical engineering have served the Company

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extremely well, as he has participated in the development and evaluation of many of the Company’s products during more than 20 years of service as a director.  Mr. Bean, who is an independent director, understands the Company’s operations and culture in depth, and is diligent in his efforts to preserve the Company’s guiding principles and values, notwithstanding the tremendous growth and expansion the Company has experienced during his service.

Richard W. Edelman, 69, has been a director of the Company since 1988.  From 2000 to the present, Mr. Edelman has served as a Managing Director and Senior Vice President of SMH Capital Inc., an investment banking firm (“SMH”).  From 2000 to 2006, he was the Managing Director and Manager of SMH’s Dallas branch.  From 1998 to 2000, he was a Senior Vice President and Branch Manager of Southwest Securities, Inc., a stock brokerage firm headquartered in Dallas, Texas.  From 1996 to 1998, he was Managing Director of Rodman & Renshaw, Inc., a stock brokerage firm.  From 1987 to 1996, he was employed by Southwest Securities, Inc. as a Senior Vice President and securities analyst.  Prior to joining Southwest Securities, Inc. in 1987, Mr. Edelman was a securities analyst and Vice President for Schneider, Bernet and Hickman, a Dallas, Texas securities firm.  Mr. Edelman obtained a Master of Business Administration degree from Columbia University in 1966.  The Board of Directors nominated Mr. Edelman for election to serve as a director, in part, because of the depth of his financial training and experience, his analytical acumen and his extensive history as a director of the Company.  Mr. Edelman possesses a keen ability to review and understand financial information, both with respect to the Company and with respect to potential business partners and acquisition candidates.  His financial training and experience have been extremely valuable to the Board of Directors in his service as the Chairman of the Audit Committee and his qualification as a financial expert.  As an independent director, Mr. Edelman has demonstrated his ability to ask difficult questions and encourage the Company’s implementation of strong financial practices.

Michael E. Stillabower, M.D., 66, has been a director of the Company since 1996.  Dr. Stillabower has been a physician in private practice in Wilmington, Delaware since 1980.  In 1999, Dr. Stillabower was appointed Director, Cardiovascular Research, of Christiana Care Health Systems.  From 1988 to 1999, he was Chief of Cardiology at the Medical Center of Delaware, where he had held a number of appointments including Director, Coronary Care Unit, from 1984 to 1988.  In May 1995 he was appointed Clinical Associate Professor of Medicine, Jefferson Medical College in Philadelphia, Pennsylvania, where he obtained his M.D. degree in 1976.  He is an elected Fellow of the American College of Cardiology and a member of other professional associations and is actively engaged in cardiology research, instruction and publication of related papers and abstracts.  Dr. Stillabower’s nomination reflects the Board of Directors’ recognition of his recognized expertise in the medical profession, his valuable role in developing and evaluating existing and proposed Company products and his understanding of the medical community and the markets for the Company’s products.  Dr. Stillabower contributes more than 30 years of specialized training and experience in cardiology and related fields to the Board of Directors, and has actively participated in the development and commercialization of many of the Company’s products.  He has used the Company’s products in cardiac procedures, and provides valuable insights from a practitioner’s viewpoint.  Dr. Stillabower is an independent director.

The Board of Directors recommends that shareholders vote FOR each of the foregoing nominees to serve as a director of the Company.

Directors Whose Terms of Office Continue

The experience and qualifications of each continuing director of the Company, including information regarding the specific experience, qualifications, attributes and skills that led the Board of Directors and the Nominating Committee to conclude that he should serve as a director of the Company at the present time, in light of the Company’s business and structure, are set forth below:

James J. Ellis, 76, has been a director of the Company since November 1995.  He has been Managing Partner of Ellis Rosier and Associates, an insurance and investment firm, since 1992.  Mr. Ellis served as General Manager of MONY Financial Services, Dallas, Texas, from 1979 until his retirement in 1992.  He also serves as a director of Jack Henry & Associates, Inc., a publicly-traded company engaged in the sales and service of software for the banking industry.  Mr. Ellis received a Bachelor degree of Business and Public Administration from the University of Missouri in 1956.  Mr. Ellis’ term as a director expires in 2011.  The Board of Directors recognizes the breadth and depth of Mr. Ellis’ considerable business and financial expertise.  Mr. Ellis brings to the Board of Directors valuable experience serving as a director of other public companies, which enhances his contributions to the activities of the Board of Directors, including his service as the Chairman of the Compensation Committee.  Mr. Ellis has applied his extensive financial acumen to encourage disciplined financial management in the Company’s operations.  Mr. Ellis’ finance and investment skills, together with his experience in the areas of corporate governance and compliance, have been increasingly valuable to the deliberations of the Board of

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Directors, as the Company has explored and pursued various growth and expansion opportunities.  Mr. Ellis is an independent director.

Fred P. Lampropoulos, 60, has been Chairman of the Board, Chief Executive Officer (“CEO”) and President of the Company since its formation in July 1987.  From 1983 to June 1987, Mr. Lampropoulos was Chairman of the Board and President of Utah Medical Products, Inc., a medical device manufacturer.  He has been involved in and holds more than 100 patents on devices used in the diagnosis and therapeutic treatment of cardiovascular disease.  He serves on several community and advisory boards and has been the recipient of numerous awards, including the 2003 Utah Governor’s Medal for Science and Technology.  Mr. Lampropoulos’ term as a director expires in 2012.  The Board of Directors believes the Company benefits immensely from Mr. Lampropoulos’ experience as founder, Chief Executive Officer and President of the Company.  He plays an invaluable role in communicating the expectations, advice, concerns and encouragement of the Board of Directors to the Company’s employees.  Mr. Lampropoulos has a deep knowledge and understanding of the Company, as well as the markets in which the Company’s products compete.  Mr. Lampropoulos also performs a critical function as the Chairman of the Board, providing decisive leadership and direction to the activities and deliberations of the Board of Directors.  The Board of Directors also believes Mr. Lampropoulos’ drive and determination are significant factors in the Company’s growth and development, and continue to be tremendous assets to the Company and its shareholders.

Franklin J. Miller, M.D., 69, has been a director of the Company since 2005, and served as a consultant to the Company, assisting in product testing and development, from 1997 through March 2005.  Dr. Miller retired as a Professor of Radiology and Surgery from the University of Utah Department of Radiology in 2005, where he was the Director of Interventional Radiology from 1976 through 2001.  In January 2002, Dr. Miller was appointed as Clinical Professor of Radiology at the University of California, San Diego, where he began the Hereditary Hemorrhagic Telangiectasia Clinic, one of only eight such clinics in the United States.  Dr. Miller has served on advisory boards to several medical device companies and has been on the editorial and review boards for numerous medical journals.  He is a graduate of Temple University Medical School, and served his resident and fellowship physician training at Johns Hopkins Hospital.  Dr. Miller’s term as a director expires in 2012.  Dr. Miller contributes a valuable set of skills, training and experiences to the deliberations of the Board of Directors.  Prior to joining the Board of Directors, Dr. Miller was actively engaged as a consultant in the Company’s product testing and development activities.  During his service as a director, Dr. Miller has continued to provide critical advice regarding the Company’s product development strategy, and plays a significant role in the Company’s evaluation of acquisition and other growth opportunities.  Based, in part, on his extensive medical training and his experience with various medical devices, Dr. Miller provides the Board of Directors valuable insight regarding the needs and preferences of the medical professionals who use the Company’s products.  Dr. Miller is an independent director.

