UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

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 ¨ Soliciting Material Pursuant to §240.14a-12

Halyard Health, Inc.

(Name of Registrant as Specified In Its Charter)

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

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March 11, 2016

Robert Abernathy

Chairman of the Board and

Chief Executive Officer

FELLOW STOCKHOLDERS:

It is my pleasure to invite you to the Annual Meeting of Stockholders of Halyard Health, Inc. (the “Company”). The meeting will be held on Thursday, April 28, 2016, at 9:00 a.m. Eastern time at the Company’s headquarters located at 5405 Windward Parkway, Alpharetta, Georgia 30004.

At the Annual Meeting, stockholders will be asked to elect three directors for a three-year term, ratify the selection of the Company’s independent auditors, approve the compensation for our named executive officers, and approve the material terms of the performance goals under our equity participation plan for management. These matters are fully described in the accompanying Notice of Annual Meeting and proxy statement.

Your vote is important. Regardless of whether you plan to attend the meeting, I urge you to vote your shares as soon as possible. You may vote using the included proxy card by completing, signing, and dating it, then returning it by mail. You may also vote your shares by telephone or through the Internet by following the instructions set forth on the proxy card. Additional information about voting your shares is included in the proxy statement.

Sincerely,

2016 Proxy Statement

Halyard

Health, Inc.

Notice of Annual Meeting of Stockholders

TO BE HELD

April 28, 2016

The Annual Meeting of Stockholders of Halyard Health, Inc. (the “Company”) will be held at the Company’s headquarters, which is located at 5405 Windward Parkway, Alpharetta, Georgia 30004, on Thursday, April 28, 2016, at 9:00 a.m. Eastern time for the following purposes:

1. To elect as directors the three nominees named in the accompanying proxy statement for a three-year term;

2. To ratify the selection of Deloitte & Touche LLP as our independent auditors for 2016;

3. To approve a non-binding resolution to approve the compensation of our named executive officers;

4. To approve the material terms of the performance goals under the Company’s Equity Participation Plan; and

5. To take action upon any other business that may properly come before the meeting or any adjournments of the meeting.

Stockholders of record at the close of business on March 4, 2016 are entitled to notice of and to vote at the meeting or any adjournments.

It is important that your shares be represented at the meeting. I urge you to vote promptly by using the Internet or telephone or by signing, dating and returning the enclosed proxy card.

To attend in person, please register by following the instructions on page 3. If you plan to attend the meeting, we ask that you nevertheless please complete, date, sign and return the enclosed proxy card and mail it as soon as possible in the envelope provided, or vote by telephone or the Internet according to the instructions on your proxy card. If you attend the meeting, you may revoke your proxy and vote your shares in person if you would like to do so.

March 11, 2016	By Order of the Board of Directors.
	Ross Mansbach
	Vice President— Deputy General Counsel and Corporate Secretary

Important Notice Regarding Availability of Proxy Materials for

the Stockholders Meeting to be held on April 28, 2016

This proxy statement along with our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, are available at www.proxyvote.com.

2016 Proxy Statement

Table of Contents

1	Information About Our Annual Meeting
1	How We Provide Proxy Materials
1	Who May Vote
2	How To Vote
2	Effect of Not Instructing Your Broker
3	How Withhold Votes and Abstentions will be Counted
3	How to Revoke or Change Your Vote
3	Votes Required
3	Attending the Annual Meeting
4	Costs of Solicitation
5	Corporate Governance
5	Board Leadership Structure
6	Director Independence
6	Board Meetings
6	Board Committees
11	Communicating with Directors
11	Other Corporate Governance Policies and Practices
14	Proposal 1. Election of Directors
14	Process and Criteria for Nominating Directors
16	Committee Review of Attributes of Current Directors
16	Diversity of Directors
16	The Nominees
18	Directors Continuing in Office
19	Director Compensation
21	2015 Outside Director Compensation
22	Proposal 2. Ratification of Auditors
23	Principal Accounting Firm Fees
23	Audit Committee Approval of Audit and Non-Audit Services
24	Audit Committee Report
25	Proposal 3. Advisory Vote to Approve Named Executive Officer Compensation
26	Compensation Discussion and Analysis
27	Compensation Executive Summary
29	Executive Compensation Objectives and Policies
30	Components of Our Executive Compensation Program

2016 Proxy Statement i

30	Setting Annual Compensation
33	Executive Compensation for 2015
39	Benefits and Other Compensation
40	Executive Compensation for 2016
42	Additional Information About Our Compensation Practices
46	Compensation Committee Report
47	Analysis of Compensation-Related Risks
48	Compensation Tables
48	Summary Compensation Table
52	Grants of Plan-Based Awards Table
53	Discussion of Summary Compensation and Plan-Based Awards Tables
54	Outstanding Equity Awards
56	Option Exercises and Stock Vested
56	Pension Benefits
56	Nonqualified Deferred Compensation
58	Potential Payments on Termination or Change of Control
64	Proposal 4. Vote to Approve the Material Terms of the Performance Goals under the Halyard Health, Inc. Equity Participation Plan
64	General
64	Summary of Section 162(m)
67	Important Provisions of the Equity Participation Plan
67	Summary of Other Significant Terms of the Equity Participation Plan
70	Certain Federal Income Tax Effects
71	Benefit to Named Executive Officers and Others
73	Other Information
73	Security Ownership Information
75	Section 16(a) Beneficial Ownership Reporting Compliance
75	Transactions with Related Persons
76	Stockholders Sharing the Same Household
76	2017 Stockholder Proposals
76	Stockholder Nominations for Board of Directors
77	Annual Meeting Advance Notice Requirements
77	Annual Report
78	Other Matters to be Presented at the Meeting

ii 2016 Proxy Statement

March 11, 2016

Information About Our Annual Meeting Halyard Health, Inc. 5405 Windward Parkway Alpharetta, GA 30004 678-425-9273

On behalf of the Board of Directors of Halyard Health, Inc. (the “Company”), we are soliciting your proxy for use at the 2016 Annual Meeting of Stockholders, to be held on April 28, 2016, at 9:00 a.m. Eastern time at the Company’s headquarters located at 5405 Windward Parkway, Alpharetta, Georgia 30004.

At the annual meeting, stockholders will vote on the following matters:

1. The election of the three nominees named in this proxy statement as directors for a three-year term;

2. The ratification of the selection of Deloitte & Touche LLP as our independent auditors for 2016;

3. A non-binding resolution to approve the compensation of our named executive officers;

4. A resolution to approve the material terms of the performance goals under the Company’s Equity Participation Plan; and

5. Any other business that may properly come before the meeting or any adjournments of the meeting.

Our Board of Directors recommends that you vote your shares FOR each of proposals one through four.

How We Provide Proxy Materials

We began providing our proxy statement and form of proxy to stockholders on March 11, 2016.

As Securities and Exchange Commission (“SEC”) rules permit, we are making our proxy statement and our annual report available to many of our stockholders via the Internet rather than by mail. This reduces printing and delivery costs and supports our sustainability efforts. You may have received in the mail a “Notice of Electronic Availability” explaining how to access this proxy statement and our annual report on the Internet and how to vote online. If you received this Notice but would like to receive a paper copy of the proxy materials, you should follow the instructions contained in the Notice for requesting these materials.

Who May Vote

If you were a stockholder of record at the close of business on the record date of March 4, 2016, you are eligible to vote at the meeting. Each share of our common stock that you own entitles you to one vote. Shares may not be voted cumulatively.

As of the record date, 46,614,947 shares of common stock were outstanding.

If your shares are held by a bank or brokerage firm, you are considered the “beneficial owner” of the shares held in “street name.” If your shares are held in street name, your bank or brokerage firm (the record holder of your shares) forwarded to you these proxy materials, along with a voting instruction card. As the beneficial owner, you have the right to direct your record holder how to vote your shares, and the record holder is required to vote your shares in accordance with your instructions. If you do not give instructions to your bank or brokerage firm, it will nevertheless be entitled to vote your shares with respect to “routine” items, but it will not be permitted to vote your shares with respect to “non-routine” items. In the case of non-routine items, your shares will be considered “broker non-votes” on those proposals.

2016 Proxy Statement 1

Information About Our Annual Meeting Effect of Not Instructing Your Broker

How to Vote

If you are the record holder of shares of our common stock as of the record date, you may vote by using the Internet or telephone, by completing and returning the enclosed proxy card by mail, or by voting in person at the meeting. To vote by telephone or Internet, see the instructions on the proxy card and have the proxy card available when you access the Internet website or place your telephone call. To vote your proxy by mail, or by voting in person at the meeting, mark your vote on the proxy card, then follow the instructions on the card to return it by mail.

If your shares are held in street name, please follow the instructions on the voting instruction card to vote your shares.

If you are the record holder of your shares and you attend the meeting, you may deliver your completed proxy card in person. Additionally, we will pass out written ballots to registered stockholders who wish to vote in person at the meeting. Beneficial owners of shares held in street name who wish to vote at the meeting will need to obtain a power of attorney or proxy from their record holder to do so.

If you return a completed and properly signed proxy card prior to the meeting, or if you vote by telephone or the Internet prior to the meeting, the persons named as proxies on the proxy card will vote your shares according to your directions. The voting results will be certified by independent Inspectors of Election.

If you are a stockholder of record and you sign and return your proxy card, or if you vote using the Internet or by telephone, but you do not specify how you want to vote your shares, the persons named as proxies on the proxy card will vote your shares as follows:

^u  FOR the election of directors named in this proxy statement;

^u  FOR ratification of the selection of our independent auditors;

^u  FOR approval of the compensation of our named executive officers; and

^u  FOR approval of the material terms of the performance goals under the Company’s Equity Participation Plan.

If any other matters are properly presented at the Annual Meeting for consideration, the persons named as proxies on the proxy card will vote as recommended by the Board of Directors or, if no recommendation is given, in their discretion.

Effect of Not Instructing

Your Broker

Routine Matters. If your shares are held in street name and you do not instruct the broker on how to vote your shares, your broker may choose to leave your shares unvoted or to vote your shares on routine matters. “Proposal 2 — Ratification of Auditors” is the only routine matter on the agenda at this year’s Annual Meeting.

Non-Routine Matters. Without instructions from you on how to vote your shares, your broker cannot vote your shares on non-routine matters, including Proposals 1, 3, and 4 resulting in what are known as “broker non-votes.” Broker non-votes will not be considered present or entitled to vote on non-routine matters and will also not be counted for the purpose of determining the number of votes cast on these proposals. Broker non-votes will not affect the outcome of any proposals considered at the Annual Meeting.

2 2016 Proxy Statement

Information About Our Annual Meeting Attending the Annual Meeting

How Withhold Votes and Abstentions Will be Counted

Election of Directors. “Withhold” votes for the election of directors will have no impact on the outcome of the vote. They will not be counted for the purpose of determining the number of votes cast or as votes “for” or “against” a nominee.

Other Proposals. Abstentions will be counted:

^u  in determining the total number of shares entitled to vote on a proposal, and

^u  as votes against a proposal

How To Revoke or Change Your Vote

If you are a stockholder of record, there are several ways to revoke or change your vote:

^u  Mail a revised proxy card with a later date or a written notice of revocation with a later date to the Corporate Secretary of the Company (the revised proxy card or notice of revocation must be received by close of business on April 27, 2016). Use the following address: Halyard Health, Inc., Attn: Corporate Secretary, 5405 Windward Parkway, Suite 100 South, Alpharetta, GA 30004.

^u  Use the Internet voting website or telephone voting procedures (the revocation or change must be completed by 11:59 p.m. Eastern time on April 27, 2016).

^u  Attend the meeting and vote in person. Please note that attendance at the meeting will not revoke a proxy if you do not actually vote at the meeting.

If you hold your shares in street name, the above options for changing your vote or revoking your instructions do not apply and you must follow the instructions received from your bank or broker to change your vote or revoke your proxy.

Votes Required

There must be a quorum to conduct business at the Annual Meeting, which is established by having a majority of the shares of our common stock present in person or represented by proxy. If you vote, your shares will be included in the number of shares to establish the quorum. Abstentions (or “Withhold” votes for the elections of directors) or proxy cards returned without voting instructions and broker non-votes will be counted as present for the purpose of determining whether the quorum requirement is satisfied.

Election of Directors. A director nominee will be elected if he or she receives a plurality of the votes cast at the meeting in person or by proxy. As a result, the three directors receiving the greatest number of “FOR” votes will be elected. Shares cannot be voted for a greater number of persons than the number of nominees named.

Other Proposals or Matters. Approval requires the affirmative vote of a majority of shares that are present at the Annual Meeting in person or by proxy and entitled to vote on the proposal.

If you are a stockholder of record and you do not sign and return a proxy card or vote by telephone or the Internet, your shares will not count toward the quorum requirement and will not affect the outcome of any proposal at the Annual Meeting.

Attending the Annual Meeting

If you are a stockholder of record, you or a duly appointed representative may attend the Annual Meeting in person. Returning your proxy card will not affect your right to attend the Annual Meeting and to vote in person. If you do plan to attend, we ask that you inform us electronically, by telephone, or by checking the appropriate box on your proxy form. This will assist us with meeting preparations and help to expedite your admittance.

2016 Proxy Statement 3

Information About Our Annual Meeting Costs of Solicitation

If your shares are not registered in your own name and you would like to attend the meeting, please ask the broker, trust, bank or other nominee that holds your shares to provide you with written proof of your share ownership as of the record date. This will enable you to gain admission to the meeting.

If you need directions to the meeting, please contact Stockholder Services by telephone at 678-425-9273 or by e-mail at stockholder.services@hyh.com. Please bring a driver’s license or other photo-identification with you to the meeting to facilitate admission to the meeting.

Costs of Solicitation

The Company will bear all costs of this proxy solicitation, including the cost of preparing, printing and delivering materials, and the out-of-pocket expenses of brokers, fiduciaries and other nominees who forward proxy materials to stockholders. In addition to mail and electronic means, our employees may solicit proxies by telephone or otherwise. Our employees will not receive additional compensation for such solicitations. We have retained D. F. King & Co., Inc. to aid in the solicitation at a cost of approximately $9,500 plus reimbursement of out-of-pocket expenses.

4 2016 Proxy Statement

Corporate Governance

Our governance structure and processes are based on a number of important governance documents including our Code of Conduct, Certificate of Incorporation, Corporate Bylaws, Corporate Governance Policies and our Board Committee Charters. These documents, which are available in the Investor’s section of our website at www.halyardhealth.com, guide the Board and our management in the execution of their responsibilities.

The Company believes that there is a direct connection between good corporate governance and long-term, sustained business success, and we believe it is important to uphold sound governance practices. As such, the Board reviews its governance practices and documents on an ongoing basis, considering changing regulatory requirements, governance trends, and issues raised by our stockholders. After careful evaluation, we may periodically make governance changes in view of these matters to maintain current good governance practices and promote shareholder value.

We believe we are in compliance with all applicable corporate governance requirements of the NYSE, the SEC, the Sarbanes-Oxley Act of 2002 and the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that have become effective as of the date of this proxy statement.

Board Leadership Structure

The Board has established a leadership structure that allocates responsibilities between our Chairman of the Board and Chief Executive Officer and our Lead Director. The Board believes that this allocation provides for dynamic Board leadership while maintaining strong independence and oversight.

Consistent with this leadership structure, at least once a quarter our Lead Director, who is an independent director, chairs executive sessions of our non-management directors. Members of the Company’s senior management team do not attend these sessions.

Chairman and Chief Executive Officer Positions

Under current circumstances, it is the Board’s view that a combined Chairman and CEO, coupled with a predominantly independent board and a proactive, independent Lead Director, promotes candid discourse and responsible corporate governance. Combining these roles also helps maintain clear lines of accountability internally and allows the Company’s leadership to speak with a single voice externally. The Board retains the discretion to separate the Chairman and Chief Executive Officer roles at any time if it deems that to be in the best interest of our Company and stockholders.

Robert Abernathy serves as Chairman of the Board and Chief Executive Officer. After careful consideration, the Board believes that with the benefit of Mr. Abernathy’s thirty plus years of operational and management experience at Kimberly-Clark Corporation (“Kimberly-Clark”) and the Company, he has demonstrated the leadership and vision necessary to lead the Board and the Company through our process of separating from Kimberly-Clark and establishing and executing our global business strategies. He maintains an investor-focused perspective, and his leadership has delivered strong performance over an extended period of time. Mr. Abernathy serves in this combined role at the pleasure of the Board without an employment contract.

2016 Proxy Statement 5

Corporate Governance Board Committees

Lead Director

Ronald Dollens serves as our independent Lead Director. Our Corporate Governance Policies outline the significant role and responsibilities of the Lead Director, which include:

^u  Chairing the Executive Committee

^u  Chairing executive sessions at which non-management directors meet outside management’s presence, and providing feedback from such sessions to the Chief Executive Officer

^u  Coordinating the activities of the independent directors

^u  Providing input on agendas and schedules for Board meetings

^u  Leading the annual Board evaluation

^u  Leading (with the Chairman of the Compensation Committee) the Board’s review and discussion of the Chief Executive Officer’s performance

^u  Providing feedback to individual directors following their periodic evaluations

^u  Speaking on behalf of the Board and chairing Board meetings when the Chairman of the Board is unable to do so

^u  Acting as a direct conduit to the Board for stockholders, employees and others according to the Board’s policies

Director Independence

We believe our independent board helps ensure good corporate governance and strong internal controls.

Our Corporate Governance Policies, as adopted by the Board, provide independence standards consistent with the rules and regulations of the SEC and the listing standards of the New York Stock Exchange (“NYSE”). Our independence standards can be found in Section 17 of our Corporate Governance Policies.