Kent W. Stanger, 55, has been Chief Financial Officer, Secretary, Treasurer and a director of the Company since 1987.  Prior to joining the Company, Mr. Stanger was the controller for Utah Medical Products, Inc., a medical device manufacturer, from 1985 to August 1987.  Prior to 1985, he was the corporate controller for Laser Corporation, American Laser and Modulaire Industries, Inc., and was a practicing certified public accountant from 1979 through 1982 with Hansen, Barnett and Maxwell, a Utah accounting firm.  Mr. Stanger received a Bachelor of Arts degree in accounting from Weber State University in 1978.  Mr. Stanger’s term as a director expires in 2011.  Mr. Stanger was a founder of the Company and, through more than 20 years of service as the principal financial manager of the Company, has developed a broad understanding of the Company’s business and operations, as well as the markets in which the Company competes.  The Board of Directors values Mr. Stanger’s accounting and financial management skills, and benefits greatly from his participation in the deliberation of the Board of Directors, as well as his ability to implement the strategic objectives identified by the Board of Directors.  Along with Mr. Lampropoulos, Mr. Stanger plays an important role in communicating the expectations, advice, concerns and encouragement of the Board of Directors to the Company’s employees.

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CORPORATE GOVERNANCE

Committees of the Board

The Board of Directors has standing Audit, Compensation, and Nominating and Corporate Governance Committees.  The Company believes each of the directors serving on the Audit, Compensation and Nominating and Corporate Governance Committees is an independent director for purposes of the Marketplace Rules of The Nasdaq Stock Market, on which the Common Stock is currently quoted, and that each of the directors serving on the Compensation Committee is an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).  During the year ended December 31, 2009, the Board of Directors held 13 meetings.  No director attended fewer than 75% of the total number of meetings of the Board of Directors and of any committee on which he served.

Audit Committee.  The Audit Committee meets to review and discuss the Company’s accounting practices and procedures with the Company’s management and independent public accountants, and to review the quarterly and annual financial statements of the Company.  The Audit Committee assists the Board of Directors in fulfilling its responsibility for oversight of the quality and integrity of the Company’s accounting, auditing and reporting practices.  The Audit Committee’s primary duties include reviewing the scope and adequacy of the Company’s internal accounting and financial controls; reviewing the independence of the Company’s independent registered public accounting firm; approving the scope of the audit activities of the Company’s independent registered public accounting firm; approving the fees of the Company’s independent registered public accounting firm; approving any non-audit related services; reviewing the audit results; reviewing the objectivity and effectiveness of the Company’s internal audit function; and reviewing the Company’s financial reporting activities and the accounting standards and principles followed. The Audit Committee Report appears on Page 29 below.

Deloitte currently serves as the Company’s independent registered public accounting firm.  The current members of the Audit Committee are Richard W. Edelman (Chairman), James J. Ellis and Rex C. Bean, each of whom is an “independent director” for purposes of the Marketplace Rules of The Nasdaq Global Select Market.  The Board of Directors has determined that Richard W. Edelman, who serves as the Chairman of the Audit Committee, is an audit committee financial expert as defined in Item 407(d) of Regulation S-K under the Securities Exchange Act of 1934, as amended.  The Board of Directors has adopted a written charter for the Audit Committee, a copy of which is available on the Company’s Internet website, www.merit.com.  The Audit Committee met five times during 2009.

Compensation Committee.  The Compensation Committee is responsible for overseeing, reviewing and approving executive compensation and benefit programs of the Company.  The members of the Compensation Committee are James J. Ellis (Chairman), Rex C. Bean and Franklin J. Miller.  Each of the members of the Compensation Committee is a non-employee director who qualifies as (i) an “independent director” for purposes of the Marketplace Rules of The Nasdaq Global Select Market, (ii) a “non-employee director” under Rule 16b-3 of the Securities Exchange Act of 1934 and (iii) an “outside director” under Section 162(m) of the Internal Revenue Code.

The Board of Directors has adopted a written Compensation Committee Charter, a copy of which is available on the Company’s Internet website, www.merit.com.  Additional information regarding the functions, procedures and authority of the Compensation Committee is provided in the Compensation Discussion and Analysis beginning on page 9 below.  The Compensation Committee Report appears on page 15 below.  The Compensation Committee met three during 2009; however, the members of the Compensation Committee met informally and discussed compensation issues affecting the Company at other times throughout the year as well.

Nominating and Corporate Governance Committee.  The Nominating Committee is responsible for overseeing the nomination of the Company’s directors.  The Nominating Committee selects, evaluates and recommends to the full Board of Directors qualified candidates for election to the Board of Directors.  The members of the Nominating Committee are Rex C. Bean (Chairman), James J. Ellis, and Michael E. Stillabower, M.D.  The Nominating Committee met once in 2009.  The Board of Directors has adopted a written charter for the Nominating Committee, a copy of which is available on the Company’s Internet website, www.merit.com.

Nomination Process

The policy of the Nominating Committee is to consider properly-submitted shareholder recommendations for candidates to serve as directors of the Company.  In evaluating those recommendations, the Nominating Committee seeks to achieve a balance of knowledge, experience and capability on the Board of Directors and to address the membership

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criteria described below.  Any shareholder wishing to recommend a candidate for consideration by the Nominating Committee should submit a recommendation in writing indicating the candidate’s qualifications and other relevant biographical information and provide confirmation of the candidate’s consent to serve as a director.  This information should be addressed to Rashelle Perry, Chief Legal Officer of the Company, at 1600 West Merit Parkway, South Jordan, Utah 84095.

The Nominating Committee reviews the appropriate skills and characteristics required of directors in the context of the current composition of the Board of Directors.  There is currently no set of specific minimum qualifications that must be met by a nominee recommended by the Nominating Committee, as different factors may assume greater or lesser significance at particular times and the needs of the Board of Directors may vary in light of its composition and the Nominating Committee’s perceptions about future issues and needs.  Among the factors the Nominating Committee typically considers are a candidate’s independence, skills, integrity, policy-making experience, ability to work constructively with the Company’s management and directors, capacity to evaluate strategy and reach sound conclusions, availability of time, awareness of the social, political and economic environment and diversity.

The Nominating Committee utilizes a variety of methods for identifying and evaluating director nominees.  The Nominating Committee assesses the appropriate size of the Board of Directors, and whether any vacancies on the Board of Directors are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Nominating Committee considers various potential candidates for director.  Candidates may come to the attention of the Nominating Committee through various means, including current directors, professional search firms, shareholder recommendations or other referrals.  Candidates are evaluated by the Nominating Committee, and may be considered at any point during the year.  All director nominee recommendations which are properly submitted to the Nominating Committee are considered by the Nominating Committee prior to the issuance of the proxy statement for the next annual meeting of shareholders.  Any materials provided to the Company by a shareholder in connection with the recommendation of a director candidate are forwarded to the Nominating Committee, which considers the recommended candidate in light of the director qualifications discussed above.  To date, the Nominating Committee has not engaged a professional search firm to assist in identifying qualified candidates for service on the Board of Directors.

Board Diversity

In identifying nominees, the Nominating Committee does not have a formal policy regarding the consideration of gender, race, sexual preference, religion and other traits typically associated with the term “diversity.”  As described in “Nomination Process” above, the Nominating Committee considers it important that the Board of Directors be composed of directors with a diverse range of experience, areas of expertise and skills, but has not adopted any formal policy regarding diversity with respect to director nominees.

Board Leadership Structure and Role in Risk Oversight

Mr. Fred P. Lampropoulos currently serves as the Chairman of the Board and Chief Executive Officer of the Company.  The Board of Directors and the Nominating Committee believe that the traditional practice of combining the roles of chairman of the board and chief executive officer currently provides the preferred form of leadership for the Company.  Given Mr. Lampropoulos’ vast experience since founding the Company 1987, his involvement as an inventor and holder of more than 100 patents on diagnostic and therapeutic devices, the respect which he has earned from the Company’s employees, business partners and shareholders, and his proven leadership skills, the Board of Directors believes the best interests of the Company’s shareholders are met by Mr. Lampropoulos’ continued service in both capacities.  The Board of Directors believes Mr. Lampropoulos’ fulfillment of both responsibilities encourages clear accountability and effective decision-making, and provides strong leadership for the Company’s employees and other stakeholders.

Given the outstanding experience and qualifications the Company’s independent directors contribute to the deliberations and activities of the Board of Directors, the Company has implemented a number of practices designed to encourage effective corporate governance.  These practices include:

·              the requirement that at least a majority of the Company’s directors meet the standards of independence applicable to the Company; and

·              regular executive sessions of the Board of Directors and its committees, which are typically held in conjunction with each regularly scheduled Board of Directors and committee meeting and include

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individual sessions with representatives of the Company’s independent registered public accounting firm, internal auditors and legal counsel.

The Board of Directors believes no single leadership model is appropriate for all companies at all times.  The Board of Directors recognizes that, depending on the circumstances, other leadership models, such as a separate, independent chairman of the board, may be appropriate.  Based upon the Company’s future needs and resources, the Board of Directors may determine to modify the existing leadership structure in the future.

The Board of Directors is actively involved in assessing and managing risks that could affect the Company.  One of the roles of the Board of Directors is to periodically assess the processes utilized by management with respect to risk assessment and risk management, including identification by management of the principal risks of the Company’s business, and the implementation by management of appropriate systems to deal with such risks.  The Board of Directors fulfills these responsibilities either directly, through delegation to committees of the Board of Directors, or, as appropriate, through delegation to individual directors.

When the Board of Directors determines to delegate any risk management oversight responsibilities, typically such delegation is made to the standing committees of the Board of Directors.  The Audit Committee is generally responsible for oversight of risks such as those relating to the quality and integrity of the Company’s financial reports, the independence and qualifications of the Company’s independent auditor, and the Company’s compliance with disclosure and financial reporting requirements.  The Nominating Committee is generally responsible for oversight of risks addressed through the identification and recommendation of individuals qualified to become directors of the Company, director and management succession planning and development and implementation of corporate governance principles.  The Compensation Committee is generally responsible for oversight of risks such as those relating to employment policies and the Company’s compensation and benefits systems.  These committees exercise their oversight responsibilities through regular reports from officers of the Corporation responsible for each of these risk areas, including the Company’s Chief Legal Officer and internal auditor, regular meetings to discuss and analyze such risks, and, when necessary, consultation with outside advisors.

Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics (the “Code of Conduct”), which is applicable to all employees, including its principal executive officer, principal financial officer and principal accounting officer, and is supplemented by additional provisions applicable to the CEO and the Company’s senior financial and accounting officers.  The Code of Conduct is posted on the Company’s Internet website, www.merit.com.  All directors, officers and employees of the Company are required to act ethically at all times and in accordance with the principles and policies set forth in the Code of Conduct.

Among other principles and policies, the Code of Conduct sets forth the Company’s position that a conflict of interest exists when a person’s private interest interferes in any way with the interests of the Company.  The Code of Conduct recognizes that a conflict of interest occurs when the Company enters into a transaction in which an employee, officer, or director, or someone related to or affiliated with an employee, officer, or director, has a significant personal interest.  The Code of Conduct also recognizes that a conflict of interest arises when an employee, officer or director of the Company receives an improper benefit as a result of the person’s position with the Company, and prohibits any form of loan or credit to directors or officers of the Company or their family members.

The Code of Conduct obligates employees, officers and directors to promptly disclose conflicts of interest to a supervisor, management, or the Board of Directors.  Any directors who have a conflicting interest in a potential conflicting interest transaction may not participate in the review of that transaction by the Board of Directors.  Any waiver of the Code of Conduct may be made only by the Board of Directors and is required to be promptly disclosed as required by law or the regulations of any exchange on which the Company’s securities are traded, including the Nasdaq Global Select Market.

Whistleblower Hotline

As contemplated by the Code of Conduct, the Company has established a whistleblower hotline that enables Company employees, vendors, customers, and shareholders, as well as other interested parties, to submit confidential and anonymous reports of suspected or actual violations of the Code of Conduct.  The Company’s whistleblower hotline may be accessed by telephone at (877) 874-8416 or online at www.silentwhistle.com.

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s executive officers and directors to file with the Securities and Exchange Commission (the “Commission”) initial reports of ownership and reports of changes in ownership of the Common Stock and other securities that are derivative of the Common Stock.  Executive officers and directors are required by Commission regulations to furnish the Company with copies of all Section 16(a) reports they file.  Based solely upon a review of the copies of those forms and written representations from the Company’s executive officers and directors, the Company believes that all Section 16(a) reports required to be filed by the Company’s officers and directors during the year ended December 31, 2009 were filed.

Shareholder Communication with the Board of Directors

The Board of Directors will receive communications from shareholders.  All communications, except those related to shareholder proposals that are discussed below under the heading “Proposals of Shareholders,” must be sent to the Chairman of the Board of Directors at the Company’s executive offices at 1600 West Merit Parkway, South Jordan, Utah 84095.  Communications submitted to the Board of Directors (other than communications received through the Company’s whistleblower hotline, which are reviewed and addressed by the Audit Committee) are reported to the other directors of the Company at the next regular meeting of the Board of Directors.  All members of the Board of Directors are strongly encouraged to attend the Company’s annual meetings of shareholders.  All members of the Board of Directors were present at the 2009 Annual Meeting of the Company’s Shareholders.