The Governance Committee of the Board has determined that all directors and nominees, except for Robert E. Abernathy, are independent directors and meet the independence standards in our Corporate Governance Policies.

Board Meetings

The Board of Directors met six times in 2015. All of the directors attended in excess of 75 percent of the total number of meetings of the Board and the committees on which they served.

Although we do not have a formal policy with respect to director attendance at annual meetings, all directors attended the 2015 Annual Meeting, and we expect that all directors, including those standing for election, will be in attendance at the Annual Meeting on April 28, 2016.

Board Committees

In 2015, the standing committees of the Board included the Audit Committee, Compensation Committee, Governance Committee, and Executive Committee. Effective January 1, 2016, the Board established a Compliance Committee as an additional standing committee. In compliance with applicable NYSE corporate governance listing standards, the Board has adopted Charters for all Committees except the Executive Committee.

Our Committee Charters are available in the Investors section of our website at www.halyardhealth.com.

6 2016 Proxy Statement

Corporate Governance Board Committees

As set forth in our Corporate Governance Policies, and in the charter of each individual committee, the Board’s committees all have the authority to retain independent advisors and consultants, with all costs paid by the Company.

Audit Committee

Chairman: Heidi Fields

Other members: Gary Blackford and Patrick O’Leary

The Board has determined that Ms. Fields is an “audit committee financial expert” under SEC rules and regulations. In addition, all Audit Committee members satisfy the NYSE’s financial literacy requirements and qualify as independent directors under our Corporate Governance Policies. See “Corporate Governance — Director Independence” for additional information on independent directors.

No member of the Audit Committee serves on the audit committees of more than three public companies. Under our Audit Committee Charter and NYSE corporate governance listing standards, if a member were to serve on more than three such committees, the Board would then determine whether this situation impairs the member’s ability to serve effectively on our Audit Committee, and we would post information about this determination on the Investors section of our website at www.halyardhealth.com.

The Committee met six times in 2015.

The Committee’s principal functions, as specified in its Charter, include:

^u  Overseeing:

† the quality and integrity of our financial statements

† our compliance programs in coordination with our Compliance Committee

† our hedging strategies and policies

† the independence, qualification and performance of our independent auditors

† the performance of our internal auditors

^u  Selecting and engaging our independent auditors, subject to stockholder ratification

^u  Pre-approving all audit and non-audit services that our independent auditors provide

^u  Reviewing the scope of audits and audit findings, including any comments or recommendations of our independent auditors

^u  Establishing policies for our internal audit programs

^u  Overseeing our risk management program and receiving periodic reports from management on risk assessments, the risk management process, and issues related to the risks of managing our business

For additional information about the Audit Committee’s oversight activities with respect to our 2015 financial statements, see “Proposal 2. Ratification of Auditors — Audit Committee Report.”

2016 Proxy Statement 7

Corporate Governance Board Committees

Compensation Committee

Chairman: Julie Shimer

Other members: John Byrnes, William Hawkins, and Maria Sainz. Mr. Hawkins was appointed to the Compensation Committee effective January 1, 2016.

Each member of this Committee is an independent director. The Committee met seven times in 2015 and acted by unanimous written consent in lieu of a meeting once in 2015.

The Committee’s principal functions, as specified in its Charter, include:

^u  Establishing and administering the policies governing annual compensation and long-term compensation, including stock option awards, restricted stock awards and restricted share unit awards, such that the policies are designed to align compensation with our overall business strategy and performance

^u  Setting, after an evaluation of his overall performance, the compensation level of the Chief Executive Officer

^u  Determining, in consultation with the Chief Executive Officer, compensation levels and performance targets for our executive officers

^u  Setting annual targets and certifying awards for corporate performance under our corporate incentive compensation plans

^u  Overseeing:

† leadership development for senior management and future senior management candidates

† a periodic review of our long-term and emergency succession planning for the Chief Executive Officer and other key officer positions, in conjunction with our Board

† key organizational effectiveness and engagement policies

^u  Annually reviewing our compensation policies and practices for the purpose of mitigating risks arising from these policies and practices that could reasonably have a material adverse effect

Roles of the Committee and the CEO in Compensation Decisions

Each year, the Committee reviews and sets the compensation of our executive officers, including our Chief Executive Officer. The Committee’s Charter does not permit the Committee to delegate to anyone the authority to establish any compensation policies or programs for the executive officers. With respect to officers that are not executive officers (our “non-executive officers”), our Chief Executive Officer has the authority to establish compensation programs and, subject to certain limits, to approve equity grants. However, only the Committee may make equity grants to our executive officers.

Our Chief Executive Officer makes a recommendation to the Committee each year on the appropriate target annual compensation for each of the other executive officers. The Committee makes the final determination of the target annual compensation for each executive officer, including our Chief Executive Officer. While our Chief Executive Officer and Chief Human Resources Officer typically each attend Committee meetings, none of the other executive officers is present during the portion of the Committee meetings when compensation for executive officers is set. In addition, our Chief Executive Officer is not present during the portion of the Committee meetings when his compensation is set.

8 2016 Proxy Statement

Corporate Governance Board Committees

For additional information on the Committee’s processes and procedures for determining executive compensation, and for a detailed discussion of our compensation policies, see “Compensation Discussion and Analysis.”

Use of Compensation Consultants

The Committee’s Charter authorizes the Committee to retain advisors, including compensation consultants, to assist it in its work. The Committee believes that compensation consultants can provide important market information and perspectives that can help it determine compensation programs that best meet the objectives of our compensation policies. In selecting a consultant, the Committee evaluates the independence of the firm as a whole and of the individual advisors who will be working with the Committee.

The Committee retains an independent executive compensation consultant who, according to the Committee’s written policy, provides services solely to the Committee and not to the Company. The Committee’s consultant has no other business relationship with the Company and receives no payments from the Company other than fees for services to the Committee. The consultant reports directly to the Committee and the Committee may replace the consultant or hire additional consultants at any time. The Committee has selected Meridian Compensation Partners, LLC as its independent consultant.

In 2015, the scope of activities for the Committee’s independent compensation consultant included:

^u  Conducting a review of the executive compensation peer group

^u  Reviewing and commenting on the Company’s executive compensation programs

^u  Conducting a risk assessment of the Company’s executive compensation programs

^u  Attending Committee meetings

^u  Periodically consulting with the Chairman of the Committee

Committee Assessment of Consultant Conflicts of Interest. The Committee has reviewed whether the work provided by Meridian Compensation Partners raises any conflict of interest. Factors considered by the Committee include: (1) whether other services are provided to the Company by the consultant; (2) what percentage of the consultant’s total revenue is made up of fees from the Company, (3) policies or procedures of the consultant that are designed to prevent a conflict of interest; (4) any business or personal relationships between individual consultants involved in the engagement and Committee members; (5) any shares of the Company stock owned by individual consultants involved in the engagement; and (6) any business or personal relationships between our executive officers and the consulting firm or the individual consultants involved in the engagement. Based on its review, the Committee does not believe that the compensation consultants that performed services to the Committee in 2015 have a conflict of interest with respect to the work performed for the Committee.

Committee Report

The Committee has reviewed the “Compensation Discussion and Analysis” section of this proxy statement and has recommended that it be included in this proxy statement. The Committee’s report is located at “Compensation Discussion and Analysis — Compensation Committee Report.”

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee during 2015 were Dr. Shimer, Ms. Sainz, and Mr. Byrnes. None of the members of the Compensation Committee was, during 2015, a current or former officer or employee of the Company. Neither Dr. Shimer nor Ms. Sainz had any

2016 Proxy Statement 9

Corporate Governance Board Committees

relationship with the Company in 2015 requiring disclosure under Item 404 of Regulation S-K. Mr. Byrnes was the Chief Executive Officer of Lincare Corporation until February 2015. The Company’s sales to Lincare Corporation prior to the date Mr. Byrnes retired in February 2015 were $438,408. For information about the Company’s policies on transactions with related parties and the ratification of the agreement with Lincare Corporation, see “Transactions with Related Parties” later in this proxy statement. During 2015, none of our executive officers served as a member of the board of directors or compensation committee of any entity that had one or more executive officers serving as a member of our Board of Directors or Compensation Committee.

Compliance Committee

Chairman: William Hawkins

Other Members: John Byrnes, Maria Sainz and Julie Shimer

Each member of this Committee is an independent director. The Committee was established on January 1, 2016.

The Committee’s principal functions, as specified in its Charter, include the following:

^u  Overseeing the Company’s compliance program in the areas of Code of Conduct, Conflicts of Interest, Consumer Protection, Ethics, Environment, Government Relations, Health and Safety, Customs and Export Controls, False Claims, Foreign Corrupt Practices Act and similar anti-bribery laws, Fraud and Abuse Laws including Anti-Kickback, Information Systems Security, Intellectual Property, Labor & Employment, Physical Security, Quality, Recalls, Regulatory, including FDA, Safety, Sunshine Act, and Transportation

^u  Overseeing the Company’s sustainability, corporate social responsibility and corporate citizenship matters

^u  Monitoring the Company’s efforts to implement programs, policies and procedures relating to compliance matters

^u  Overseeing the investigation of any material noncompliance with laws or the Company’s compliance program, policies or procedures, other than any instances involving financial noncompliance

^u  Reviewing the Company’s compliance risk assessment plan

^u  Identifying and investigating emerging compliance issues and trends which may affect the Company

Governance Committee

Chairman: Gary D. Blackford

Other Members: Heidi Fields and Patrick O’Leary

Each member of this Committee is an independent director. The Committee met five times in 2015.

10 2016 Proxy Statement

Corporate Governance Other Corporate Governance Policies and Practices

The Committee’s principal functions, as specified in its Charter, include the following:

^u  Overseeing the screening and recruitment of prospective Board members and making recommendations to the Board of Directors regarding specific director nominees, as well as overseeing the process for Board nominations

^u  Overseeing corporate governance matters, including developing and recommending to the Board changes to our Corporate Governance Policies

^u  Advising the Board on:

† Board organization, membership, function, performance and compensation

† committee structure and membership

† policies and positions regarding significant stockholder relations issues

^u  Reviewing director independence standards and making recommendations to the Board with respect to the determination of director independence

^u  Monitoring and recommending improvements to the Board’s practices and procedures

^u  Reviewing stockholder proposals and considering how to respond to them

The Committee, in accordance with its Charter and our Certificate of Incorporation, has established criteria and processes for director nominations, including those proposed by stockholders. Those criteria and processes are described in “Proposal 1. Election of Directors — Process and Criteria for Nominating Directors” and “Other Information — Stockholder Nominations for Board of Directors.”

Executive Committee

Chairman: Ron Dollens (Lead Independent Director)

Other Members: Robert Abernathy, Heidi Fields, William Hawkins and Julie Shimer

The Committee did not meet in 2015.

The Committee’s principal function is to exercise, when necessary between Board meetings, the Board’s powers to direct our business and affairs. Accordingly, the Committee has no regular scheduled meetings and it is expected that the Committee will meet each year infrequently or not at all.

Communicating with Directors

The Board has established a process by which stockholders and other interested parties may communicate with the Board, including the Lead Director. That process can be found in the Investors section of our website at www.halyardhealth.com.

Other Corporate Governance Policies and Practices

Corporate Governance Policies. The Board of Directors has adopted Corporate Governance Policies. These policies guide the Company and the Board on matters of corporate governance, including: director responsibilities, Board committees and their Charters, director independence, director compensation and performance assessments, director orientation and education, director access to management, Board access to outside financial, business and legal advisors, and management development and succession planning. To see these policies, go to the Investors section of our website at www.halyardhealth.com.

2016 Proxy Statement 11

Corporate Governance Other Corporate Governance Policies and Practices

Code of Conduct. The Company has a Code of Conduct that applies to all of our directors, executive officers and employees, including our Chief Executive Officer, Chief Financial Officer and Vice President and Controller. It is available in the Investors section of our website at www.halyardhealth.com. Any amendments to or waivers of our Code of Conduct applicable to our Chief Executive Officer, Chief Financial Officer or Vice President and Controller will also be posted at that location.

Board and Management Roles in Risk Oversight. The Board is responsible for providing risk oversight with respect to our operations. In connection with this oversight, the Board particularly focuses on our strategic and operational risks, as well as related risk mitigation. In addition, the Board reviews and oversees management’s response to key risks facing the Company.

The Board’s committees review particular risk areas to assist the Board in its overall risk oversight of the Company:

^u  The Audit Committee oversees our risk management program, with a particular focus on our internal controls, financial statement integrity and fraud risks, and related risk mitigation. In connection with this oversight, the Audit Committee receives regular reports from management on risk assessments, the risk management process, and issues related to the risks of managing our business. The Audit Committee also receives an annual enterprise risk management update, which discusses our key financial, strategic, operational and compliance risks.

^u  The Compensation Committee reviews the risk profile of our compensation policies and practices. This process includes a review of an assessment of our compensation programs, as described in “Compensation Discussion and Analysis — Analysis of Compensation-Related Risks.”

^u  The Governance Committee monitors risks relating to governance matters and recommends appropriate actions in response to those risks.

^u  The Compliance Committee monitors risks relating to certain compliance matters and recommends appropriate actions in response to those risks.

Complementing the Board’s overall risk oversight, our senior executive team identifies and monitors key enterprise-wide and business unit risks, providing the basis for the Board’s risk review and oversight process. Our senior management team is supported by management members from core business units and from our finance, treasury, information technology, global risk management, compliance and legal functions. Management identifies significant risks for review and updates our policies for risk management in areas such as hedging, foreign currency and country risks, product liability, property and casualty risks, and supplier and customer risks. The Board believes the allocation of risk management responsibilities described above supplements the Board’s leadership structure by allocating risk areas to an appropriate committee for oversight, allows for an orderly escalation of issues as necessary, and helps the Board satisfy its risk oversight responsibilities.

Whistleblower Procedures. The Audit Committee has established procedures for receiving, recording and addressing any complaints we receive regarding accounting, internal accounting controls or auditing matters, and for the confidential and anonymous submission, by our employees or others, of any concerns about our accounting or auditing practices. We also maintain a toll-free Code of Conduct telephone line and a website, each allowing our employees and others to voice their concerns anonymously.

12 2016 Proxy Statement

Corporate Governance Other Corporate Governance Policies and Practices

Management Succession Planning. In conjunction with the Board, the Compensation Committee is responsible for periodically reviewing the long-term management development plans and succession plans for the Chief Executive Officer and other key officers, as well as the emergency succession plan for the Chief Executive Officer and other key officers if any of these officers unexpectedly becomes unable to perform his or her duties.

Disclosure Committee. We have established a Disclosure Committee to assist in fulfilling our obligations to maintain disclosure controls and procedures and to coordinate and oversee the process of preparing our periodic securities filings with the SEC. This committee is composed of members of management and is chaired by our Vice President and Controller.

No Executive Loans. We do not extend loans to our executive officers or directors and therefore do not have any such loans outstanding.

Charitable Contributions. The Governance Committee has adopted guidelines for the review and approval of charitable contributions by the Company to organizations or entities with which a director or an executive officer may be affiliated. We will disclose in the Investors section of our website at www.halyardhealth.com any contributions made by us to a tax-exempt organization under the following circumstances:

^u  An independent director serves as an executive officer of the tax-exempt organization; and

^u  If within the preceding three years, contributions in any single year from the Company to the organization exceeded the greater of $1 million or 2 percent of the tax-exempt organization’s consolidated gross revenues.

2016 Proxy Statement 13

Proposal 1.

Election of Directors

Our Board is divided into three classes, as required by our Certificate of Incorporation, with one class of directors elected each year for a three-year term. As of the date of this proxy statement, the Board of Directors consists of nine directors including William Hawkins who was elected to the Board by the Board of Directors effective December 1, 2015. Three of the directors have terms that expire at this year’s Annual Meeting (Class of 2016), three have terms that expire at next year’s Annual Meeting (Class of 2017), and three have terms that expire at the 2018 Annual Meeting (Class of 2018).

The three nominees standing for election at the Annual Meeting are being nominated to serve for a term to expire at the 2019 Annual Meeting of Stockholders (Class of 2019), and until their successors have been duly elected and qualified. All nominees have advised us that they will serve if elected; however, should any nominee become unable to serve, the Board may reduce the number of directors to be elected or select a substitute nominee. If the Board selects a substitute nominee, the shares represented by valid proxies will be voted for the substitute nominee, other than shares voted “Withhold” with respect to the original nominee.

Given the independent status of the nominees, if all nominees are elected at the Annual Meeting, eight of the nine directors on our Board will be independent directors.

Process and Criteria for Nominating Directors

The Board of Directors is responsible for approving candidates for Board membership. The Board has delegated the screening and recruitment process to the Governance Committee, in consultation with the Chairman of the Board and Chief Executive Officer and the Lead Director. The Committee therefore recommends to the Board any new appointments and nominees for election as directors at our annual meeting of stockholders. It also recommends nominees to fill any vacancies. As provided in our Certificate of Incorporation, the Board may elect a new director when a vacancy occurs between annual meetings of stockholders.

The Committee may receive recommendations for Board candidates from various sources, including our directors, management and stockholders. Stockholders may submit recommendations for Board candidates to the Chairman of the Governance Committee at Halyard Health, Inc., c/o Corporate Secretary, 5405 Windward Parkway, Suite 100 South, Alpharetta, GA 30004. Board candidates recommended by stockholders are evaluated using the same criteria as candidates recommended by other sources. In addition, the Governance Committee periodically retains a search firm to assist it in identifying and recruiting director candidates meeting the criteria specified by the Committee. The Committee also has a process for considering nominations submitted by stockholders. For details on this process, see “Other Information — Stockholder Nominations for Board of Directors.”