Compensation Committee Interlocks and Insider Participation

The current members of the Compensation Committee are James J. Ellis (Chairman), Rex C. Bean and Franklin J. Miller.  None of the members of the committee is currently, or has formerly been, an officer or employee of the Company or any of its subsidiaries.  The Company had no relationship during 2009 requiring disclosure under Item 404 of Regulation S-K with respect to any of the persons who served on the Compensation Committee during 2009.

EXECUTIVE OFFICERS

In addition to Mr. Lampropoulos and Mr. Stanger, whose biographies are included previously in this Proxy Statement as directors of the Company, certain information is furnished with respect to the following executive officers of the Company:

Martin R. Stephens, 56, joined the Company in 2004 and currently serves as the Company’s Executive Vice President of Sales and Marketing.  Prior to his appointment, Mr. Stephens previously served as the Company’s Executive Vice President of Sales from 2004 to 2009 and as Vice President of Business Development in 2004.  Prior to joining the Company, Mr. Stephens was employed at Zions Utah Bancorporation, Salt Lake City, Utah, where he has served as Vice President of Sales, from 1989 to 2003.  From 1988 to 2004, Mr. Stephens served as an elected Representative in the Utah House of Representatives and served as Speaker of the House from 1998 to 2004.  Mr. Stephens earned a Bachelor of Business Administration from Weber State University.

Arlin D. Nelson, 69, joined the Company in 1988 and currently serves as the Company’s Chief Operating Officer.  Prior to his appointment as Chief Operating Officer, Mr. Nelson worked for the Company as Vice President of the Company’s Research and Development Department from 2004 to 2006 and as Manufacturing and Research & Development Engineer from 1988 to 2004.  Prior to joining the Company, Mr. Nelson served as the Vice President of Operations of Intermountain Packing, Inc. from 1985 to 1987 and served as Co-Founder and Vice President of Operations of Willow Technology, Inc. from 1979 to 1984.

Rashelle Perry, 44, joined the Company in 2001, and currently serves as the Company’s Chief Legal Officer.  Prior to joining the Company, Ms. Perry served as General Counsel for Promedix.com, Salt Lake City, Utah and Corporate Counsel for Unishippers Association, Inc., Salt Lake City, Utah.  Ms. Perry also worked for Novel, Inc. in Orem, Utah and for the law firm of Parsons, Davies, Kinghorn and Peters in LLC, Salt Lake City, Utah.  Ms. Perry earned an Honors Bachelor of Arts degree from the University of Utah in 1989 and a Juris Doctorate degree from the University of Utah in 1992.

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis is designed to provide information regarding the Company’s philosophy and objectives underlying its compensation policies, the processes the Company follows in setting compensation, and the components of compensation that the Company utilizes in compensating its senior executive officers.  This discussion is focused on the Company’s named executive officers (“NEOs”) listed in the Summary Compensation Table and other compensation tables beginning on page 16, which should be read in conjunction with this discussion.

Executive Summary

Under the oversight of the Compensation Committee, the Company’s compensation philosophy is to offer compensation programs to the NEOs that:

·      Focus executives on achieving or exceeding measurable performance targets;

·      Encourage continuation of the Company’s entrepreneurial spirit;

·      Attract and retain highly-qualified and motivated executives;

·      Promote the Company’s guiding principles for adherence to a high ethical environment, as well as health and safety standards; and

·      Align compensation with shareholder value.

In meeting these objectives, the Compensation Committee strives to align the interests of management and shareholders and maximize shareholder value.

The compensation programs specific to the NEOs are overseen by the Compensation Committee. In pursuit of the Company’s compensation philosophy and objectives, the Compensation Committee believes that the compensation packages provided to the NEOs should generally include both cash and equity-based compensation, generally in the form of stock options.  Base pay and benefits are set at levels considered necessary to attract and retain qualified and effective executives.  Variable incentive pay is used to align the compensation of the NEOs with the Company’s short-term business and performance objectives, such as income and overall financial performance.  Equity awards are used to retain key employees and to motivate executives to create long-term shareholder value.

Process for Establishing Compensation

Procedure.  The Compensation Committee has oversight responsibility for establishing the Company’s compensation practices for the Company’s CEO and the other NEOs.  Performance reviews of the Company’s CEO are based on the Company’s performance during a given year, compared with the Company’s performance objectives.  Performance reviews of other NEOs are based on the CEO’s evaluation of individual performance, as well as Company performance for that year.  With respect to the compensation levels for the other NEOs, the Compensation Committee considers input and recommendations from the CEO.  While the CEO makes recommendations concerning salary adjustments, cash bonus programs or award amounts for the other NEOs, the Compensation Committee maintains the ability to modify those recommendations.

Role of Consultants.  The Compensation Committee did not engage an independent compensation consulting firm to review the Company’s executive compensation programs with respect to the year ended December 31, 2009.  In prior years, the Compensation Committee has engaged Hay Group, Inc., a global human resources consulting firm, (“Hay Group”) to serve as its independent advisor and compensation consultant.  The Compensation Committee’s prior engagement of Hay Group has included reviews of the Company’s executive employment arrangements, incentive plan designs and comparative data regarding severance, change in control, benefits and perquisites.  At the direction of the Compensation Committee, Hay Group has also met with the Company’s management to gain a better understanding of the

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Company’s historical compensation policies and practices.  In prior years, Hay Group provided the Compensation Committee with relevant market data and alternatives to consider when making compensation decisions for the NEOs.

Evaluation.  In evaluating compensation of the NEOs for the year ended December 31, 2009, the Compensation Committee took into account executive compensation data which it believed was representative of executive compensation paid in the medical products industry, primarily by reviewing public disclosure of other public companies, as filed with the U.S. Securities and Exchange Commission.  The Compensation Committee also considered, among other factors, the Company’s performance and relative shareholder return, the awards given to the NEOs in past years, the Company’s performance targets for the year ended December 31, 2009, and other factors considered relevant by the Compensation Committee.  Although the Compensation Committee did not engage Hay Group to assist in evaluating the Company’s executive compensation practices during the year ended December 31, 2009, the Compensation Committee did utilize portions of Hay Group’s 2008 compensation analysis in the course of evaluating NEO compensation for the year ended December 31, 2009.  Notwithstanding the Compensation Committee’s use of the 2008 information supplied by Hay Group, the decisions of the Compensation Committee with regard to the NEOs for 2009 were based principally on objective and subjective evaluations of the individual NEOs, without any specific comparative targets.

Other Considerations.  As in past years, for the year ended December 31, 2009, the Compensation Committee also relied on its experience and judgment in making executive compensation decisions after reviewing the performance of the Company for the year ended December 31, 2009 and evaluating the NEOs’ performance and responsibilities with the Company and current compensation arrangements.  The compensation program for the NEOs and the Compensation Committee assessment process have been designed to be flexible in an effort to respond to the evolving business environment and individual circumstances relative to individual performance, as well as internal equity for compensation levels among the Company’s executives.

The Company’s executive compensation program is divided into two general categories, fixed and variable pay.  Fixed pay consists of base salary and provides the NEOs with a level of assured cash compensation appropriate for their positions within the Company.  Variable pay includes annual cash bonus awards and annual performance-based equity awards, each as explained in more detail below.  The Compensation Committee believes that a portion of total compensation should be at-risk to the NEOs and tied to the Company’s achievement of its performance goals.

Generally, at the beginning of each year, the Company’s CEO identifies performance goals which are intended to align the efforts of the Company’s executives, including the NEOs, with the Company’s achievement of its strategic business plan.  The CEO then reviews those performance goals with the Compensation Committee.  Those goals then become targets for the variable pay component of the Company’s executive compensation program.  Because the performance goals are generally established at the beginning of each year and market conditions fluctuate throughout the year, the performance goals may not correspond to subsequent annual earnings estimates released by the Company.

Pay Mix

The allocation between cash and non-cash NEO compensation is influenced by the practices of subjective and objective analysis conducted by the Compensation Committee and the CEO, and is intended to reflect the Compensation Committee’s determination of the appropriate compensation mix among base pay, annual cash incentives and long-term equity incentives.  Actual cash and equity incentive awards are set as a result of the performance of the Company or the individual NEO, depending on the position of the NEO, the type of award and the Company’s performance, compared to established goals.  For the year ended December 31, 2009, the elements of the compensation mix for the NEOs included:

·      Base salary, which is designed to attract and retain executives over time;

·      Annual cash incentive bonus compensation, which is designed to focus on business objectives established by the Compensation Committee and CEO for a particular year;

·      Broad-based employee retirement, welfare and fringe benefits programs, and other personal benefits; and

·      Executive deferred compensation and, for those NEOs who are eligible, post-retirement medical benefits.

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Fixed Compensation

Base Salary

The Compensation Committee does not use a specific formula for evaluating individual performance of the NEOs.  Instead, the performance of the NEOs other than the Company’s CEO is assessed by the CEO based upon each NEO’s contributions to the Company’s business success.  The performance of the Compensation Company’s CEO is assessed by the Compensation Committee in formal and informal meetings with the CEO, as well as executive sessions conducted by the Compensation Committee.  The criteria used in evaluating individual NEO performance, including that of the CEO, vary depending on the executive’s function, but generally include:

·      Leadership inside and outside the Company;

·      Advancing the Company’s interests with customers, vendors and in other strategic business relationships;

·      Product quality and development;

·      Advancement in skills and responsibility; and

·      The Company’s financial results.

The Compensation Committee analyzes each NEO’s base salary in light of individual performance.  Although the Compensation Committee believes that competitive base salaries are necessary to attract and retain a highly qualified and effective executive team, it also believes that a portion of executive compensation should be based on performance.  Based on the Compensation Committee’s evaluation, the Compensation Committee approved the NEO base salaries for the year ended December 31, 2009 which are reflected in the Summary Compensation Table set forth on page 16 below.  The Compensation Committee reviewed the performance of the Company and the NEOs, which included the criteria described above, and established the following base salary amounts for the NEOs for the year ending December 31, 2010: Fred P. Lampropoulos, $660,000; Martin R. Stephens, $350,000; Kent W. Stanger $255,000; Arlin D. Nelson, $225,000; and Rashelle Perry $200,000.

Broad-Based Benefits Programs

The Company offers certain broad-based benefits programs, including benefits such as health, dental, disability and life insurance, health savings accounts, health care reimbursement accounts, paid vacation time and discretionary Company contributions to a 401(k) profit sharing plan.  Benefits are provided to the Company’s executives in accordance with practices within the marketplace.  The Compensation Committee believes such benefits are a necessary element of compensation in attracting and retaining employees.  In addition, the NEOs receive limited perquisites in order to achieve a competitive pay package as detailed in the Summary Compensation Table.

Deferred Compensation Plan and Early Retiree Program

The Company provides a non-qualified deferred compensation plan for the benefit of certain of its highly-compensated management employees, including the NEOs.  Under the non-qualified deferred compensation plan, eligible executives may elect in advance of each calendar year to defer up to 100% of their cash salary and bonus compensation earned with respect to such year.  Amounts deferred are credited to an unfunded liability account maintained by the Company on behalf of the applicable NEO, which account is deemed invested in and earns a rate of return based upon certain notational and self-directed investment options offered under the plan.  In its discretion, the Company may elect to credit each eligible participant’s account under the deferred compensation plan with an employer matching contribution; however, the Company has never made such a matching contribution.  Participant account balances under the deferred compensation plan are fully-vested and will be paid by the Company to each participant upon retirement or separation from employment, or on other specified dates, in a lump sum or in installments according to a schedule elected in advance by the participant.

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Effective in 2007, the Company also adopted an early retiree program allowing certain Company executive employees, including the NEOs, to continue to purchase health benefits through the Company at the rate available to current Company employees plus ten percent (the “Early Retiree Program”).  The Early Retiree Program applies only to retirees who serve as vice presidents of the Company (or in a higher ranking position) at the time of their retirement.  In order to participate in the Early Retiree Program, executive retirees must meet specific criteria, such as having a minimum of ten years of service with the Company, being at least 45 years old at the time of their retirement, and having participated in the Company-sponsored medical plan for a minimum of two years prior to retirement date.  Retiree coverage ceases when the participant elects any other group health insurance coverage or when the participant becomes eligible for Medicare.

The Company and its subsidiaries do not maintain any other executive pension or retirement plans for the NEOs.

Variable Compensation

In general, the Company’s variable compensation programs are designed to align the interests of the Company’s executive officers, including the NEOs, with the Company’s operating and financial results.

Annual Incentive Cash Bonuses

It is the Company’s general practice to provide NEOs with the opportunity to earn annual incentive cash bonus compensation under programs that reward attainment of key Company objectives.  The objectives that underlie the Company’s annual incentive compensation programs may vary between years and between the NEOs, but generally include objectives that reward attainment of targeted sales and earnings levels.  In setting the bonus amounts that an NEO is eligible to earn for achieving specified objectives, the Compensation Committee and the Company’s CEO review bonus and total cash compensation levels for each NEO.  Bonus opportunities for achieving objectives are generally established for each NEO based on job scope and contribution.  Executives have the opportunity to earn discretionary bonuses for extraordinary performance, as determined by the Compensation Committee and/or the CEO.

The decision as to whether to provide an annual incentive cash bonus program to NEOs for any year, the type and funding of any program offered, and the objectives that underlie any program, are subject to the discretion of the CEO and the Compensation Committee and reflect their assessment of general and industry specific conditions existing during the applicable period.  The Compensation Committee and/or the CEO may also exercise discretion based on their assessment of the NEO’s contribution and accountability for the objectives that are the subject of the bonus and any other factors the Compensation Committee and/or the CEO considers relevant.