The Committee believes that the criteria for director nominees should foster effective corporate governance, support our strategies and businesses, take diversity into account and ensure that our directors, as a group, have an overall mix of the attributes needed for an effective Board. The criteria should also support the successful recruitment of qualified candidates.

Qualified candidates for director are those who, in the judgment of the Committee, possess all of the personal attributes and a sufficient mix of the experience attributes listed below to ensure effective service on the Board.

14 2016 Proxy Statement

Proposal 1. Election of Directors Committee Review of Attributes of Current Directors

PERSONAL ATTRIBUTES

Leadership u   Lead in personal and professional lives.	Collaborative u   Actively participate in Board and committee matters.	Ability to communicate u   Possess good interpersonal skills.
Ethical Character u   Possess high standards for ethical behavior.	Independence u   Independent of management and Company (for non- management directors only).	Effectiveness u   Bring a proactive and solution-oriented approach.

EXPERIENCE ATTRIBUTES

ATTRIBUTE	FACTORS THAT MAY BE CONSIDERED
Financial acumen Has good knowledge of business finance and financial statements	u   Satisfies the financial literacy requirements of the NYSE u   Qualifies as an audit committee financial expert under the rules and regulations of the SEC u   Has an accounting, finance or banking background
General business experience Possesses experience that will aid in judgments concerning business issues	u   Has leadership experience as a chief or senior executive officer u   Has experience setting compensation
Industry knowledge Possesses knowledge about our industries	u   Has substantial knowledge of the healthcare industry, including with respect to caregiving, cost reimbursement or regulatory environment u   Has governance/public company board experience
Diversity of background and viewpoint Brings to the Board an appropriate level of diversity	u   Brings a diverse viewpoint that is representative of our customer, consumer, employee and stockholder base u   Provides a different perspective (stemming, for example, from an academic background or experience from outside the healthcare industries)
Special business experience Possesses global management experience and experience with healthcare supplies and medical devices	u   Has international experience u   Has a track record of successful innovation u   Has supply chain management expertise

2016 Proxy Statement 15

Proposal 1. Election of Directors The Nominees

Committee Review of Attributes of Current Directors

The Governance Committee has reviewed the background of each of our current directors and their service on the Board in light of the personal and experience attributes described above. The Committee has determined that each director possesses all of the personal attributes as well as a sufficient mix of the experience attributes.

For details about each director’s specific experience attributes, see “The Nominees” and “Directors Continuing in Office” below.

Diversity of Directors

As noted above, the Governance Committee believes that diversity of backgrounds and viewpoints is a key attribute for directors. As a result, the Committee seeks to have a diverse Board that is representative of our customer, product user, employee and stockholder base. While the Committee carefully considers this diversity when considering nominees for director, the Committee has not established a formal policy regarding diversity in identifying director nominees.

The Nominees

The following three individuals are nominated for election to the Board of Directors for a three-year term expiring at the 2019 Annual Meeting of Stockholders (Class of 2019):

John P. Byrnes, age 57, was elected to our Board in October 2014. Mr. Byrnes served as the Chairman of the Board of Lincare Holdings, Inc. (“Lincare”), a provider of home respiratory care, infusion therapy and medical equipment, from March 2000 through August 2012 and as a director of Lincare from May 1997 to March 2015. Mr. Byrnes was the Chief Executive Officer of Lincare from 1997 until March 2015 and served as Lincare’s President from June 1996 until April 2003. Prior to becoming Lincare’s President, Mr. Byrnes served in a number of capacities at Lincare over a ten-year period, including serving as Chief Operating Officer throughout 1996. Mr. Byrnes was a director of Kinetic Concepts, Inc., a publicly-traded global medical technology company devoted to the discovery, development, manufacturing and marketing of innovative, high- technology therapies and products, from January 2003 until February 2011 and of U.S. Renal Care, Inc., a dialysis provider, from August 2005 until 2012. Mr. Byrnes has been selected to serve as a member of our Board of Directors due to his leadership experience as a chief executive officer, knowledge of, and experience in, the healthcare industry, international experience and governance and public company board experience.

Maria Sainz, age 50, was elected to our Board effective February 1, 2015. Ms. Sainz has served as the President and CEO of Cardiokinetix, a medical device company pioneering a catheter- based treatment for heart failure, since May 2012. She was the President and CEO of Concentric Medical, Inc., a developer of minimally invasive products for the treatment of acute ischemic stroke, from April 2008 until May 2012. In October 2011, Concentric Medical was acquired by Stryker Corporation, a medical technology company, where she was named General Manager of the business unit of Stryker Neurovascular. From 2006 to 2008, Ms. Sainz led integration activities following the acquisition of Guidant Corporation by Boston Scientific. From February 2003 through July 2006, Ms. Sainz served as President of the Cardiac Surgery division of Guidant Corporation. From January 2001 through February 2003, Ms. Sainz served as Vice President, Global Marketing for the Vascular Intervention division of Guidant Corporation. From late 1998 through early 2001, Ms. Sainz served as Vice President of the Intermedics Cardiac Rhythm Management business of Guidant Corporation in Europe. Ms. Sainz also serves as a director of Orthofix International, N.V, a global medical device company, The Spectratenics Corporation, a cardiovascular technology company, and MRI Interventions, Inc., a medical device company. Ms. Sainz has been selected to serve as a member of our Board of Directors due to her leadership experience as a chief executive officer, knowledge of, and experience in, the healthcare industry, international experience, and public company board experience.

16 2016 Proxy Statement

Proposal 1. Election of Directors The Nominees

    Dr. Julie Shimer, age 63, was elected to our Board in October 2014. Dr. Shimer is the Chairman of the Compensation Committee. She is currently a private investor and has 30 years of product development experience, including many years with major communications companies. From March 2007 to April 2012 she served as Chief Executive Officer of Welch Allyn, Inc., a manufacturer of frontline medical products and solutions, having served on the board of directors beginning in July 2002. Previously, Dr. Shimer was President and Chief Executive Officer of Vocera Communications, Inc., a provider of wireless communications systems, also serving on the board of directors. She also has served as general manager at 3Com Corporation and Motorola and has been a product development leader at Motorola and AT&T Bell Laboratories. She has also served as the Chairwoman of Empire State Development Corp., the State of New York’s economic development organization and as an advisor to two private companies, Kitchology, a mobile platform empowering families dealing with special diets through the power of technology and community, and CPLANE Networks, a leader in end-to-end data center and wide area network service orchestration that enables software-defined networking (SDN) and network function virtualization (NFV) services to be launched and managed in a single environment. She also serves on the boards of directors of three nonprofit organizations. Dr. Shimer also serves as a director of Netgear, Inc., a provider of home and small business network solutions, and EarthLink Holdings Corp., a leading managed network and cloud services provider. Dr. Shimer has been selected to serve as a member of our Board of Directors due to her leadership experience as a chief executive officer, knowledge of, and experience in, the healthcare industry, international experience and governance and public company board experience.

The Board of Directors unanimously recommends a vote FOR the election of each of the three nominees for director named above.

2016 Proxy Statement 17

Proposal 1. Election of Directors Directors Continuing in Office

Directors Continuing in Office

The following members of the Board of Directors are continuing in office and have terms expiring as indicated below:

Term Expiring at the 2017 Annual Meeting (Class of 2017):

	Robert E. Abernathy, age 61, has been the Chairman of our Board of Directors and our Chief Executive Officer since our spin-off from Kimberly-Clark on October 31, 2014. He served as President Global Health Care of Kimberly-Clark from June 2014 until our spin-off from Kimberly-Clark on October 31, 2014. Prior to that he served as an Executive Vice President of Kimberly-Clark from November 2013 to June 2014 and prior to that served as Kimberly-Clark’s Group President — Europe, Global Nonwovens, and Continuous Improvement & Sustainability from 2012 to November 2013. He had overall responsibility for Kimberly-Clark’s Health Care business from 1997 to early 2004. His past responsibilities at Kimberly-Clark have also included overseeing its businesses in Asia, Latin America, Eastern Europe, the Middle East and Africa, as well as operations and major project management in North America. He was appointed Vice President — North American Diaper Operations in 1992; Managing Director of Kimberly-Clark Australia Pty. Limited in 1994; Group President — Developing and Emerging Markets in 2004; and Group President — North Atlantic Consumer Products in 2008. Mr. Abernathy also serves as a director of RS Legacy Corporation (formerly RadioShack Corporation). Mr. Abernathy was selected to serve as the Chairman of our Board of Directors due to his leadership experience as our Chief Executive Officer and as an executive vice president of Kimberly-Clark, knowledge of, and experience in, the healthcare industry, international experience and governance and public company board experience.
	Ronald W. Dollens, age 69, was elected to our Board in October 2014. Mr. Dollens is the Lead Director of our Board of Directors, and, as such, serves as the Chairman of the Executive Committee. Mr. Dollens retired as the President and Chief Executive Officer of Guidant Corporation, a global producer of cardiovascular therapeutic devices and related products, in 2005 where he had served since its spin-off from Eli Lilly & Company in 1994. Prior to that time, he held various management positions at Eli Lilly & Company from 1972 until 1994. From 2000 until 2011, he served on the Board of Directors of Kinetic Concepts, Inc., a publicly-traded global medical technology company devoted to the discovery, development, manufacturing and marketing of innovative, high-technology therapies and products, and served as Chairman from 2005 until 2011. Mr. Dollens has also served on the Board of Directors of Abiomed, Inc. from 2006 until October 2010, and Beckman Coulter, Inc. from 1999 until April 2005. Mr. Dollens has been selected to serve as the Lead Director of our Board of Directors due to his leadership experience as a chief executive officer, knowledge of, and experience in, the healthcare industry, international experience and governance and public company board experience.
	Heidi K. Fields, age 61, was elected to our Board in October 2014. Ms. Fields is the Chairperson of the Audit Committee. Ms. Fields retired as the Executive Vice President and Chief Financial Officer of Blue Shield of California, a not-for-profit health plan provider, where she had served since 2003. Prior to that time, she served as the Executive Vice President and Chief Financial Officer of Gap, Inc., a multinational clothing and accessories retailer, from 1999 until 2003. Ms. Fields also serves as a director of Agilent Technologies, Inc., a public research development and manufacturing company, and as a director of Financial Engines, Inc., an investment advisement company. Ms. Fields has been selected to serve as a member of our Board of Directors due to her executive leadership experience as a chief financial officer, financial literacy and experience in finance and accounting, knowledge of, and experience in, the healthcare industry, international experience and governance and public company board experience.

18 2016 Proxy Statement

Proposal 1. Election of Directors Director Compensation

Term Expiring at the 2018 Annual Meeting (Class of 2018):

	William A. Hawkins, age 62, was elected to our Board of Directors in December 2015. Mr. Hawkins is the Chairman of our Compliance Committee. Mr. Hawkins serves as the Lead Director at Immucor, Inc., a leading provider of transfusion and transplantation diagnostic products worldwide. He also served as President and Chief Executive Officer of Immucor from October 2011 to July 2015. From 2008 to 2011, he served as Chairman and Chief Executive Officer of Medtronic, Inc., a global leader in medical technology. He served as President and Chief Executive Officer of Medtronic, Inc. from 2007 to 2008, President and Chief Operating Officer of Medtronic, Inc. from 2004 to 2007, and Senior Vice President and President, Vascular of Medtronic, Inc. from 2001 to 2004. From 1998 to 2001 Mr. Hawkins served as President and Chief Executive Officer of Novoste Corporation, a medical equipment company. Prior thereto, Mr. Hawkins served in a variety of senior roles at American Home Products, a consumer products company, Johnson & Johnson, a healthcare company, Guidant Corporation, a medical products company, and Eli Lilly and Company, a global pharmaceutical company. Mr. Hawkins also serves as a director of Thoratec Corporation, a medical device company. Mr. Hawkins was selected to serve as a member of our Board of Directors due to his leadership experience as a chief executive officer, knowledge of, and experience in, the healthcare industry, international experience and governance and public company board experience.
	Gary D. Blackford, age 58, was elected to our Board in October 2014. Mr. Blackford is the Chairman of our Governance Committee. From 2002 until February 2015, Mr. Blackford was the Chairman of the Board and Chief Executive Officer of Universal Hospital Services, Inc. (“UHS”), a leading, nationwide provider of medical technology outsourcing and services to the health care industry. Mr. Blackford was the Chief Executive Officer of Curative Health Services, Inc., a specialty pharmacy and health services company, from 2001 to 2002. He was also the Chief Executive Officer of ShopforSchool, Inc., an online retailer, from 1999 to 2001. Mr. Blackford also serves as a director of Wright Medical Group, N.V., a global medical device company. Mr. Blackford has been selected to serve as a member of our Board of Directors due to his executive leadership experience as a chief executive officer, financial literacy and experience in finance and accounting, international experience, and governance and public company board experience.
	Patrick J. O’Leary, age 58, was elected to our Board in October 2014. Mr. O’Leary served as Executive Vice President and Chief Financial Officer of SPX Corporation, a global industrial and technological services and products company, from December 2004 until August 2012, when he retired. From October 1996 to December 2004 he served as Chief Financial Officer and Treasurer of SPX Corporation. Mr. O’Leary also serves as a director of PulteGroup, Inc., a homebuilding company and as a director of SPX Corporation. Mr. O’Leary has been selected to serve as a member of our Board of Directors due to his executive leadership experience as a chief financial officer, financial literacy and experience in finance and accounting, international experience, and governance and public company board experience.

Director Compensation

Directors who are not officers or employees of the Company or any of our subsidiaries, affiliates or equity companies are “Outside Directors” for compensation purposes and are compensated for their services under our Outside Directors’ Compensation Plan. All independent directors currently on our Board are Outside Directors and are compensated under this Plan.

Our objectives for Outside Director compensation are:

^u  to attract qualified candidates for Board service

^u  to remain competitive with the median compensation paid to outside directors of comparable companies

2016 Proxy Statement 19

Proposal 1. Election of Directors Director Compensation

^u  to keep pace with changes in practices in director compensation

^u  to reinforce our practice of encouraging stock ownership by our directors

In 2015, our Outside Director compensation was established based on the median non-management director compensation for our peers.

The table below shows how we structure Outside Director compensation:

Board Members	Cash retainer: $70,000 annually, paid in four quarterly payments at the beginning of each quarter. Restricted share units: Annual grant with a value of $140,000, awarded and valued on the first business day of the year
Committee Chairs	Additional cash compensation of $15,000, paid in four quarterly payments at the beginning of each quarter
Lead Director	Additional cash compensation of $20,000, paid in four quarterly payments at the beginning of each quarter

New Outside Directors receive a pro-rated annual retainer and grant of restricted share units based on the month when they joined the Board.

We also reimburse Outside Directors for expenses incurred in attending Board or committee meetings.

Restricted share units are not shares of our common stock. Rather, restricted share units represent the right to receive a pre-determined number of shares of our common stock within 90 days following a “restricted period” that begins on the date of grant and expires on the date the Outside Director retires from or otherwise terminates service on the Board. In this way, they align the director’s interests with the interests of our stockholders. Outside Directors may not dispose of the units or use them in a pledge or similar transaction. Outside Directors also receive additional restricted share units equivalent in value to the dividends, if any, that would have been paid to them if the restricted share units granted to them were shares of our common stock.

20 2016 Proxy Statement

Proposal 1. Election of Directors 2015 Outside Director Compensation

2015 Outside Director Compensation

The following table shows the compensation paid to each Outside Director for his or her service in 2015:

Name	Fees Earned or Paid in Cash($)		Stock Awards($) (1)(2)		Total($)
Gary D. Blackford		70,000		140,000		210,000
John P. Byrnes		70,000		140,000		210,000
Ronald W. Dollens		90,000		140,000		230,000
Heidi K. Fields		85,000		140,000		225,000
William A. Hawkins, III (3)		5,833		11,667		17,500
Patrick O’Leary		70,000		140,000		210,000
Maria Sainz		70,000		140,000		210,000
Dr. Julie Shimer		85,000		140,000		225,000

(1) Amounts shown reflect the grant date fair value of those grants, determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 — Stock Compensation (“ASC Topic 718”) for restricted share unit awards granted pursuant to our 2015 Outside Directors’ Compensation Plan. See Note 10 to our audited consolidated and combined financial statements included in our Annual Report on Form 10-K for 2015 for the assumptions used in valuing these restricted share units.

(2) Each director received 3,027 restricted share units on January 2, 2015, with the exception of Ms. Sainz who received 3,143 shares on February 2, 2015 and Mr. Hawkins who received 355 shares on December 1, 2015.

(3) William Hawkins joined the Board on December 1, 2015. Mr. Hawkins received a pro-rated annual retainer and a pro-rated grant of restricted share units based upon this effective date.

Other than the cash retainer and grants of restricted share units previously described, no Outside Director received any compensation or perquisites from the Company for services as a director in 2015.

A director who is not an Outside Director does not receive any compensation for services as a member of the Board or any committee, but is reimbursed for expenses incurred as a result of the services.

2016 Proxy Statement 21

Proposal 2.

Ratification of Auditors

The Audit Committee of the Board of Directors is directly responsible for the appointment, compensation, retention and oversight of our independent auditors. The Audit Committee is also responsible for overseeing the negotiation of the audit fees associated with retaining our independent auditors. To assure continuing auditor independence, the Audit Committee periodically considers whether a different audit firm should perform our independent audit work. Also, in connection with the mandated rotation of the independent auditor’s lead engagement partner, the Audit Committee and its chairman are directly involved in the selection of the lead engagement partner.