For 2009, the CEO and the Compensation Committee set internal company goals, the achievement of which enabled the NEOs to earn a cash bonus under the Company’s incentive bonus program.  For 2009, the NEOs, other than Mr. Stephens, were eligible to receive an incentive bonus if the Company achieved aggregate goals established by the Committee in the following categories: sales, gross margins, earnings per share, cost savings, inventory reduction and acquisitions.  Mr. Stephens was eligible to receive his targeted level of incentive bonus if the divisions over which he had supervision achieved certain targeted sales levels for 2009.  The Compensation Committee believes that the 2009 annual cash bonus opportunities were motivators for management employees and were instrumental in influencing Company performance in 2009.  Because the Company materially exceeded the targeted levels of sales, gross margins, earnings per share, cost savings and acquisitions for 2009, the NEOs (other than Mr. Stephens) earned the full amount of their targeted incentive bonuses for 2009 notwithstanding the Company’s failure to meet its inventory reduction goal.  Likewise, Mr. Stephens earned the full amount of his targeted incentive bonus for 2009 based on the sales revenue from the divisions over which he had oversight.  Incentive bonus amounts earned by the NEOs for 2009 are reported under the heading “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table that appears on page 16 below.

Performance Bonuses

In addition to the cash bonus opportunities under the incentive cash bonus program described above, the CEO or Compensation Committee (for the CEO himself) may choose to reward extraordinary performance and achievements by awarding discretionary bonuses to the NEOs and other executives from time to time that are not part of the annual incentive plan or any other plan.  With respect to the NEOs, any discretionary bonuses awarded based on exceptional performance rather than pre-determined performance criteria during 2009 are reported under the heading “Bonus” in column (d) of the Summary Compensation Table that appears on page 16 below.  There is no expectation that all NEOs will receive

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discretionary performance bonuses in any particular year, and the criteria for such bonuses are not established in advance.  For the year ended December 31, 2009, based upon its review of the Company’s performance and Mr. Lampropoulos’ leadership in achieving that performance, the Compensation Committee awarded to Mr. Lampropoulos a discretionary performance bonus in the amount of $100,000.  The Company did not pay any other discretionary performance bonuses during 2009.

Long-Term Incentive Compensation

Historically, long-term equity awards, in the form of stock options, have been granted at the Compensation Committee’s discretion to the NEOs annually in an effort to provide long-term performance-based compensation, to encourage the NEOs to continue their engagement with the Company throughout the vesting periods, and to align management and shareholder interests.  In making awards under the Merit Medical Systems, Inc. Long Term Incentive Plan (the “2006 Incentive Plan”), the Compensation Committee considers grant size, the appropriate combination of equity-based awards, the impact of the grant on the Company’s financial performance, as determined in accordance with the requirements of the Financial Accounting Standards Board ASC Topic 718 (“ASC Topic 718”), and the corresponding compensation value used by the Company in determining the amount of the awards (which may vary from the ASC Topic 718 expense).  Generally, the amount of long-term equity awards granted to the NEOs has been based upon the Compensation Committee’s assessment of each NEO’s expected future contributions to the Company; however, the amount of those awards may be influenced by external factors such as general economic or industry-specific conditions.  The Company generally grants long-term equity awards at the regularly scheduled Compensation Committee meeting held in May or December of each year, but may vary the date of grant from year to year.  After evaluating general economic and industry conditions for the year ended December 31, 2009, as well as the Company’s operating and financial performance during the year, the Compensation Committee elected not to grant any awards to the Company’s executive officers under the 2006 Incentive Plan.  Messrs, Lampropoulos and Stanger were, however, granted options in consideration of their service as directors of the Company.

Options under the 2006 Incentive Plan have been granted to NEOs with exercise prices equal to the closing price per share on the date of each grant, (or if the market was closed on that date, with the most immediately available recent closing price), and have historically vested on an immediate, three-year, or five-year pro-rated basis.  The 2006 Incentive Plan allows for a minimum three-year vesting schedule, although vesting of options may accelerate upon a change in control of the Company.  The Company has not granted options with an exercise price below 100% of the trading price of the underlying shares of Common Stock on the date of grant or granted options that are priced on a date other than the grant date (unless granted on a Saturday or day when the market is closed).  Stock options only have value to the extent the value of the underlying shares of Common Stock on the exercise date exceeds the exercise price.  Accordingly, stock options provide compensation to the NEOs only if the underlying share price increases over the option term.

Other

Employment Agreements

The Compensation Committee has determined that executive employment agreements are a necessary component of the Company’s compensation package in order to provide competitive compensation arrangements, particularly because such agreements are standard in the Company’s industry.  Moreover, the Compensation Committee believes that the change in control provisions within the agreements help to attract and retain the Company’s NEOs by reducing the personal uncertainty and anxiety that arises from the possibility of a future business combination.

The Company has entered into amended and restated employment agreements (collectively, the “Employment Agreements”) with each of the NEOs.  The annual base salaries payable under the Employment Agreements, as adjusted for 2010, are $660,000 for Mr. Lampropoulos; $255,000 for Mr. Stanger; $350,000 for Mr. Stephens; $225,000 for Mr. Nelson; and $200,000 for Ms. Perry.  The amount of the base salary payable to each NEO is subject to change based on salary increases subsequent to December 31, 2008 and review by the Compensation Committee on an annual basis.  The employment status of each of the NEOs pursuant to the Employment Agreements is “at will”: however, the Employment Agreements provide for mandatory severance payments to each NEO in the event the NEO’s employment with the Company is terminated in connection with a “Change in Control.”  Those severance arrangements are discussed in greater detail below under the heading “Executive Compensation Tables and Discussion — Potential Payments upon Termination or Change in Control.”

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In addition to the annual base salary described above, the Employment Agreements also provide that the NEOs shall receive an annual cash bonus in an amount to be determined in the sole discretion of the Board of Directors (which has delegated that authority to the Compensation Committee); provided, however, that for fiscal years ending after a Change in Control, the annual bonus must be at least equal to an NEO’s average annual cash bonus for the last three full fiscal years ending prior to the Change in Control.  The NEOs (and to the extent applicable, their spouses and eligible dependants) are eligible to participate in all incentive, savings and retirement, medical insurance, prescription insurance, dental insurance, term life insurance, long-term disability insurance and other employee benefit plans, policies or arrangements maintained by the Company for its employees generally and, at the discretion of the Compensation Committee, in incentive stock option and other benefit plans maintained by the Company for Company executives.  The Employment Agreements also provide for certain fringe benefits, paid vacation, the furnishing of office and support staff and the reimbursement of business expenses incurred by the NEOs, all in accordance with the Company’s established policies.

The terms of the Employment Agreements reflect in part the concern of the Compensation Committee that any future threatened or actual change in control of the Company, such as an acquisition or merger, could cause disruption and harm to the Company in the event of the resulting loss of any of its key executives.  The change in control provisions in the Employment Agreements are intended to provide a measure of incentive and security to the executives until the resolution of any such threat or actual change in control.  The Compensation Committee believes that such agreements should not include provisions that would obligate a potential acquirer of the Company to make large payouts to the NEOs simply because a change in control has occurred.  Because of this concern, the occurrence of a change in control event alone will not trigger any payment obligations to the NEOs under their respective Employment Agreements.  Additional change in control payment obligations under the Employment Agreements only arise in the event the NEO’s employment is terminated without “Cause” in connection with the change in control or the NEO resigns “for Good Reason” (as defined in the Employment Agreements) in connection with a change in control.  Thus, the Compensation Committee regards the employment agreements as “double trigger” change in control agreements.