For 2016, the Audit Committee has selected Deloitte & Touche LLP (along with its member firms and affiliates, “Deloitte”) as the independent registered public accounting firm to audit our financial statements. In engaging Deloitte for 2016, the Audit Committee utilized a review and selection process that included the following:

^u  a review of management’s assessment of the services Deloitte provided in 2015

^u  discussions, in executive session, with the Chief Financial Officer and the Vice President and Controller regarding their viewpoints on the selection of the 2016 independent auditors and on Deloitte’s performance

^u  discussions, in executive session, with representatives of Deloitte about their possible engagement

^u  Audit Committee discussions, in executive session, about the selection of the 2016 independent auditors

^u  a review and approval of Deloitte’s proposed estimated fees for 2016

^u  a review and assessment of Deloitte’s independence

The Audit Committee and the Board believe that the continued retention of Deloitte to serve as our independent auditor is in the best interests of the Company and its stockholders, and they recommend that stockholders ratify this selection.

Representatives of Deloitte are expected to be present at the Annual Meeting with the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

Stockholders are not required to ratify the appointment of Deloitte as our independent auditor. However, we are submitting the ratification to our stockholders as a matter of good corporate practice. If our stockholders fail to ratify the appointment of Deloitte, or even if our stockholders do ratify the appointment of Deloitte, the Audit Committee in its discretion may select a different independent auditor at any time during the year if it determines that such change would be in the best interest of the Company and our stockholders.

The Board of Directors unanimously recommends a vote FOR ratification of Deloitte’s selection as the Company’s auditor for 2016.

22 2016 Proxy Statement

Proposal 2. Ratification of Auditors Audit Committee Approval of Audit and Non-Audit Services

Principal Accounting Firm Fees

Our aggregate fees to Deloitte (excluding value added taxes) with respect to the fiscal years ended December 31, 2015 and 2014, were as follows:

	2015($)		2014($)
Audit Fees (1)		3,345,000		1,500,000
Audit-Related Fees (2)		—		4,074,750
Tax Fees (3)		629,000		119,000
All Other Fees		—		—

(1) These amounts represent fees billed or expected to be billed for professional services rendered by Deloitte for the audit of the Company’s annual financial statements for the fiscal years ended December 31, 2015 and December 31, 2014, reviews of the financial statements included in the Company’s Form 10-Qs, and other services that are normally provided by the independent registered public accounting firm in connection with statutory or regulatory filings or engagements for each of those fiscal years, including: fees for consolidated financial audits, statutory audits, comfort letters, attest services, consents, assistance with and review of SEC filings and other related matters.

(2) These amounts represent aggregate fees billed or expected to be billed by Deloitte for assurance and related services reasonably related to the performance of the audit or review of our financial statements for the fiscal years ended December 31, 2015 and December 31, 2014, which are not included in the audit fees listed above.

(3) These amounts represent Deloitte’s aggregate fees for tax compliance, tax advice and tax planning for 2015 and 2014.

Audit Committee Approval of Audit and

Non-Audit Services

Using the following procedures, the Audit Committee pre-approves all audit and non-audit services provided by Deloitte to the Company:

^u  Before the first face-to-face Audit Committee meeting of the year, our Vice President and Controller prepares a detailed memorandum regarding non-audit services to be provided by Deloitte during the year. This memorandum includes the services to be provided, the estimated cost of these services, reasons why it is appropriate to have Deloitte provide these services, and reasons why the requested service is not inconsistent with applicable auditor independence rules;

^u  At the first face-to-face Audit Committee meeting each year, our Chief Financial Officer presents a proposal, including fees, to engage Deloitte for audit and non-audit services; and

^u  Before each subsequent meeting of the Audit Committee, our Vice President and Controller prepares an additional memorandum that includes updated information regarding the approved services and highlights any new audit and non-audit services to be provided by Deloitte. All new non-audit services to be provided are described in individual requests for services.

The Audit Committee reviews the requests presented in these proposals and memoranda and approves all services it finds acceptable.

To ensure prompt handling of unexpected matters, the Audit Committee has delegated to the Chairman of the Audit Committee the authority to amend or modify the list of audit and non-audit services and fees between meetings, as long as the additional or amended services do not affect Deloitte’s independence under applicable rules. Any actions taken under this authority are reported to the Audit Committee at its next meeting.

All Deloitte services and fees in 2015 were pre-approved by the Audit Committee or the Audit Committee Chairman.

2016 Proxy Statement 23

Proposal 2. Ratification of Auditors Audit Committee Report

Audit Committee Report

In accordance with its Charter adopted by the Board, the Audit Committee assists the Board in overseeing the quality and integrity of the Company’s accounting, auditing and financial reporting practices.

In discharging its oversight responsibility for the audit process, the Audit Committee obtained from the independent registered public accounting firm (the “auditors”) a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors’ independence, as required by Public Company Accounting Oversight Board (“PCAOB”) Rule 3526, Communication with Audit Committees Concerning Independence, discussed with the auditors any relationships that may impact their objectivity and independence and satisfied itself as to the auditors’ independence. The Audit Committee also discussed with management, the internal auditors, and the auditors, the quality and adequacy of the Company’s internal controls and the internal audit function’s organization, responsibilities, budget and staffing. The Audit Committee reviewed with both the auditors and the internal auditors their audit plans, audit scope and identification of audit risks.

The Audit Committee discussed and reviewed with the auditors all communications required by the PCAOB’s auditing standards, including those required by PCAOB AS 16, “Communication with Audit Committees.” Also, with and without management present, it discussed and reviewed the results of the auditors’ examination of our financial statements.

Management is responsible for preparing the Company’s financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and for establishing and maintaining the Company’s internal control over financial reporting. The auditors have the responsibility for performing an independent audit of the Company’s financial statements, and expressing opinions on the conformity of the Company’s financial statements with GAAP. The Audit Committee discussed and reviewed the Company’s audited financial statements as of and for the fiscal year ending December 31, 2015, with management and the auditors.

Based on the above-mentioned review and discussions with management and the auditors, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, for filing with the SEC. The Audit Committee also has selected and recommended to the Company’s stockholders for ratification the reappointment of Deloitte as the independent registered public accounting firm for 2016.

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

Heidi Fields, Chairman

Patrick O’Leary

Gary Blackford

24 2016 Proxy Statement

Proposal 3. Advisory Vote

to Approve Named Executive

Officer Compensation

In the Compensation Discussion and Analysis that follows, we describe in detail our executive compensation program, including its objectives, policies and components. Our executive compensation program seeks to align the compensation of our executives with the objectives of our business plans and strategies. To this end, the Compensation Committee (the “Committee”) approved an executive compensation program for 2015 that was designed to achieve the following objectives:

^u  Pay-for-Performance. Support a performance-oriented environment that rewards achievement of our financial and non-financial goals.

^u  Focus on Long-Term Success. Reward executives for long-term strategic management and stockholder value enhancement.

^u  Stockholder Alignment. Align the financial interest of our executives with those of our stockholders.

^u  Quality of Talent. Attract and retain executives whose abilities are considered essential to our long-term success.

For a more detailed discussion of how our executive compensation program reflects these objectives and policies, including information about the 2015 compensation of our named executive officers, see “Compensation Discussion and Analysis,” below.

We are asking our stockholders to support our executive compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our executive compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our executives and the objectives, policies and practices described in this proxy statement. Accordingly, our stockholders are being asked to vote on the following non-binding resolution at the Annual Meeting:

RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved by the Company’s stockholders on an advisory basis.

The say-on-pay vote is advisory and is therefore not binding on the Company, the Committee or our Board. Nonetheless, the Committee and our Board value the opinions of our stockholders. Therefore, to the extent there is any significant vote against the executive compensation as disclosed in this proxy statement, the Committee and our Board will consider our stockholders’ concerns and will evaluate whether any actions are necessary to address those concerns.

The Board of Directors unanimously recommends a vote FOR the approval of named executive officer compensation, as disclosed in this proxy statement pursuant to the SEC’s compensation disclosure rules.

2016 Proxy Statement 25

Compensation Discussion

and Analysis

This Compensation Discussion and Analysis (“CD&A”) is intended to provide investors with an understanding of the compensation policies and decisions regarding 2015 compensation for our named executive officers as well as information on 2016 compensation decisions as of the date of this proxy statement.

For 2015, our named executive officers were:

Named Executive Officer	Title
Robert E. Abernathy	Chairman of the Board and Chief Executive Officer
Steven E. Voskuil	Senior Vice President and Chief Financial Officer
Rhonda D. Gibby	Senior Vice President and Chief Human Resources Officer
Christopher M. Lowery	Senior Vice President and Chief Operating Officer
John W. Wesley	Senior Vice President, General Counsel and Chief Ethics and Compliance Officer

To assist stockholders in finding important information, this CD&A is organized as follows:

Compensation Executive Summary	27
Executive Compensation Objectives and Policies	29
Components of our Executive Compensation Programs	30
Setting Annual Compensation	30
Executive Compensation in 2015	33
Benefits and Other Compensation	39
Executive Compensation for 2016	40
Additional Information About our Compensation Practices	42

26 2016 Proxy Statement

Compensation Discussion and Analysis Compensation Executive Summary

Compensation Executive Summary

This executive summary provides a brief overview of our key accomplishments in 2015 and our key compensation principles and practices.

2015 HIGHLIGHTS

A substantial portion of 2015 was devoted to completing our separation from Kimberly-Clark following our spin-off in late 2014, and to begin operating as a separate independent publicly-traded company, while continuing to stay focused on our business and delivering results. Some key highlights for the year include:

Separation and Stand-alone Activities:

^u  Exited our 2015 Transition Services Agreements with Kimberly-Clark on time and under-budget

^u  Transitioned a majority of Kimberly-Clark Healthcare brands to Halyard brands

^u  Completed our first year assessment of internal control over financial reporting as required by the Sarbanes-Oxley Act of 2002 with no material weaknesses identified

^u  Completed the transfer of our information technology systems from Kimberly-Clark on time and under budget

Business and Results:

^u  For 2015, net sales of Medical Devices increased 2% compared to 2014. On a constant currency basis, the increase in net sales was 3%.

^u  2015 net sales for the Company declined during the year by 6% compared to 2014. On a constant currency basis, the decline was 3%. The decline was driven by competitive and other challenges in our Surgical and Infection Prevention (S&IP) businesses, offset by growth in our Medical Devices businesses. As described later in this CD&A, 2015 net sales on a constant currency basis, which we refer to as Adjusted Net Sales, was a performance metric under our 2015 incentive compensation programs.

^u  2015 ended the year with a net loss of $426 million, compared to net income of $27 million in 2014. The net loss was driven by a goodwill impairment charge of $474 million relating to our S&IP businesses together with the decline in the S&IP business during the year.

^u  2015 diluted earnings per share were -$9.15, compared to $0.58 per share in 2014. As described later in this CD&A, 2015 diluted earnings per share was a performance metric under our 2015 incentive compensation programs.

PERFORMANCE-BASED COMPENSATION

Pay-for-performance is a key objective of our compensation program. Consistent with that objective, performance-based compensation constituted a significant portion of our named executive officers’ target direct annual compensation for 2015. Also, to further align the financial interests of our executives with those of our stockholders, a majority of our executives’ target direct annual compensation for 2015 was equity-based. As discussed later in this CD&A, because the Company’s and management’s performance was below expectation, management’s compensation for 2015 was below target.

2016 Proxy Statement 27

Compensation Discussion and Analysis Compensation Executive Summary

COMPENSATION DESIGN PRINCIPLES AND GOVERNANCE PRACTICES

The design principles for our executive compensation program are intended to protect and promote the interests of our stockholders. Below we summarize certain practices we have implemented to drive performance and those we have not implemented because we do not believe they would serve our stockholders’ long-term interests:

  What We Do   What We Don’t Do

ü Pay for performance

ü Perform an annual compensation risk assessment

ü Utilize an independent compensation consultant

ü Require that change-in-control agreements contain a double trigger

ü Maintain share ownership guidelines and restrict pledging

ü Maintain a clawback policy on incentive payments due to financial restatement

ü Benchmark our compensation practices to ensure executive compensation is consistent with market

ü Cap short and long-term incentive payments at reasonable levels

Ò Maintain employment contracts

Ò Provide excise tax gross-up on change-in-control payments or on perquisites (other than on certain relocation benefits)

Ò Allow repricing of underwater options without stockholder approval

Ò Allow current payment of dividends or dividend equivalents on unearned long-term incentives

Ò Provide more than minimal perquisites

Ò Allow executive officers to engage in hedging transactions

COMMITTEE CONSIDERATION OF STOCKHOLDER ADVISORY VOTES ON COMPENSATION

At our 2015 Annual Meeting, our executive compensation program received the support of over 94 percent of shares represented at the meeting. Our Compensation Committee (the “Committee”) has considered the results of this vote and views this outcome as evidence of stockholder support of its executive compensation decisions and policies. Nevertheless, in order to ensure that our executive compensation program is properly aligned with our long term strategic and business objectives, the Committee undertook a fresh review of our executive compensation philosophy and programs and has adopted new design philosophies and guiding principles for executive compensation in 2016. See “Executive Compensation for 2016” for a discussion of those changes.

As noted under “Proposal 3. Advisory Vote to Approve Named Executive Officer Compensation,” the Committee will continue to review stockholder votes on our executive compensation and determine whether to make any changes to the program in light of those vote results.

The Committee also adopted an annual advisory say-on-pay vote based on the 96.4 percent of shares represented at the 2015 meeting that voted in favor of that frequency.

28 2016 Proxy Statement

Compensation Discussion and Analysis Executive Compensation Objectives and Policies

Executive Compensation Objectives and Policies

The Committee is responsible for establishing and administering our policies governing the compensation of our executive officers. The Committee reviews our compensation objectives and policies annually, including determining whether they continue to support our business objectives and are consistent with the Committee’s charter.

Our 2015 executive compensation policies were designed to achieve the following objectives:

Objective	Description	Related Policies
Pay for Performance	Support a performance-oriented environment that rewards achievement of our financial and non-financial goals.	The majority of pay varies with the levels at which annual and long-term performance goals are achieved. Performance goals are aligned with our strategies for sustained growth and profitability.
Focus on Long-Term Success	Reward executives for long-term strategic management and stockholder value enhancement.	A significant component of annual target compensation is in the form of performance-based restricted share units. The number of shares actually received on payout of these units depends on our performance over a three-year period.
Stockholder Alignment	Align the financial interest of our executives with those of our stockholders.	Equity-based awards make up the largest part of annual target compensation. Our executive officers also receive stock options, which vest over time and have value only if our stock price rises after the option grants are made. We also have other policies that link our executives’ interests with those of our stockholders, including stock ownership guidelines.
Quality of Talent	Attract and retain highly-skilled executives whose abilities are considered essential to our long-term success as a global company.	The Committee reviews peer group data to ensure our executive compensation program remains competitive so we can continue to attract and retain this talent.

2016 Proxy Statement 29

Compensation Discussion and Analysis Setting Annual Compensation

Components of Our Executive Compensation Program

The table below gives an overview of the compensation components used in our 2015 executive officer compensation program and matches each with one or more of the objectives described above.

Component	Objectives	Purpose	Target Competitive Position
Base salary	Quality of talent	Provide annual cash income based on: •  level of responsibility, performance and experience •  comparison to market pay information	•  Compared to median of peer group •  Actual base salary will vary based on the individual’s performance and experience in the position
Annual cash incentive	Pay-for-performance Quality of talent	Motivate and reward achievement of the following annual performance goals: •  corporate key financial goals •  other corporate financial and strategic performance goals	•  Target compared to median of peer group •  Actual payout will vary based on actual corporate and business unit or staff function performance
Long-term equity incentive	Stockholder alignment Focus on long-term success Pay-for-performance Quality of talent	Provide an incentive to deliver stockholder value and to achieve our long-term objectives, through awards of: •  performance-based restricted share units •  stock option grants Time-vested restricted share units may be granted from time to time for recruiting, retention or other purposes	•  Target compared to median of peer group •  Actual payout of performance-based restricted share units will vary based on actual corporate performance •  Actual payout will also vary based on actual stock price performance
Retirement benefits	Quality of talent	Provide competitive retirement plan benefits through 401(k) plan and other defined contribution plans	•  Benefits comparable to those of peer group
Perquisites	Quality of talent	Provide minimal market-based additional benefits	•  Determined by the Committee
Post-termination compensation (severance and change of control)	Quality of talent	Encourage attraction and retention of executives critical to our long-term success and competitiveness: •  Severance Pay Plan, which provides eligible employees, including executives, with payments and benefits in the event of certain involuntary terminations •  Executive Severance Plan, which provides eligible executives with payments in the event of a qualified separation of service following a change of control	•  Determined by the Committee

Setting Annual Compensation

This section describes the processes followed in setting 2015 target annual compensation for our named executive officers.

FOCUS ON TOTAL DIRECT ANNUAL COMPENSATION

In setting 2015 compensation for our executive officers, including our Chief Executive Officer, the Committee focused on total direct annual compensation, which consists of annual cash compensation (base salary and target annual cash incentive) and long-term equity incentive compensation (performance-based restricted share units and stock options). The Committee considered annual cash and long-term equity incentive compensation both separately and as a package to help ensure that the executive compensation objectives are met.

30 2016 Proxy Statement

Compensation Discussion and Analysis Setting Annual Compensation

BENCHMARKING – EXECUTIVE COMPENSATION PEER GROUP

To ensure that our executive compensation program is reasonable and competitive in the marketplace, our program is compared to programs at other companies. In setting 2015 compensation for our named executive officers, the Committee used the following peer group for the Company’s executive compensation:

2015 Executive Compensation Peer Group
Align Technology, Inc. CONMED Corporation The Cooper Companies, Inc. C.R. Bard, Inc. DENTSPLY International Inc. Edwards Lifesciences Corporation Greatbatch, Inc.	Haemonetics Corporation Hill-Rom Holdings, Inc. Hologic, Inc. Integra Lifesciences Holding Corporation Invacare Corporation NuVasive, Inc.	ResMed Inc. Sirona Dental Systems, Inc. STERIS Corporation Teleflex Incorporated Varian Medical Systems, Inc. West Pharmaceutical Services, Inc.

The peer group is intended to consist of companies with whom we compete for talent. We believe that we generally compete for talent with healthcare and medical device companies with annual revenues ranging from approximately one-third to three times our annual revenues.

The Committee (working with its independent compensation consultant), reviews the executive compensation peer group annually to ensure that it continues to serve as an appropriate comparison for our compensation program.

For purposes of setting executive compensation for 2016, the Committee added Merit Medical Systems, Inc. to the peer group. The Committee, with the advice of the independent compensation consultant, determined that adding this additional company to the peer group would result in a peer group that was more appropriately balanced between medical supply and medical device companies.

PROCESS FOR SETTING TOTAL DIRECT ANNUAL COMPENSATION TARGETS

In setting the total direct annual compensation of our executive officers, both market data provided by the independent compensation consultant and information on the performance of each executive officer for prior years is evaluated. To remain competitive in the marketplace for executive talent, the target levels for the executive officers’ compensation components, including our Chief Executive Officer, are compared to the median of the peer group.

To reinforce a pay-for-performance culture, targets for individual executive officers may be set above or below this median depending on the individual’s performance in prior years and experience in the position, as well as any applicable retention concerns. The Committee believes that comparing target levels to the median, setting targets as described above, and providing incentive compensation opportunities that will enable executives to earn above-target compensation if they deliver above-target performance on their performance goals, are consistent with the objectives of our compensation policies. In particular, the Committee believes that this approach enables us to attract and retain skilled and talented executives to guide and lead our businesses and supports a pay-for-performance culture.

When setting annual compensation for our executive officers, the Committee considers each compensation component (base salary, annual cash incentive and long-term equity incentive), but its decision regarding a particular component does not necessarily impact its decision about other components.

2016 Proxy Statement 31

Compensation Discussion and Analysis Setting Annual Compensation

In setting compensation for executive officers that join us from other companies, the Committee will evaluate both market data for the position to be filled and the candidate’s compensation history. The Committee recognizes that in order to successfully recruit a candidate to leave his or her current position and to join the Company, the candidate’s compensation package may have to exceed his or her current compensation, which could result in a compensation package above the median of our peer group.

CEO TOTAL DIRECT ANNUAL COMPENSATION

Mr. Abernathy’s total direct annual compensation is determined in the same manner as the direct annual compensation of the other named executive officers. Mr. Abernathy’s and the other named executive officers 2015 direct annual target compensation was below the median of total direct annual compensation of chief executive officers and comparable executive officers of companies included in the peer group. The Committee established the below median targets because Mr. Abernathy and the other named executive officers were new to their roles at the Company and each had a total direct annual compensation target for 2015 that was higher than their compensation at Kimberly-Clark prior to the spin-off.

The difference between Mr. Abernathy’s compensation and that of the other named executive officers reflects the fact that Mr. Abernathy’s responsibilities for management and oversight of a global enterprise are significantly greater than those of the other executive officers. As a result, the market pay level for Mr. Abernathy is appropriately higher than the market pay for our other executive officer positions.

TOTAL DIRECT ANNUAL COMPENSATION TARGETS FOR 2015

Consistent with the focus on total direct annual compensation, the Committee established the following 2015 direct annual compensation targets for our named executive offices based on their roles and responsibilities:

Name	2015 Total Direct Annual Compensation Target ($)
Robert E. Abernathy		4,674,750
Steven E. Voskuil		1,516,965
Rhonda D. Gibby		821,975
Christopher M. Lowery		1,891,931
John W. Wesley		1,030,000

These 2015 direct annual compensation target amounts differ from the amounts set forth in the Summary Compensation Table in the following ways:

• Base salaries are adjusted each year on April 1, while the Summary Compensation Table includes salaries for the entire calendar year. See “Executive Compensation for 2015 – Base Salary”;

• Annual cash incentive compensation is included at the target level, while the Summary Compensation Table reflects the actual amount earned for 2015; and

• In setting total direct annual compensation targets, the Committee does not include deferred compensation earnings or other compensation, while those amounts are required to be included in the Summary Compensation Table.

32 2016 Proxy Statement

Compensation Discussion and Analysis Executive Compensation for 2015

Executive Compensation for 2015

To help achieve the objectives discussed above, our executive compensation program for 2015 consisted of fixed and performance-based components, as well as short-term and long-term components.

BASE SALARY

To attract and retain high caliber executives, we pay our executives an annual fixed salary that we believe to be competitive in the marketplace.

Salary ranges and individual salaries for executive officers are reviewed annually, and salary adjustments generally are effective on April 1 of each year. In determining individual salaries, salary levels for similar positions at our peer group companies are considered, as well as the executive’s performance and experience in his or her position. This performance evaluation is based on how the executive performs during the year against results-based objectives established at the beginning of the year. In general, an experienced executive who is performing at a satisfactory level will receive a base salary at or around the median of our peer group companies. However, executives may be paid above or below the median depending on their experience and performance. From time to time, if warranted, executives and other employees may receive additional salary increases because of promotions, changes in duties and responsibilities, retention concerns, or market conditions.

The following table shows the 2015 base salaries in effect for each named executive officer during the year:

Name	2015 Base Salary as of January 1 ($)		2015 Base Salary as of April 1 ($)
Robert E. Abernathy		825,000		837,375
Steven E. Voskuil		430,000		436,450
Rhonda D. Gibby		310,000		314,650
Christopher M. Lowery		475,000		482,125
John W. Wesley		375,000		393,750

ANNUAL CASH INCENTIVE PROGRAM

Consistent with our pay-for-performance compensation objective, our executive compensation program includes an annual cash incentive program to motivate and reward executives in achieving annual performance objectives established by the Committee.

2016 Proxy Statement 33

Compensation Discussion and Analysis Executive Compensation for 2015

2015 Targets

The target payment amount for annual cash incentives is a percentage of the executive’s base salary. The range of possible payouts is expressed as a percentage of the target payment amount. These ranges are set based on competitive factors. The following table sets forth the target payment amounts and range of possible payouts for each named executive officer in 2015:

TARGET PAYMENT AMOUNTS AND RANGE OF POSSIBLE PAYOUTS

FOR 2015 ANNUAL CASH INCENTIVE PROGRAM

	Target Payment Amount	Range of Potential Payout
Robert E. Abernathy	100% of base salary	0% - 232% of target payment amount
Steven E. Voskuil	70% of base salary	0% - 232% of target payment amount
Rhonda D. Gibby	50% of base salary	0% - 232% of target payment amount
Christopher M. Lowery	85% of base salary	0% - 232% of target payment amount
John W. Wesley	60% of base salary	0% - 232% of target payment amount

2015 Performance Goals, Performance Assessments and Payouts

Payment amounts under the annual cash incentive program are dependent on performance measured against goals established at the beginning of the year. These performance goals are derived from our financial and strategic goals.

As shown in the table below, the performance goals established for 2015 were divided into two elements, and were weighted for each executive.

ANNUAL CASH INCENTIVE PROGRAM

2015 PERFORMANCE GOALS AND WEIGHTS

		Robert E. Abernathy			Steven E. Voskuil			Rhonda D. Gibby			Christopher M. Lowery			John W. Wesley
Element 1:	Corporate key financial goals		80	%		80	%		80	%		80	%		80	%
Element 2:	Other corporate financial and strategic performance goals		20	%		20	%		20	%		20	%		20	%

In February 2016, the Committee determined the extent to which each goal was met in 2015 and the resulting payout. Below we describe the two elements of performance, explain how the Committee assessed the performance of each element, and show the payouts that were determined in each case.

34 2016 Proxy Statement

Compensation Discussion and Analysis Executive Compensation for 2015

ELEMENT 1: CORPORATE KEY FINANCIAL GOALS

For 2015, the Committee chose the following as corporate key financial goals for the annual cash incentive program:

2015 Goal	Explanation	Reason for Use as a Performance Measure
Adjusted Net Sales	Net sales for 2015 on a constant currency basis	A key indicator of overall growth
EPS	Diluted net income per share	A key indicator of overall performance
Cash Conversion Cycle	Days it takes to convert raw materials into finished goods and then collect on the sales of those finished goods	A measure of operational efficiency

At the beginning of 2016, the Committee determined a payout percentage based on its assessment of the degree to which the 2015 key financial goals were achieved. To determine the payout percentage for Element 1, the Committee followed the following process:

First, it determined an initial payout percentage based on how the Company performed against the adjusted net sales and EPS goals. For 2015, the Committee set these goals and the corresponding initial payout percentages at the following levels:

Measure (each weighted 50%)	Range of Performance Levels
	Threshold		Target		Maximum
Adjusted Net Sales (millions)	$	1,634	$	1,647	$	1,713
EPS	$	1.19	$	1.40	$	1.61
Initial Payout Percentage		0%		100%		200%

Second, the Committee applied a multiplier to this initial payout percentage. The multiplier was based on how the Company performed against its cash conversion cycle goals. Depending on the level of improvement in cash conversion cycle, the multiplier would either decrease or increase the initial payout percentage (but the amount of the final payout percentage could not exceed a 232 percent cap).

For 2015, the Committee set the following ranges for this cash conversion cycle multiplier:

	Range of Performance Levels
	Threshold		Target		Maximum
Cash Conversion Cycle		125 days		110 days		100 days
Cash Conversion Cycle Multiplier Applied to Initial Payout Percentage		0.8 x		1.0 x		1.2 x

Actual results and actual payout percentages for Element 1. For 2015, the Committee determined that the Company’s adjusted net sales were $1,574 million and its EPS was -$9.15. Based on these results, the Committee determined the initial payout percentage to be zero. To this percentage, the Committee then applied a cash conversion cycle multiplier of 98.9 percent, which was based on the actual 2015 cash conversion cycle of 111 days. After taking into account performance on all of these goals under Element 1, the Committee determined that no amount would be paid out with respect to the key corporate financial goals.

ELEMENT 2: OTHER CORPORATE FINANCIAL AND STRATEGIC PERFORMANCE GOALS

At the beginning of 2015, the Committee also established other corporate financial and strategic performance goals that were intended to challenge our executives to exceed long-term objectives. These additional performance goals related to (1) efficiently completing the separation from

2016 Proxy Statement 35

Compensation Discussion and Analysis Executive Compensation for 2015

Kimberly-Clark by exiting our transition services agreement (TSA) with Kimberly-Clark on budget, (2) growth through targeted innovation as reflected in an innovation vitality index, and (3) reducing the cost and complexity of the global enterprise by achieving cost savings in our supply chain. The Committee then determined a payout percentage based on how the Company performed against these other corporate financial and strategic performance goals. For 2015, the Committee set these goals and the corresponding initial payout percentages at the following levels:

Measure (each weighted one-third)	Range of Performance Levels
	Threshold		Target		Maximum
Exit TSAs on Budget	$	39,000,000	$	36,000,000	$	31,000,000
Manage Innovation Vitality Index		13.3%		13.7%		15.1%
Cost Savings in Supply Chain	$	12,000,000	$	22,000,000	$	32,000,000
Initial Payout Percentage		0%		100%		200%

Actual results and payout percentages for Element 2. For 2015, the Committee determined that the Company exited the TSAs at a cost of $35 million, achieved an innovation vitality index of 13.8 percent, and achieved cost savings in the supply chain of $18.6 million. Based on these results, the Committee determined that the payout percentage for achieving the other corporate financial and strategic performance goals should be 96.6 percent of target.

Annual Cash Incentive Payouts for 2015

The following tables show the payout opportunities and the actual payouts of annual cash incentives for 2015 for each of our named executive officers. Payouts were based on the payout percentages for each element, weighted for each executive as shown above.

Name	Annual Incentive Target Opportunity				Annual Incentive Maximum Opportunity				Actual 2015 Annual Incentive Payout
	% of Base     Salary		Amount($)		% of     Target		Amount($)		% of     Target		Amount($)
Robert E. Abernathy		100%		837,375		232%		1,942,710		19.3%		161,613
Steven E. Voskuil		70%		305,515		232%		708,795		19.3%		58,964
Rhonda D. Gibby		50%		157,325		232%		364,994		19.3%		30,364
Christopher M. Lowery		85%		409,806		232%		950,750		19.3%		79,093
John W. Wesley		60%		236,250		232%		548,100		19.3%		45,596

The Committee believes that the 2015 annual incentive payout is consistent with the pay-for-performance objective of our executive compensation program.

LONG-TERM EQUITY INCENTIVE COMPENSATION

Our executive officers receive annual long-term equity incentive grants as part of their overall compensation package. These awards are consistent with the objectives of aligning our senior leaders’ interests with the financial interests of our stockholders, focusing on our long-term success, supporting our performance-oriented environment and offering competitive compensation packages.

Information regarding long-term equity incentive awards granted to our named executive officers can be found under “Summary Compensation,” “Grants of Plan-Based Awards,” and “Discussion of Summary Compensation and Plan-Based Awards Tables.”

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Compensation Discussion and Analysis Executive Compensation for 2015

2015 Grants

In determining the 2015 long-term equity incentive award amounts for our named executive officers the following factors were considered by the Committee, among others: the specific responsibilities and performance of the executive, business performance, retention needs, stock price performance and other market factors. Because these awards are part of the annual compensation program that compares total direct annual compensation to the median of the peer group comparison, grants from prior years were not considered when setting 2015 targets or granting awards.

To determine target values, each executive’s total direct annual compensation was compared to the median of the peer group, and then individual performance and the other factors listed above, as applicable, were considered. The Committee also considered target level long-term equity levels set forth in offer letters entered into by certain executive officers with Kimberly-Clark prior to the spin-off. Target grant values were then approved by the Committee and were divided into two types:

• Performance-based restricted share units (60 percent of the target grant value).

• Stock options (40 percent of the target grant value).

The Committee believed this allocation between performance-based restricted share units (PRSUs) and stock options supports the pay-for-performance and stockholder alignment objectives of our executive compensation program. In 2015, the following annual long-term equity incentive awards were granted to our named executive officers:

Name	Target Grant Value of Awards ($)	Target PRSUs Awarded (#)	Stock Options Awarded (#)
Robert E. Abernathy	3,000,000	39,587	96,154
Steven E. Voskuil	775,000	10,227	24,840
Rhonda D. Gibby	350,000	4,618	11,218
Christopher M. Lowery	1,000,000	13,195	32,051
John W. Wesley	400,000	5,278	12,821

For valuation purposes, each PRSU granted was assigned a value equal to the closing price of one share of Company common stock at the end of the day on the date of grant, and each stock option was assigned a value equal to the Black-Scholes valuation for that option at the end of the day on the date of grant.

The performance goals of the PRSUs granted in 2015 are based on 3-year Net Sales and 3-year Adjusted EBITDA Growth for the 2015-2017 period and will vest on March 5, 2018. As a result of the Company’s performance in 2015, these PRSUs are on pace to vest at zero percent.

2016 Proxy Statement 37

  Compensation Discussion and Analysis Executive Compensation for 2015

GROW TO GREATNESS (G2G) GRANTS

In February 2015, the Committee, with the advice of its independent compensation consultant, approved a special one-time grant of stock options to approximately 200 leaders within the Company, including our named executive officers. These grants are intended to further align the Company leadership team’s interest with stockholders and incent them to focus on our long-term success. The stock options vest over five years, with 33 percent vesting on March 5 of each of 2017, 2018 and 2019 and have an exercise price of $45.47 per share. The dollar value of these options, and the number of options actually received on March 5, 2015 by our named executive officers are as follows:

Name	Grant Date Value of Stock Options Granted($)		Number of Options Granted
Robert E. Abernathy		1,500,000		85,616
Steven E. Voskuil		387,500		22,117
Rhonda D. Gibby		175,000		9,989
Christopher M. Lowery		500,000		28,539
John W. Wesley		200,000		11,416

38 2016 Proxy Statement

Compensation Discussion and Analysis Benefits and Other Compensation

Benefits and Other Compensation

RETIREMENT BENEFITS

Our named executive officers received contributions from the Company under the Halyard Health, Inc. 401(k) Plan (the “401(k) Plan”) and the Halyard Health, Inc. Supplemental Retirement 401(k) Plan (the “Supplemental 401(k) Plan”). The Company does not have a defined benefit pension plan in the United States, and none of our named executive officers participate in any Company defined benefit pension plans.

The 401(k) Plan and Supplemental 401(k) Plan are consistent with those maintained by our peer group companies and are therefore necessary to remain competitive with them for recruiting and retaining executive talent. The Committee believes that these retirement benefits are important parts of our compensation program. For more information, see “Nonqualified Deferred Compensation – Overview of Qualified and Non-Qualified Plans” and “Pension Benefits.”

OTHER COMPENSATION

We believe the perquisites provided to our executive officers are below the median of those provided by our peer group. In addition, the Company does not provide tax reimbursement or gross-ups for perquisites offered to executive officers, except for certain relocation benefits.

POST-TERMINATION BENEFITS

We maintain two severance plans that cover our executive officers: the Severance Pay Plan and the Executive Severance Plan. An executive officer may not receive severance payments under more than one severance plan. Benefits under these plans are payable only if the executive’s employment terminates under the conditions specified in the applicable plan. We believe that our severance plans are consistent with those maintained by our peer group companies and that they are therefore important for attracting and retaining executives who are critical to our long-term success and competitiveness. For more information about these severance plans and their terms, see “Potential Payments on Termination or Change of Control – Severance Benefits.”

Severance Pay Plan

Our Severance Pay Plan provides severance benefits to most of our U.S. hourly and salaried employees, including our named executive officers, who are involuntarily terminated under the circumstances described in the plan. The objective of this plan is to facilitate the employee’s transition to his or her next position, and it is not intended to serve as a reward for the employee’s past service.

Executive Severance Plan

Our Executive Severance Plan provides severance benefits to eligible executives, including our named executive officers, in the event of a qualified termination of employment (as defined in the plan) in connection with a change of control. For an eligible employee to receive a payment under this plan, two things must occur: there must be a change of control of the Company, and the employee must have been involuntarily terminated without cause or have resigned for good reason (as defined in the plan) within two years of the change of control (often referred to as a “double trigger”). The objective of this plan is to encourage the executive officers to stay with the company in the event of a change of control transaction to ensure a smooth transition. Each of our named executive officers has entered into an agreement under the plan that expires on October 31, 2017.

2016 Proxy Statement 39

  Compensation Discussion and Analysis Executive Compensation for 2016

Executive Compensation for 2016

During 2015, the Committee, with the assistance of its independent consultant, conducted a review of the design philosophies and objectives of our executive compensation programs to determine if they properly align executive compensation with the objectives of our strategic business plans and goals. The Committee determined that no change was required to the key objectives of the programs, which are pay for performance, focus on long-term success, stockholder alignment, and quality of talent. But the Committee did determine that it would be appropriate to adopt design philosophies to guide the manner in which the key objectives are implemented. In December 2015, the Committee approved the following design philosophies and guiding principles:

Philosophy	Description	Guiding Principles
Aligned	A majority of executive officer compensation should be at risk and vary with the performance outcomes of shareholders	ü      50% or more of executive officer compensation is incentive based ü     Incentive metrics aligned to stockholder value ü      Performance goals should generally reflect year-over-year growth to achieve target funding ü     No annual grants of time-based restricted share units to executive officers ü      Within business groups, a majority of performance is placed on business unit performance goals
Compelling	The value and structure of compensation provided should assist in the attraction of key executive talent	ü      Base salaries at or above the 50th percentile with variance based on skills, experience, and performance ü      Actual total compensation payout opportunities are set well above the 50th percentile for above-average performance ü      Significant upside leverage in payouts provided for over-performance
Simple	The compensation arrangements should maximize simplicity and focus on broad performance factors	ü      Use minimal number of metrics; typically one or two ü     Strategic metrics (i.e., not financial) are generally avoided ü      Special or one-time incentive awards are used sparingly ü     Perquisites and other special executive benefits are generally avoided
Sound	Executive compensation policies and structure should support strong corporate governance and drive an ownership culture among executives	ü      Ownership culture is reinforced through use of good governance ü     Individual contracts are avoided and severance practices are conservative ü      Compensation deferral opportunities provided ü     Encourage innovation while deterring excessive risk taking

40 2016 Proxy Statement

  Compensation Discussion and Analysis Executive Compensation for 2016

The Committee retains the right to deviate from the guiding principles set out above whenever it determines that to do so is consistent with our overall compensation objectives and is in the best interest of the Company and its stockholders.

2016 BASE SALARY

In February 2016, the Committee approved the base salaries for our named executive officers, effective April 1, 2016. As a result of the Company’s 2015 performance, the Committee determined that none of the named executive officers would receive an increase in their base salaries in 2016. Accordingly, 2016 base salaries are:

Name	2016 Base Salary($)
Robert E. Abernathy	837,375
Steve E. Voskuil	436,450
Rhonda D. Gibby	314,650
Christopher M. Lowery	482,125
John W. Wesley	393,750

2016 ANNUAL CASH INCENTIVE TARGETS

In February 2016, the Committee also established objectives for 2016 annual cash incentives, which will be payable in 2017. The target payment amounts and range of possible payouts for 2016 are as follows:

	Target Payment Amount	Possible Payout
Robert E. Abernathy	100% of base salary	0% - 225% of target payment amount
Steven E. Voskuil	70% of base salary	0% - 225% of target payment amount
Rhonda D. Gibby	50% of base salary	0% - 225% of target payment amount
Christopher M. Lowery	85% of base salary	0% - 225% of target payment amount
John W. Wesley	60% of base salary	0% - 225% of target payment amount

The Committee sets the appropriate split among the different elements of performance that make up our performance goals. The following are the 2016 performance goals and relative weights for our named executive officers.

ANNUAL CASH INCENTIVE PROGRAM

2016 PERFORMANCE GOALS AND WEIGHTS

	Robert E. Abernathy		Steven E. Voskuil		Rhonda D. Gibby		Christopher M. Lower		John W. Wesley
Corporate key financial goals		100%		100%		100%		100%		100%

Consistent with the Simple philosophy adopted by the Committee at the end of 2015, the Committee determined that no other corporate and strategic performance goals would be established for the 2016 annual cash incentive program.

2016 Proxy Statement 41

Compensation Discussion and Analysis Additional Information about Our Compensation Practices

2016 LONG-TERM EQUITY COMPENSATION INCENTIVE AWARDS

In February 2016, the Committee approved long-term incentive compensation awards for the named executive officers consisting of awards of performance-based restricted share units with a value equal to 60 percent of the target grant value for long-term equity incentive compensation, with the balance of the value to be granted in stock options. The performance objectives for the performance-based restricted share unit awards granted in 2016 are based on relative total shareholder return for the period January 1, 2016 through December 31, 2018. The actual number of shares to be received by our named executive officers will range from zero to 200 percent of the target levels established by the Committee for each executive, depending on the degree to which the performance objectives are met.

PERFORMANCE-BASED RESTRICTED SHARE UNITS

GRANTED IN 2016

Name	Target Amount of Shares(#)	Maximum Amount of Shares(#)
Robert E. Abernathy	65,598	131,196
Steven E. Voskuil	17,493	34,986
Rhonda D. Gibby	7,981	15,962
Christopher M. Lowery	22,959	45,918
John W. Wesley	10,933	21,866

The Committee also approved the dollar amount of stock options to be granted to our named executive officers in May 2016, along with our annual stock option grants to other employees. The number of options they will receive will be based on the fair market value of our stock on the date of grant.

Name	Value of Stock Options to be Granted($)
Robert E. Abernathy	1,200,000
Steven E. Voskuil	320,000
Rhonda D. Gibby	146,000
Christopher M. Lowery	420,000
John W. Wesley	200,000

Additional Information about Our Compensation Practices

As a matter of sound governance, we follow certain practices with respect to our compensation program. We regularly review and evaluate our compensation practices in light of regulatory developments, market standards and other considerations.

USE OF INDEPENDENT COMPENSATION CONSULTANT

The Committee engaged Meridian Compensation Partners LLC (“Meridian”) as its independent consultant to assist it in determining the appropriate executive officer compensation under our compensation policies described above. Consistent with the Committee’s policy in which its independent consultant may provide services only to the Committee, Meridian had no other business relationship with the Company and received no payments from us other than fees and expenses for services to the Committee. See “Corporate Governance—Compensation Committee” for information about the use of compensation consultants.

42 2016 Proxy Statement

Compensation Discussion and Analysis Additional Information about Our Compensation Practices

ROLE OF THE CHIEF EXECUTIVE OFFICER IN COMPENSATION DECISIONS

Our Chief Executive Officer makes a recommendation to the Committee each year on the appropriate target annual compensation for each of the other executive officers. The Committee makes the final determination of the target annual compensation for each executive officer, including our Chief Executive Officer. While our Chief Executive Officer and Chief Human Resources Officer typically attend Committee meetings, none of the other executive officers is present during the portion of the Committee’s meetings when compensation for executive officers is set. In addition, our Chief Executive Officer is not present during the portion of the Committee’s meetings when his compensation is set.

ADJUSTMENT OF FINANCIAL MEASURES FOR ANNUAL AND LONG-TERM EQUITY INCENTIVES

Financial measures for the annual and long-term equity incentive programs are developed based on expectations about our planned activities and reasonable assumptions about the performance of our key business drivers for the applicable period. From time to time, however, discrete items or events may arise that were not contemplated by these plans or assumptions. These could include accounting and tax law changes, tax credits from items not within the ordinary course of our business operations, restructuring and write-off charges, significant acquisitions or dispositions, and significant gains or losses from litigation settlements.

Under the Committee’s exception guidelines regarding our annual and long-term equity incentive program measures, the Committee may adjust in the future the calculation of financial measures for these incentive programs to eliminate the effect of the types of items or events described above. In making these adjustments, the Committee’s policy is to seek to neutralize the impact of the unexpected or unplanned items or events, whether positive or negative, in order to provide consistent and equitable incentive payments that the Committee believes are reflective of our performance. In considering whether to make a particular adjustment under its guidelines, the Committee will consider the potential tax impact of the adjustment under Code Section 162(m) and will review whether the item or event was one for which management was responsible and accountable, treatment of similar items in prior periods, the extent of the item’s or event’s impact on the financial measure, and the item’s or event’s characteristics relative to normal and customary business practices. Generally, the Committee will apply an adjustment to all compensation that is subject to that financial measure.

PRICING AND TIMING OF STOCK OPTION GRANTS AND TIMING OF PERFORMANCE-BASED EQUITY GRANTS

Our policies and our Equity Participation Plan require stock options to be granted at no less than the closing price of our common stock on the date of grant, except for the options granted to replace Kimberly-Clark stock options forfeited as a result of the spin-off (which were priced to preserve the intrinsic value of the forfeited Kimberly-Clark options), and the other options granted following the spin-off which used a five day variable weighted price. Stock option grants to our executive officers are generally made annually at a meeting of the Committee that is scheduled at least one year in advance, and the grants are effective on the date of this meeting. However, if the meeting occurs during a period when we do not permit insiders to trade Company common stock (a “Blackout Period”), the stock option grants will not be effective until the first business day following the end of the Blackout Period. Our Blackout Periods end at 11:59 p.m. on the day we issue our quarterly earnings press releases. Our executives are not permitted to choose the grant date for their individual stock option grants.

The Chairman of the Board and Chief Executive Officer has been delegated the limited authority to approve equity grants, including stock options, to employees for recruiting and special employee

2016 Proxy Statement 43

Compensation Discussion and Analysis Additional Information about Our Compensation Practices

recognition and retention purposes. These grants may not exceed 100,000 shares in calendar year 2016. The Chairman of the Board and Chief Executive Officer is not permitted to make any grants to any of our executive officers.

Annual stock option grants to non-executive officers are effective on the same date as the annual stock option grants to our executive officers. Recruiting, special recognition and retention stock-based awards are generally made on a pre-determined date following our quarterly earnings release.

The Committee awards performance-based restricted share units to executive officers at its February meetings. We believe this practice is consistent with award practices at other public companies of comparable size. Our executives are not permitted to choose the grant date for their individual restricted share unit awards.

POLICY ON INCENTIVE COMPENSATION CLAWBACK

As described in detail above, a significant percentage of our executive officer compensation is incentive-based. The determination of the extent to which the incentive objectives are achieved is based in part on the Committee’s discretion and in part on our published financial results. The Committee has the right to reassess its determination of the performance awards if the financial statements on which it relied are restated. The Committee has the right to direct management to seek to recover from any executive officer any amounts determined to have been inappropriately received by the individual executive officer. In addition, under the Company’s Equity Participation Plan, the Committee may require awards with performance goals under the Plan to be subject to any policy we may adopt relating to the recovery of that award to the extent it is determined that performance goals relating to the awards were not actually achieved. Further, the Sarbanes-Oxley Act of 2002 mandates that the chief executive officer and the chief financial officer reimburse us for any bonus or other incentive-based or equity-based compensation paid to them in a year following the issuance of financial statements that are later required to be restated as a result of misconduct. The Committee intends to review and revise the incentive compensation clawback policy once the SEC issues final regulations on clawbacks under the Dodd-Frank legislation enacted in 2010.

STOCK OWNERSHIP GUIDELINES

We strongly believe that the financial interests of our executives should be aligned with those of our stockholders. Accordingly, the Committee has established the following stock ownership guidelines for our executive officers:

TARGET STOCK OWNERSHIP AMOUNTS

Position	Ownership Level
Chief Executive Officer	Five times annual base salary
Other named executive officers	Two times annual base salary

Failure to attain these targeted stock ownership levels within five years from date of hire for, or appointment to, an eligible position can result in the reduction of part or all of the executive’s annual cash incentive (with a corresponding grant of time-vested restricted share units or restricted stock in that amount), or a reduction in future long-term equity incentive awards, either of which may continue until the ownership guideline is achieved. In determining whether our stock ownership guidelines have been met, any restricted stock and time-vested restricted share units held are counted as owned, but performance-based restricted share units are excluded until they vest. Executive officer stock ownership levels will be reviewed annually for compliance with these guidelines.

44 2016 Proxy Statement

Compensation Discussion and Analysis Additional Information about Our Compensation Practices

OTHER POLICES RELATING TO TRANSACTIONS IN COMPANY SECURITIES

We require all executive officers to pre-clear transactions involving our common stock (and other securities related to our common stock) with our Legal Department.

We do not permit our executive officers to engage in transactions that hedge an executive officer’s economic risk of owning shares of our common stock. Additionally, our executives are not permitted to pledge shares of our common stock owned by them as collateral for loans or other obligations.

COMMITTEE EXERCISE OF DISCRETION TO REDUCE ANNUAL CASH INCENTIVE PAYMENT

In establishing performance goals and target levels under the annual cash incentive program, the Committee is exercising its discretion to limit the amount of the incentive payments, consistent with our pay-for-performance objective. In the absence of this exercise of discretion, our chief executive officer would be entitled to an award equal to four percent of our earnings before unusual items, and each of our other executive officers would be entitled to an award equal to two percent of our earnings before unusual items; however, the Committee has exercised its discretion to limit the amount of the incentive payments each year of the program, and this potential maximum award has never been paid to any of the executive officers.

CORPORATE TAX DEDUCTION FOR EXECUTIVE COMPENSATION

The United States income tax laws generally limit the deductibility of compensation paid to the chief executive officer and each of the three highest-paid executive officers (not including the chief financial officer) to $1,000,000 per annum. However, an exception exists for performance-based compensation that meets certain regulatory requirements. Several classes of our executive compensation, including option awards and portions of our long-term equity grants to executive officers, are designed to meet the requirements for deductibility. Other classes of our executive compensation, including portions of the long-term equity grants described above, may be subject to the $1,000,000 deductibility limit.

Although deductibility of compensation is preferred, tax deductibility is not a primary objective of our compensation programs. In the Committee’s view, meeting the compensation objectives set forth above is more important than the benefit of being able to deduct the compensation for tax purposes.

2016 Proxy Statement 45

Compensation Committee Report

Compensation Committee Report

In accordance with its written charter adopted by the Board, the Compensation Committee of the Company has oversight of compensation policies designed to align executive officers’ compensation with our overall business strategy, values and management initiatives. In discharging its oversight responsibility, the Committee has retained an independent compensation consultant to advise the Committee regarding market and general compensation trends.

The Committee has reviewed and discussed the Compensation Discussion and Analysis with our management, which has the responsibility for preparing the Compensation Discussion and Analysis. Based upon this review and discussion, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2015.

COMPENSATION COMMITTEE OF

THE BOARD OF DIRECTORS

Julie Shimer, Chairman

John Byrnes

William Hawkins

Maria Sainz

46 2016 Proxy Statement

Analysis of Compensation-Related Risks

Analysis of Compensation- Related Risks

The Committee has reviewed an assessment of our compensation programs for our employees, including our executive officers, to analyze the risks arising from our compensation systems. The Committee’s independent consultant assisted with the review of our executive compensation programs.

Based on this assessment, the Committee believes that the design of our compensation programs, including our executive compensation program, does not encourage our executives or employees to take excessive risks and that the risks arising from these programs are not reasonably likely to have a material adverse effect on the Company.

Several factors contributed to the Committee’s conclusion, including:

• The Committee believes the Company maintains a values-driven, ethics-based culture supported by a strong tone at the top.

• The performance targets for annual cash incentive programs are selected to ensure that they are reasonably attainable in a manner consistent with the Company’s business plans without encouraging executives or employees to take inappropriate risks.

• An analysis by the Committee’s consultant indicated that our compensation programs are consistent with those of our peer group. In addition, the analysis noted that target levels for direct annual compensation are compared to the median of our peer group.

• The Committee believes the allocation among the components of direct annual compensation provides an appropriate balance between annual and long-term incentives, total fixed and performance-based compensation.

• Annual cash incentives and long-term performance-based restricted share unit awards under our executive compensation program are capped at a reasonable percent of the target award, and all other material non-executive cash incentive programs are capped at reasonable levels, which the Committee believes protects against disproportionately large incentives.

• The Committee believes the performance measures and the multi-year vesting features of the long-term equity incentive compensation component encourage participants to seek sustainable growth and value creation.

• The Committee believes inclusion of share-based compensation through the long-term equity incentive compensation component encourages appropriate decision-making that is aligned with the long-term interests of stockholders.

• Our stock ownership guidelines further align the interests of management and stockholders.

2016 Proxy Statement 47

Compensation Tables

Summary Compensation Table

The following table contains information concerning compensation awarded to, earned by, or paid to the Company named executive officers by Kimberly-Clark for the year 2013, by Kimberly-Clark and the Company for the year 2014, and by the Company for the year 2015. Position titles refer to each Company named executive officer’s title at the Company effective December 31, 2015. Additional information regarding the items reflected in each column follows the table.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock  Awards ($)		Option  Awards ($)		Non-Equity  Incentive  Plan  Compensation ($)		Change in  Pension  Value and  Nonqualified  Deferred  Compensation  Earnings ($)		All Other  Compensation ($)		Total ($)
Robert E. Abernathy		2015		837,375		—		1,800,021		2,699,994		161,613		—		96,755		5,595,758
Chairman of the Board and Chief Executive Officer		2014		787,500		—		3,700,828		508,375		708,516		1,024,198		161,189		6,890,606
		2013		780,000		—		1,424,997		328,807		850,533		—		120,106		3,504,443
Steven E. Voskuil		2015		436,450		—		465,732		697,949		58,964		—		75,784		1,734,880
Senior Vice President and Chief Financial Officer		2014		367,496		150,000		1,357,579		808,736		221,078		46,809		44,577		2,996,275
		2013		349,775		—		299,954		69,219		230,681		—		53,516		1,003,145
Rhonda D. Gibby Senior Vice President and Chief Human Resources Officer		2015		314,650		—		209,980		315,008		30,364		—		22,891		892,892
		2014		258,004		100,000		577,224		335,264		123,742		—		25,409		1,419,643
		2013		237,993		—		149,977		34,613		116,301		—		33,803		572,687
Christopher M. Lowery Senior Vice President and Chief Operating Officer		2015		482,125		—		604,232		902,739		79,093		—		42,381		2,110,570
		2014		332,667		250,000		1,156,670		535,857		200,185		—		32,815		2,508,193
		2013		290,037		—		142,540		32,883		107,865		—		51,361		624,686
John W. Wesley		2015		393,750		—		239,991		360,014		45,596		—		35,771		1,075,122
Senior Vice President, General Counsel and Chief Ethics and Compliance Officer		2014		323,750		150,000		521,460		66,157		174,302		—		162,313		1,397,981
		2013		308,750		—		206,232		47,590		208,630		—		47,356		818,558

Salary. The amounts in this column represent base salary earned during the year.

Bonus. The amounts in this column represent one-time retention and relocation payments paid in 2014 in connection with the spin-off from Kimberly-Clark.

Stock Awards and Option Awards. The amounts in these columns reflect the grant date fair value, computed in accordance with ASC Topic 718, of restricted share unit awards and stock options, respectively, granted under Kimberly-Clark’s 2001 Equity Participation Plan (the “Kimberly-Clark 2001 Plan”), as amended by the Kimberly-Clark 2011 Plan (collectively, the “Kimberly-Clark Equity Plans”) in 2013 and 2014, and under the Halyard Health, Inc. Equity Participation Plan in 2014 and 2015. See Note 10 to our audited consolidated and combined financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for the assumptions used in valuing and expensing these restricted share units and stock option awards in accordance with ASC Topic 718.

48 2016 Proxy Statement

Compensation Tables

At the time of the spin-off, the named executive officers forfeited a number of unvested performance-based restricted share units and stock option awards previously granted by Kimberly-Clark. Because the SEC rules require the Summary Compensation Table to reflect the grant date value of all of the awards granted to the named executive officers by Kimberly-Clark and the Company, the 2014 values in the stock award and option awards columns (and as a result, the total compensation column) of the Summary Compensation Table above are higher than they normally would have been. For example, the full grant date values of the awards made by Kimberly-Clark in June 2014 are included in the 2014 numbers, even with respect to the awards that were forfeited in connection with the spin-off, and the full grant date value of the replacement awards made by the Company are also included in the 2014 numbers even though those awards replace equity awards granted by Kimberly-Clark in 2012, 2013 and 2014. In order to reflect a more normal value for the 2014 stock and option awards, in the table below we have taken the amounts in the Summary Compensation Table and subtracted both (i) the grant date fair value of the forfeited June 2014 Kimberly-Clark awards that were replaced by new Company awards and (ii) the grant date value of Company replacement awards that relate to pre-2014 Kimberly-Clark awards that were forfeited:

	Stock Awards								Options
Name	2014 Stock Awards From Summary Compensation Table ($)		2014 Stock Awards Forfeited at Time of Spin- off ($)		Replacement Awards for pre-2014 unvested Stock Awards ($)		Normalized 2014 Stock Awards ($)		2014 Option Awards from Summary Compensation Table ($)		2014 Option Awards Forfeited at Time of Spin- off ($)		Replacement Awards for pre-2014 unvested Option Awards ($)		Normalized 2014 Option Awards ($)
Robert E. Abernathy		3,700,828		1,424,960		—		2,275,868		508,375		—		—		508,375
Steven E. Voskuil		1,357,579		356,297		413,498		587,784		808,736		72,758		373,880		362,098
Rhonda D. Gibby		577,224		127,475		184,968		264,781		335,264		26,036		165,430		143,798
Christopher M. Lowery		1,156,670		217,511		185,195		753,964		535,857		44,421		166,481		324,955
John W. Wesley		521,460		217,511		—		303,949		66,157		—		—		66,157

For awards that are subject to performance conditions, the value is based on the probable outcome of the conditions at grant date. This value, as well as the value of the awards at the grant date assuming the highest level of performance conditions will be achieved and using the grant date stock price, is set forth below:

Name	Year		Stock Awards at Grant Date Value ($)		Stock Awards at Highest Level of Performance Conditions($)
Robert E. Abernathy		2015		1,800,021		3,600,042
		2014		1,424,960		2,849,920
		2013		1,424,997		2,849,994
Steven E. Voskuil		2015		465,732		931,464
		2014		356,297		712,594
		2013		299,954		599,908
Rhonda D. Gibby		2015		209,980		419,960
		2014		127,475		254,950
		2013		149,977		299,954
Christopher M. Lowery		2015		604,232		1,208,464
		2014		217,511		435,022
		2013		142,540		285,080
John W. Wesley		2015		239,991		479,982
		2014		217,511		435,022
		2013		206,232		412,464

2016 Proxy Statement 49

Compensation Tables

As noted above, the performance awards granted by Kimberly-Clark in 2014 to all of the named executive officers, and to Messrs. Voskuil and Lowery and Ms. Gibby in 2012 and 2013, were forfeited upon the spin-off from Kimberly-Clark on October 31, 2014.

Non-Equity Incentive Plan Compensation. The amounts in this column are the annual cash incentive payments described above in “Compensation Discussion and Analysis.” These amounts were earned during the years indicated and were paid to the Company named executive officers in February of the following year.

Change In Pension Value and Nonqualified Deferred Compensation Earnings. The amounts in this column reflect the aggregate change during the year in actuarial present value of accumulated benefits under all Kimberly-Clark defined benefit and actuarial plans (including supplemental pension plans). With respect to the supplemental pension plans, amounts have been calculated to reflect an approximate 30-year Treasury bond rate to determine the amount of the earlier retirement age lump sum benefit in a manner consistent with Kimberly-Clark’s financial statements.

For 2013, the aggregate value of pension benefits for Messrs. Abernathy and Voskuil decreased by $519,759 and $32,442, respectively. Because these amounts decreased, they have been excluded from the table above under the SEC’s regulations. Messrs. Lowery and Wesley and Ms. Gibby were not participants in Kimberly-Clark’s pension plans.

Each of the Company named executive officers participated in the Halyard Health Supplemental 401(k) Plan, a non-qualified defined contribution plan. Earnings on each of these plans are not included in the Summary Compensation Table because the earnings were not above-market or preferential. See “Nonqualified Deferred Compensation” below for a discussion of this plan and each named executive officer’s earnings under the plan in 2015.

All Other Compensation. All other compensation consists of the following:

Name	Year		Perquisites ($) (1)		Defined Contribution Plan Amounts ($) (2)		Tax Gross-Up ($) (3)		Total ($)
Robert E. Abernathy		2015		—		96,755		—		96,755
		2014		34,242		113,287		13,660		161,189
		2013		8,000		112,106		—		120,106
Steven E. Voskuil		2015		18,585		41,637		15,562		75,784
		2014		3,413		41,164		—		44,577
		2013		—		53,516		—		53,516
Rhonda D. Gibby		2015		—		22,891		—		22,891
		2014		—		25,409		—		25,409
		2013		—		33,803		—		33,803
Christopher M. Lowery		2015		—		42,381		—		42,381
		2014		—		30,045		2,770		32,815
		2013		—		35,171		16,190		51,361
John W. Wesley		2015		—		35,771		—		35,771
		2014		107,915		36,641		17,757		162,313
		2013		3,629		43,727		—		47,356

(1) Perquisites. The amount shown for Mr. Voskuil in 2015 reflects a moving allowance paid in connection with his relocation to Atlanta, Georgia to assume his new role with the Company.

(2) Defined Contribution Plan Amounts. Matching contributions were made under the Kimberly-Clark 401(k) Profit Sharing Plan and accrued under the Kimberly-Clark Supplemental 401(k) Plan in 2014 and 2013, and under the Halyard Health 401(k) Plan and Supplemental 401(k) Plan in 2015 and 2014, for each of the Company named executive officers. A

50 2016 Proxy Statement

Compensation Tables

profit-sharing contribution was also made under the Kimberly-Clark 401(k) Profit Sharing Plan and the Kimberly-Clark Supplemental 401(k) Plan in February 2015 and 2014 with respect to Kimberly-Clark’s performance in 2014 and 2013, respectively, for the Company named executive officers as follows:

Name	Performance Year		Profit Sharing Contribution($)
Robert E. Abernathy		2015		—
		2014		45,016
		2013		49,825
Steven E. Voskuil		2015		—
		2014		15,820
		2013		18,895
Rhonda D. Gibby		2015		—
		2014		9,679
		2013		10,665
Christopher M. Lowery		2015		—
		2014		10,841
		2013		13,333
John W. Wesley		2015		—
		2014		14,096
		2013		15,965

The profit sharing contribution varied depending on Kimberly-Clark’s performance for the applicable year, contributing to fluctuations from year to year in the amounts in the All Other Compensation column of the Summary Compensation Table. The Company does not have a profit sharing plan.

(3) Tax Gross-Ups. The amount shown for Mr. Voskuil reflects tax reimbursement for income attributed to him in 2015 under the Company’s relocation program in connection with his relocating to the Atlanta, Georgia area to assume his new role with the Company.

2016 Proxy Statement 51

Compensation Tables

Grants of Plan-Based Awards

The following table sets forth Company plan-based awards granted to the Company named executive officers during 2015 on a grant-by-grant basis.

GRANTS OF PLAN-BASED AWARDS IN 2015

				Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)						Estimated Future Payouts Under Equity Incentive Plan Awards (2)
Name	Grant Type	Date Committee Took Action(3)	Grant Date (3)	Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)		All Other Stock Awards: Number of Shares of Stock or Units (#)	All Other Option Awards: Number of Securities Underlying Options (#) (4)		Exercise or Base Price of Option Awards ($/SH)		Grant Date Fair Value of Stock and Option Awards ($) (5)
Robert E. Abernathy	Performance- based RSUs	2/24/2015	3/5/2015								—		39,587		79,174							1,800,021
	Time-vested stock option	2/10/2015	3/5/2015															85,616		45.47		1,499,992
	Annual cash incentive award		3/18/2015		—		837,375		1,942,710
	Time-vested stock option	2/24/2015	5/5/2015															96,154		45.53		1,200,002
Steven E. Voskuil	Performance- based RSUs	2/24/2015	3/5/2015								—		9,987		19,794							450,017
	Time-vested stock option	2/10/2015	3/5/2015															21,404		45.47		374,998
	Annual cash incentive award		3/18/2015		—		305,515		708,795
	Performance- based RSUs(6)		3/18/2015										330		660							15,715
	Time-vested stock option(6)		3/18/2015															713		47.62		12,948
	Time-vested stock option	2/24/2015	5/5/2015															24,840		45.53		310,003
Rhonda D. Gibby	Performance- based RSUs	2/24/2015	3/5/2015								—		4,618		9,236							209,980
	Time-vested stock option	2/10/2015	3/5/2015															9,989		45.47		175,007
	Annual cash incentive award		3/18/2015		—		157,325		364,994
	Time-vested stock option	2/24/2015	5/5/2015															11,218		45.53		140,001
Christopher M. Lowery	Performance- based RSUs	2/24/2015	3/5/2015								—		11,216		22,432							509,992
	Time-vested stock option	2/10/2015	3/5/2015															24,258		45.47		425,000
	Annual cash incentive award		3/18/2015		—		409,806		950,750
	Performance- based RSUs(6)		3/18/2015								—		1,979		3,958							94,240
	Time-vested stock option(6)		3/18/2015															4,281		47.62		77,743
	Time-vested stock option	2/24/2015	5/5/2015															32,051		45.53		399,996

52 2016 Proxy Statement

Compensation Tables

Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)

Estimated Future Payouts Under Equity Incentive Plan Awards (2)

Name

Grant Type

Date Committee Took Action(3)

Grant Date (3)

Threshold ($)

Target ($)

Maximum ($)

Threshold (#)

Target (#)

Maximum (#)

All Other Stock Awards: Number of Shares of Stock or Units (#)

All Other Option Awards: Number of Securities Underlying Options (#) (4)

Exercise or Base Price of Option Awards ($/SH)

Grant Date Fair Value of Stock and Option Awards ($) (5)

John W. Wesley

Performance- based RSUs

2/24/2015

3/5/2015

—

5,278

10,556

239,991

Time-vested stock option

2/10/2015

3/5/2015

11,416

45.47

200,008

Annual cash incentive award

3/18/2015

—

236,250

548,100

Time-vested stock option

2/24/2015

5/5/2015

12,821

45.53

160,006

(1) Represents the potential annual performance-based incentive cash payments each named executive officer could earn in 2015. These awards were granted under the Executive Officer Achievement Award Program, which is the annual cash incentive program for the Company’s executive officers. Actual amounts earned in 2015 were based on the 2015 objectives established by the Company’s Compensation Committee. See “Compensation Discussion and Analysis.” At the time of the grant, the incentive payment could range from the threshold amount to the maximum amount depending on the extent to which the 2015 objectives were met. The actual amounts paid in 2016 based on the 2015 objectives are set forth in the Summary Compensation Table under the column entitled “Non-Equity Incentive Plan Compensation.”

(2) Performance-based restricted share units granted to the named executive officers under the Equity Participation Plan.

(3) The grant date for each award is the effective date of each grant established by the Company’s Compensation Committee when it took action to grant the awards, unless there is a date for such grant in the column entitled “Date Committee Took Action.” If the date on which the Committee takes action to approve a grant falls during a blackout period during which insiders are not permitted to buy or sell shares of our common stock, then the grant is made effective as of a later date when the blackout period has expired. Our blackout periods typically expire at 11:59 p.m. Eastern time on the day after we publicly release the results of the prior quarter. In addition, as described in “Compensation Discussion and Analysis,” the Committee approved the dollar value of annual time-vested stock options grants to executive officers at its meetings in February but the option award is not effective until May when annual option awards are granted to non-executive officers.

(4) Time-vested stock options granted to the named executive officers under the Equity Participation Plan on March 5, 2015 with respect to the Grow to Greatness awards and on May 5, 2015 with respect to annual long-term incentive grants. See “Compensation Discussion and Analysis” for a discussion of our annual long-term annual grants and the 2015 Grow to Greatness grants.

(5) Grant date fair value is determined in accordance with ASC Topic 718. See Note 10 to our audited consolidated and combined financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for the assumptions used in valuing and expensing these restricted share units and stock option awards in accordance with ASC Topic 718.

(6) Represents grants to Messrs. Voskuil and Lowery that were made in order to correct errors in the calculation of their annual long-term incentive compensation awards and our 2015 Grow to Greatness awards.

Discussion Of Summary Compensation And Plan-based Awards Tables

The Company’s executive compensation policies and practices, pursuant to which the compensation set forth in the Summary Compensation Table and the Grants of Plan-Based Awards in 2015 table was paid or awarded, are described under “Compensation Discussion and Analysis” above.

2016 Proxy Statement 53

Compensation Tables

Outstanding Equity Awards

The following table sets forth information concerning outstanding Company equity awards for the named executive officers as of December 31, 2015. The 2015 awards were part of our annual long-term incentive compensation awards or our 2015 Grow to Greatness awards described earlier. The March 18, 2015 grants to Messrs. Lowery and Voskuil were made to correct errors in the calculation of their annual long-term incentive compensation awards and our 2016 Grow to Greatness awards. The 2014 option awards were granted to replace Kimberly-Clark options that terminated as a result of the spin-off and those replacement options have terms equal to the remaining terms of the Kimberly-Clark options being replaced. Additionally, options were also granted in 2014 to the named executive officers which have ten-year terms, ending on the option expiration date set forth in the table. Stock awards were granted as indicated in the footnotes to the table.

OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2015 ⁽¹⁾

				Option Awards (2)								Stock Awards
Name	Grant Date			Number of Securities Underlying Unexercised Options(#) Exercisable		Number of Securities Underlying Unexercised Options(#) Unexercisable		Option Exercise Price($) (3)		Option Expiration Date		Number of Shares or Units of Stock That Have  Not Vested (#) (4)			Market Value of Shares or Units of Stock That Have Not Vested ($) (8)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (9)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) (10)
Robert E. Abernathy		5/5/2015			—		96,154		45.43		5/5/2025
		3/5/2015			—		85,616		45.47		3/5/2025
		3/5/2015																39,587		1,322,602
		11/7/2014			6,599		15,400		37.88		11/7/2024
		11/7/2014											38,302	(5)		1,279,670
		11/7/2014											21,779	(6)		727,636
Steven E. Voskuil		5/5/2015			—		24,840		45.53		5/5/2025
		3/18/2015																330		11,025
		3/18/2015			—		713		47.62		3/5/2025
		3/5/2015			—		21,404		45.47		3/5/2025
		3/5/2015																9,897		330,659
		11/7/2014	(A)		14,135		0		26.04		5/2/2022
		11/7/2014	(B)		8,761		11,682		34.24		5/1/2023
		11/7/2014	(C)		9,501		22,170		37.50		6/19/2024
		11/7/2014			1,800		4,200		37.88		11/7/2024
		11/7/2014											9,577	(5)		319,968
		11/7/2014											6,123	(7)		204,569
		11/7/2014											5,940	(6)		198,455
Rhonda D. Gibby		5/5/2015			—		11,218		45.53		5/5/2025
		3/5/2015			—		9,989		45.47		3/5/2025
		3/5/2015																4,618		154,287
		11/7/2014	(A)		5,378		0		26.04		5/2/2022
		11/7/2014	(B)		4,381		5,842		34.24		5/1/2023
		11/7/2014	(C)		3,399		7,934		37.50		6/19/2024
		11/7/2014			1,080		2,520		37.88		11/7/2024
		11/7/2014											3,426	(5)		114,463
		11/7/2014											3,061	(7)		102,268
		11/7/2014											3,564	(6)		119,073

54 2016 Proxy Statement

Compensation Tables

				Option Awards (2)								Stock Awards
Name	Grant Date			Number of Securities Underlying Unexercised Options(#) Exercisable		Number of Securities Underlying Unexercised Options(#) Unexercisable		Option Exercise Price($) (3)		Option Expiration Date		Number of Shares or Units of Stock That Have  Not Vested (#) (4)			Market Value of Shares or Units of Stock That Have Not Vested ($)  (8)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (9)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) (10)
Christopher M. Lowery		5/5/2015			—		32,051		45.53		5/5/2025
		3/18/2015			—		4,281		47.62		3/5/2025
		3/18/2015																1,979		66,118
		3/5/2015			—		24,258		45.47		3/5/2025
		3/5/2015																11,216		374,727
		11/7/2014	(A)		5,840		0		26.04		5/2/2022
		11/7/2014	(B)		4,162		5,551		34.24		5/1/2023
		11/7/2014	(C)		5,800		13,536		37.50		6/19/2024
		11/7/2014			4,260		9,940		37.88		11/7/2024
		11/7/2014											5,846	(5)		195,315
		11/7/2014											2,911	(7)		97,257
		11/7/2014											14,058	(6)		469,678
John W. Wesley		5/5/2015			0		12,821		45.53		5/5/2025
		3/5/2015			0		11,416		45.57		3/5/2025
		3/5/2015																5,278		176,338
		11/7/2014			660		1,540		37.88		11/7/2024
		11/7/2014											5,846	(5)		195,315
		11/7/2014											2,178	(6)		72,767

(1) The amounts shown reflect outstanding equity awards granted under the Equity Participation Plan.

(2) Stock options granted under the Equity Participation Plan generally become exercisable in three annual installments of 30 percent, 30 percent and 40 percent, beginning on the first anniversary of the grant date. Grow to Greatness awards become exercisable in three annual installments of 33.3% each, beginning on March 5, 2017. Option awards with a letter (A), (B) or (C) following the grant date were replacement options awarded to replace unvested Kimberly-Clark stock options which were forfeited as a result of the spin-off. The vesting schedule of those replacement options are the same as the forfeited Kimberly-Clark options, as follows:

	Original Grant Year		1st 30 percent vest		2nd 30 percent vest		Final 40 percent vest
(A)		2012		Vested in 2013		Vested in 2014		5/2/2015
(B)		2013		Vested in 2014		5/1/2015		5/1/2016
(C)		2014		4/30/2015		4/30/2016		4/30/2017

All options become exercisable for three years upon death or total and permanent disability and for the earlier of five years or the remaining term of the options, upon retirement of the officer. In addition, options generally become exercisable upon a termination of employment following a change of control, and options granted to the named executive officers are subject to the Executive Severance Plan. See “Potential Payments on Termination or Change of Control” below. The options may be transferred by the officers to family members or certain entities in which family members have interests.

(3) The option price per share is equal to the closing price per share of the Company’s common stock at grant date, except for replacement options which have a grant price intended to preserve the intrinsic value of the forfeited Kimberly-Clark option being replaced, and options granted immediately following the spin-off which were priced using a weighted average closing price for the first five trading days following the effective date of the spin-off.

(4) Time-vested restricted share units granted under the Equity Participation Plan. These awards replaced unvested Kimberly-Clark performance-based restricted share units that were forfeited as a result of the spin-off.

(5) These replacement awards vest on April 30, 2017, which is the same date on which the forfeited awards they replaced were scheduled to vest.

(6) These awards vest on November 7, 2017.

(7) These replacement awards vest on May 1, 2016, which is the same date on which the forfeited awards they replaced were scheduled to vest.

(8) The values shown in this column are based on the closing price of our common stock on December 31, 2015 of $33.41 per share.

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Compensation Tables

(9) Performance-based restricted share units will vest on March 5, 2018.

(10) The values shown in this column are based on the closing price of our common stock on December 31, 2015 of $33.41 per share. The value provided assumes the performance-based restricted share units will payout at target. As discussed in “Compensation Discussion and Analysis,” based on 2015 performance these awards are on pace to payout at zero.

Option Exercises and Stock Vested

The following table sets forth information concerning Company stock options exercised and stock awards vested during 2015 for the Company’s named executive officers.

OPTION EXERCISES AND STOCK VESTED IN 2015 ⁽¹⁾

	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise(#)		Value Realized on Exercise($))		Number of Shares Acquired on Vesting(#)		Value Realized on Vesting($) (2)
Robert E. Abernathy		—		—		—		—
Steven E. Voskuil		—		—		4,793		234,138
Rhonda D. Gibby		—		—		1,822		89,005
Christopher M. Lowery		—		—		1,978		96,625
John W. Wesley		—		—		—		—

(1) The amounts in this table reflect Company time-based restricted share units that vested during the year.

(2) The dollar amount reflects the total pre-tax value received by the Company named executive officers upon the vesting of the Company time-vested restricted share units (number of shares vested times the closing price of Company’s common stock on the vesting date), including cash paid in lieu of fractional shares. It is not the grant date fair value disclosed in other locations in this proxy statement.

Pension Benefits

The Company does not offer a pension plan in the United States, and none of the Company’s executive officers participate in a Company pension plan.

Nonqualified Deferred Compensation

The following table sets forth information concerning the Company’s nonqualified defined contribution plan and deferred compensation plans for the Company named executive officers during 2015.

2015 NONQUALIFIED DEFERRED COMPENSATION

Name	Plan	Company Contributions in 2015($)  (1)		Aggregate Earnings in 2015($) (2)			Aggregate Balance at December 31, 2015($)
Robert E. Abernathy	Supplemental 401(k) Plan		80,855		7,018			611,518
Steven E. Voskuil	Supplemental 401(k) Plan		25,737		(761	)		57,925
Rhonda D. Gibby	Supplemental 401(k) Plan		11,907		(434	)		73,793
Christopher M. Lowery	Supplemental 401(k) Plan		26,481		(2,351	)		35,819
John W. Wesley	Supplemental 401(k) Plan		19,871		(1,568	)		281,325

56 2016 Proxy Statement

Compensation Tables

(1) Contributions consist of amounts accrued by the Company under the Halyard Supplemental 401(k) Plan. These amounts are included in the Summary Compensation Table and represent a portion of the Defined Contribution Plan Payments included in All Other Compensation.

(2) The amounts in this column show the changes in the aggregate account balance for the Company named executive officers during 2015 that are not attributable to company contributions. Aggregate earnings are not included in the Summary Compensation Table because the earnings are not above-market or preferential.

Overview of Qualified and Non-Qualified Plans. The following is an overview of the Company’s qualified and non-qualified plans that it offered to our named executive officers as of December 31, 2015.

	Halyard 401(k) Plan	Halyard Supplemental 401(k) Plan
Purpose	To assist employees in saving for retirement	To provide benefits to the extent necessary to fulfill the intent of the Halyard 401(k) Plan without regard to the limitations imposed by the Code on qualified defined contribution plans
Eligible participants	Most employees	Salaried employees impacted by limitations imposed by the Code on the Halyard 401(k) Plan
Is the plan qualified under the Code?	Yes	No
Can employees make contributions?	Yes	No
Does the Company make contributions or match employee contributions?	The Company matches 100% of employee contributions, to a yearly maximum of 6% of eligible compensation.	The Company provides credit to the extent the Company’s contributions to the Halyard 401(k) Plan are limited by the Code
When do account balances vest?	Immediately	Immediately
How are account balances invested?	Account balances are invested in certain designated investment options selected by the participant	Account balances are credited with earnings and losses as if such account balances were invested in certain designated investment options selected by the participant
When are account balances distributed?	Distributions of the participant’s vested account balance are only available after termination of employment. Loans, hardship and certain other withdrawals are allowed prior to termination of employment for certain vested amounts under the Halyard 401(k) Plan	Distributions of the participant’s vested account balance are payable after termination of employment.

2016 Proxy Statement 57

Compensation Tables

The Halyard Supplemental 401(k) Plan is not funded and represents a general obligation of the Company.

Potential Payments on Termination or Change of Control

The Company’s named executive officers are eligible to receive certain benefits in the event of termination of employment, including following a change of control of the Company. This section describes various termination scenarios as well as the payments and benefits payable under those scenarios.

Severance Benefits

The Company maintains two severance plans that cover its executive officers, depending on the circumstances that result in their termination. Those plans include the Executive Severance Plan, which is applicable when an executive officer is terminated following a change of control, and the Severance Pay Plan, which is applicable in the event of certain other involuntary terminations. An executive officer may not receive severance payments under more than one of the plans described below.

Executive Severance Plan. The Company’s Board of Directors determines the eligibility criteria for participation in the Executive Severance Plan. The Company has entered into an agreement under this plan with each of its named executive officers. The agreements provide that, in the event of a “Qualified Termination of Employment” (as described below), the executive officers will each receive a cash payment in an amount equal to the sum of:

^u  Two times the sum of annual base salary and the average annual incentive award for the three prior fiscal years,

^u  The value of any forfeited restricted stock, time-vested restricted share units, and stock option awards, based on the closing price of the Company’s common stock at the date of the executive officer’s separation from service.

^u  The number of performance-based restricted share units that are forfeited multiplied by the average performance-based restricted share unit payment for the prior three years,

^u  The value of the employer match each executive officer would have received if he or she had remained employed an additional two years under the Halyard Health 401(k) Plan and Halyard Health Supplemental 401(k) Plan, and

^u  Two years of COBRA premiums for medical and dental coverage.

A “Qualified Termination of Employment” is a separation of service within two years following a change of control of the Company (as defined in the plan) either involuntarily without cause or by the participant with good reason (as defined in the plan). In addition, any involuntary separation of service without cause within one year before a change of control will also be determined to be a Qualified Termination of Employment if it is in connection with, or in anticipation of, a change of control.

The current agreements with each executive officer expire on October 31, 2017, unless extended by the Company’s Compensation Committee.

The agreements with the executive officers reflect that they are not entitled to a tax gross-up if they incur an excise tax due to the application of Section 280G of the Code. Instead, payments

58 2016 Proxy Statement

Compensation Tables

and benefits payable to an executive officer will be reduced to the extent doing so would result in the officer retaining a larger after-tax amount, taking into account the income, excise and other taxes imposed on the payments and benefits.

The agreements with the executive officers provide that they will retain in confidence any confidential information known to them concerning the Company and the Company’s business so long as such information is not publicly disclosed.

Severance Pay Plan. The Company’s Severance Pay Plan generally provides eligible employees (including the Company named executive officers) severance payments and benefits in the event of certain involuntary terminations. Benefits under the Severance Pay Plan depend on the participants’ employee classification.

Under the Severance Pay Plan, if an executive officer’s employment was involuntarily terminated, he or she would receive:

^u  For the Chief Executive Officer, two times the sum of annual base salary and the average annual incentive award for the three prior fiscal years, and for any other executive officer, one and one-half times the sum of annual base salary and the average annual incentive award for the three prior fiscal years,

^u  If the termination occurs after March 31 of a given year, a pro-rated annual incentive award for that year based on actual performance,

^u  Six months of COBRA premiums for medical coverage, and

^u  Six months of outplacement services and three months of participation in Halyard’s employee assistance program.

Severance pay under the Severance Pay Plan will not be paid to any participant who is terminated for cause (as defined in the plan), is terminated during a period in which the participant is not actively at work for more than 25 weeks (except to the extent otherwise required by law), voluntarily quits or retires, dies or is offered a comparable position (as defined in the plan).

A named executive officer must execute a full and final release of claims against the Company within a specified period of time following termination to receive severance benefits under the Severance Pay Plan. If the release has been timely executed, severance benefits are payable as a lump sum cash payment no later than 60 days following the participant’s termination date. Any current year annual incentive award that is payable under the Severance Pay Plan will be paid at the same time as it was payable under the Executive Officer Achievement Award Program or the Management Achievement Award Program, as applicable, but no later than 60 days following the calendar year of the separation from service.

Retirement, Death and Disability

Retirement. In 2015, retirement was defined as separation from service on or after age 55 without requirement for years of service. The Committee approved a change in the definition of retirement for 2016 and thereafter. Retirement now means separation from service on or after the age of 60 with five years of service, or on or after age 55 with ten years of service. Years of service at Kimberly-Clark prior to the spin-off are considered years of service for the definition of retirement. In the event of retirement, the Company named executive officers are entitled to receive:

^u  Accelerated vesting of unvested stock options, and the options will be exercisable until the earlier of five years or the remaining term of the options,

^u  For units outstanding more than six months after the date of grant, performance-based restricted share units will be payable based on attainment of the performance goal at the end of the performance period, and

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Compensation Tables

^u  Annual incentive award payment under the Executive Officer Achievement Award Program or the Management Achievement Award Program, as applicable, as determined by the Halyard Compensation Committee in its discretion.

Death. In the event of death while an active employee, the following benefits are payable:

^u  Accelerated vesting of unvested stock options, and the options will be exercisable until the earlier of three years or the remaining term of the options,

^u  Time-vested restricted share units will be vested pro rata, based on the number of full months of employment during the restricted period prior to the participant’s termination of employment, payable within 90 days following the end of the restricted period,

^u  For units outstanding more than six months after the date of grant, performance-based restricted share units will be vested pro rata, based on attainment of the performance goal at the end of the restricted period, payable within 70 days following the end of the performance period,

^u  Annual incentive award payment under the Executive Officer Achievement Award Program or the Management Achievement Award Program, as applicable, as determined by the Halyard Compensation Committee in its discretion, and

^u  Payment of benefits under the Company’s group life insurance plan (which is available to all salaried employees in the United States) equal to two times the participant’s annual pay, up to $1 million (plus any additional coverage of three, four, five or six times the participant’s annual pay, in increments of up to $1 million each, purchased by the participant at group rates). The Company provided and employee-purchased benefits cannot exceed $6 million.

Disability. In the event of a separation of service due to a total and permanent disability, as defined in the applicable plan, the Company named executive officers are entitled to receive:

^u  Accelerated vesting of unvested stock options, and the options will be exercisable until the earlier of three years or the remaining term of the options,

^u  Time-vested restricted share units will be vested pro rata, based on the number of full months of employment during the restricted period prior to the participant’s termination of employment, payable within 90 days following the end of the performance period,

^u  For units outstanding more than six months after the date of grant, performance-based restricted share units will be vested pro rata, based on attainment of the performance goal at the end of the restricted period, payable within 70 days following the end of the restricted period,

^u  Annual incentive award payment under the Executive Officer Achievement Award Program or the Management Achievement Award Program, as applicable, as determined by the Company’s Compensation Committee in its discretion,

^u  Continuing coverage under the Company’s group life insurance plan (available to all U.S. salaried employees), with no requirement to make monthly contributions toward coverage during disability, and

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^u  Payment of benefits under the Company’s Long-Term Disability Plan (available to all U.S. salaried employees). Long-term disability under the plan would provide income protection of monthly base pay, ranging from a minimum monthly benefit of $50 to a maximum monthly benefit of $20,000. Benefits are reduced by the amount of any other Company or government-provided income benefits received (but will not be lower than the minimum monthly benefit).

Potential Payments on Termination or Change of Control Table

The following table presents the approximate value of (1) the severance benefits for the named executive officers under the Executive Severance Plan had a Qualified Termination of Employment under that plan occurred on December 31, 2015; (2) the severance benefits for the Halyard named executive officers under the Severance Pay Plan if an involuntary termination had occurred on December 31, 2015; (3) the benefits that would have been payable on the death of the Halyard named executive officers on December 31, 2015; (4) the benefits that would have been payable on the total and permanent disability of the Halyard named executive officers on December 31, 2015; and (5) the potential payments to Messrs. Abernathy and Wesley if they had retired on December 31, 2015. If applicable, amounts in the table were calculated using the closing price of Halyard’s common stock on December 31, 2015 of $33.41 per share.

Because none of the Company named executive officers, other than Messrs. Abernathy and Wesley, were eligible to retire as of December 31, 2015 potential payments assuming retirement on that date are not included for the other named executive officers. The value of benefits that already were vested as of December 31, 2015, such as vested but unexercised stock options and the balances of the executive officers’ accounts under