Tax Deductibility and Executive Compensation

Section 162(m) of the Code imposes a $1 million annual limit on the amount that a public company may deduct for compensation paid to the company’s chief executive officer during a tax year or to any of the company’s three other most highly compensated executive officers who are still employed at the end of the tax year.  The limit does not apply to compensation that meets the requirements of Code Section 162(m) for “qualified performance-based” compensation (i.e., compensation paid only if the executive meets pre-established, objective goals based upon performance criteria approved by the Company’s shareholders).

The Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Code and attempts, to the extent practical, to implement compensation policies and practices that maximize the potential income tax deductions available to the Company by qualifying such policies and practices as performance-based compensation exempt from the deduction limits of Section 162(m).  In certain situations, the Compensation Committee may approve compensation that will not meet the requirements of Code Section 162(m) in order to ensure competitive levels of total compensation for its executive officers.  No NEO’s compensation in 2009 exceeded the $1 million deduction limit.

Compensation Policies and Practices Relating to Risk Management

The Compensation Committee has reviewed the Company’s compensation program in total, which applies to all of the Company’s full-time employees, and believes that there is no material risk of a material adverse effect on the Company resulting from the program.  As a matter of best practice, the Company intends to continue to monitor its compensation program to ensure that those programs continue to align the interests of the Company’s employees with those of its shareholders while avoiding unnecessary or excessive risk.

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COMPENSATION COMMITTEE REPORT

The Compensation Committee establishes and oversees the design and function of the Company’s executive compensation program.  The undersigned members of the Compensation Committee of the Board of Directors have reviewed and discussed the foregoing Compensation Discussion and Analysis with the management of the Company and recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for the 2010 Annual Meeting.

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EXECUTIVE COMPENSATION TABLES AND DISCUSSION

Summary Compensation Table for 2009

The following Summary Compensation Table summarizes the total compensation paid to or earned by each of the NEOs for the years indicated.

Merit Medical Systems, Inc.

Proxy Table - Compensation Table

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Grants of Plan-Based Awards for 2009

The following table sets forth information concerning non-equity based and equity-based plan awards granted to the NEOs during the year ended December 31, 2009.

Merit Medical Systems, Inc.

Proxy Table - Option Grants in Last Fiscal Year

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Outstanding Equity Awards at Year-End 2009

The following table provides information on the holdings of stock options and other stock awards by the NEOs as of December 31, 2009.

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(1)         Unvested options vest as follows: (i) Mr. Lampropoulos’ option dated 6/27/2007 vests as to 20% on June 27 each year for five years commencing 6/27/2008 and his option dated 5/21/2008 vests as to 20% on May 21 each year for five years commencing 5/21/2009 and his option dated 9/26/2009 vests as to 20% on September 26 each year for five years commencing 9/26/2010; (ii) Mr. Stanger’s option dated 6/27/2007 vests as to 20% on June  27 of each year for five years commencing 6/27/2008, his option dated 5/21/2008 vests as to 20% on May 21 each year for five years commencing 5/21/2009 and his option dated 9/26/2009 vests as to 20% on September 26 each year for five years commencing 9/26/2010; (iii) Mr. Stephens’ option dated 6/27/2007 vests as to 20% on June 27 of each year for five years commencing 6/27/2008 and his option dated 5/21/2008 vests as to 20% on May 21 each year for five years commencing 5/21/2009; (iv) Mr. Nelson’s option dated 6/27/2007 vests as to 20% on June 27 of each year for five years commencing 6/27/2008 and his option dated 5/21/2008 vests as to 20% on May 21 each year for five years commencing 5/21/2009; and (v) Ms. Perry’s option dated 6/27/2007 vests as to 20% on June 27 of each year for five years commencing 6/27/2008 and her option dated 5/21/2008 vests as to 20% on May 21 each year for five years commencing 5/21/2009.

Option Exercises and Stock Vested in 2009

The following table provides information regarding stock options exercised by the NEOs during the year ended December 31, 2009.

(1)          The reported value for this column is determined by multiplying the number of option shares by the difference between the market price of the Common Stock on the date of exercise and the exercise price of the stock option. The value is stated before payment of applicable taxes.

Non-qualified Deferred Compensation for 2009

Pursuant to the Merit Medical Systems, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”), NEOs may elect prior to the beginning of each calendar year to defer the receipt of base salary and bonuses earned for the ensuing calendar year.  Amounts deferred are credited to an unfunded liability account maintained by the Company on behalf of the applicable NEO, which account is deemed invested in and earns a rate of return based upon certain notational, self-directed investment options offered under the Deferred Compensation Plan.  The NEO’s accounts under the Deferred Compensation Plan may also be credited with a discretionary employer matching contribution, although no such discretionary contribution was made for 2009 or any other time since the Deferred Compensation Plan’s inception.  Participant account balances under the Deferred Compensation Plan are fully-vested and will be paid by the Company to each NEO upon retirement or separation from employment, or on other specified dates certain, in a lump sum form or in installments according to a schedule elected in advance by the participant.

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The following table sets forth certain information regarding the account balances and amounts credited under the Deferred Compensation Plan in 2009 with respect to the NEOs.

The table below shows the funds available for notational investment under the Deferred Compensation Plan and their annual rate of return for the calendar year ended December 31, 2009.  These notational investments were generally the same as the mutual fund investment options offered in 2009 under the Company’s 401(k) Plan:

Potential Payments Upon Termination or Change in Control

Employment Agreements.   On December 31, 2008, the Company entered into, amended and restated Employment Agreements (the “Employment Agreements”) with each of the NEOs as described in the Compensation Discussion and Analysis commencing on page 9 above.  The Employment Agreements provide payments and benefits in the event of termination of employment under certain circumstances, including in connection with a change in control as follows:

(a)           Other Than in Connection with a Change in Control.  If an Executive’s employment with the Company is terminated for any reason, voluntarily or involuntarily, with or without “Cause” (as defined below), other than “in Connection with a Change in Control” (as defined below), the Company is obligated to pay the Executive a lump sum cash payment equal to his or her accrued and unpaid base salary and any accrued vacation pay earned but not yet paid through the date of termination, to the extent not already paid, plus a lump sum cash payment equal to the Executive’s accrued annual bonus earned for the Company’s last fiscal year ending immediately prior to the Executive’s date of

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termination, to the extent not already paid (the sum of such payments hereinafter referred to as the “Accrued Obligations”).  Any further severance benefit is solely at the discretion of the Company.  A termination is deemed to be “in Connection with a Change in Control” if it occurs on or within two years after the date of a Change in Control or, in the case of involuntary termination without Cause, within six months prior to a Change in Control and in anticipation of the Change in Control.  A “Change in Control” means: (i) the acquisition in one or more integrated transactions by any individual, entity or group of beneficial ownership of 20% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; (ii) individuals who as of December 31, 2008 constitute the Board of Directors (the “Incumbent Board”), cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a director subsequent to December 31, 2008 whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board; (iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company, subject to certain exceptions set forth in the Employment Agreements; and (iv) the approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(b)           For Good Reason or Without Cause in Connection with a Change in Control.  If an NEO’s employment with the Company is terminated by the NEO for “Good Reason” (as defined below) in Connection with a Change in Control or by the Company without Cause in Connection with a Change in Control, the Company is obligated to: (i) pay to the NEO any Accrued Obligations to the extent not already paid; (ii) pay to the NEO a cash severance benefit equal to two times (three times solely in the case of Mr. Lampropoulos) the sum of (A) the NEO’s annual base salary then in effect, and (B) the NEO’s average annual bonus for the last three full fiscal years ending prior to the Change in Control; (iii) continue to provide group health benefits to the NEO and/or NEO’s eligible spouse and dependent children for two years (three times solely in the case of Mr. Lampropoulos) after the date of the NEO’s termination; (iv) provide the NEO with certain outplacement services at the Company’s expense; and (v) pay or provide to the NEO certain other accrued benefits to the extent not already paid or provided.

For purposes of the Employment Agreements, “Cause” means: (i) the willful and continued failure of an NEO to perform his or her duties after a written demand for substantial performance specifically identifying the deficiencies in the Executive’s performance has been delivered to the NEO by the Board of Directors or, in the case of all NEOs other than Mr. Lampropoulos, the Company’s Chief Executive Officer; (ii) the willful engaging by an NEO in illegal conduct, intentional misconduct or gross negligence which materially and demonstrably injures the Company; or (iii) violation of written Company policies prohibiting workplace discrimination, sexual harassment, and alcohol or substance abuse.  For purposes of the Employment Agreements, “Good Reason” means: (i) the Company’s assignment to the NEO upon or within two years after a Change in Control of any duties inconsistent with or that diminishes the NEO’s duties, authority or responsibilities under the terms of the NEO’s Employment Agreement; (ii) the Company’s failure to comply with certain compensation provisions in the Employment Agreements; (iii) the Company requiring the NEO to relocate to another office or location upon or within two years of a Change in Control; (iv) the failure by the Company to require any successor entity to comply with the terms of a respective Employment Agreement; or (v) the NEO’s voluntary resignation for any reason, in the NEO’s sole discretion, within 30 days after the date of a Change in Control.

(c)           For Cause or Without Good Reason Following a Change in Control.  If the Company terminates an NEO’s employment for Cause on or after the date of a Change in Control, the Company must pay to the NEO his or her annual base salary and accrued vacation and must continue to pay and/or provide certain other welfare benefits to the extent not already provided and/or unpaid.  If an NEO voluntarily terminates his or her employment without Good Reason upon or following a Change in Control, the Company is obligated to pay the NEO for Accrued Obligations and to provide certain other accrued benefits to the extent not already paid and/or provided.

(d)           Upon Death or Disability.  Upon an NEO’s death or disability other than in Connection with a Change in Control, the Company is obligated to pay the NEO (or the NEO’s estate) an amount equal to Accrued Obligations plus any additional severance benefits approved by the Compensation Committee.  If an NEO’s employment is terminated after the date of a Change in Control by reason of the NEO’s death, the Company must also continue to provide certain other benefits to the NEOs family for a stated period.  If an NEO’s employment is terminated after the date of a Change in Control by reason of the NEO’s disability, the Company must also continue to provide certain welfare benefits.

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If a Change in Control with respect to the Company results in compensatory payments to an NEO, including severance benefits and acceleration of vesting of a NEO’s stock options, and if the value of such severance benefits and option acceleration exceeds 2.99 times the NEO’s average W-2 compensation with the Company for the five taxable years preceding the year of the Change in Control (the “Base Period Amount”), the Change in Control related payments and option acceleration would result in an “excess parachute payment” under Code Section 280G.  An NEO would be subject to a 20% excise tax on, and the Company would be unable to deduct, the amount by which such parachute payments to the NEO exceed the NEO’s Base Period Amount.  The Employment Agreements provide that in the event any payments made to an NEO, when added to all other “parachute payments” to the NEO within the meaning of Section 280G of the Code, result in the payment of an “excess parachute payment” to the NEO within the meaning of Section 280G and 4999 of the Code, then: (i) the cash payments owed to the NEO shall be reduced by the minimum amount necessary to avoid the imposition of an excise or penalty tax on the NEO, provided such reduction does not exceed $1,000, or (ii) in all other cases, the Company must pay to the NEO an additional amount (on a fully-grossed-up, after tax basis) sufficient to put the NEO in the same after-tax position that the NEO would have been in had payments under the respective Employment Agreement not been subject to the excise tax under Code Section 4999 (a “Tax Gross-Up Payment”).

Accelerated Stock Option Vesting Upon a Change in Control.  Under the Company’s 2006 Incentive Plan and prior stock option plan, all otherwise unvested stock options held by NEOs become fully vested upon a “change in control” as defined below, without regard to whether the NEO terminates employment.  The Company’s stock option plans generally define a change in control as (i) certain changes in the majority of the Board of Directors within a 24 month period; (ii) the acquisition by any person of 50% or more of the Common Stock or other voting securities; (iii)  consummation of a merger or reorganization of the Company in which neither the Company nor another entity controlled by the Company’s shareholders is the surviving entity; (iv) a sale or other disposition of all or substantially all of the Company’s assets to another entity that is not controlled by the Company’s shareholders; or (v) shareholder approval of a liquidation of the Company.  Additionally, in the case of stock options granted, such options remain exercisable following a change in control for their entire original term notwithstanding termination of the option holder’s employment prior to the scheduled option expiration date.

Amounts Payable Upon a Change in Control without Termination of Employment.

The following table shows for each NEO the intrinsic value of his or her otherwise unvested stock options on December 31, 2009 that would have vested had a “change in control” within the meaning of the Employment Agreements occurred on that date, calculated by multiplying the number of underlying shares by the closing price of Common Stock on the last trading day of 2009 and by then subtracting the applicable option exercise price:

The Employment Agreements do not provide for any additional payments to the NEOs merely upon a Change in Control absent a termination of employment of the NEOs.

Amounts Payable upon Termination of Employment

Termination Without Cause or For Good Reason In Connection with a Change in Control.  The following table shows the amounts that would be payable to each NEO if the Company had undergone a “Change in Control” within the meaning of the Employment Agreements on December 31, 2009 and the NEO’s employment with the Company terminated

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voluntarily for Good Reason or involuntarily without Cause on December 31, 2009.  The following amounts are in addition to accrued vacation and distributions from the Company’s 401(k) Plan that are payable to all salaried employees upon termination of employment: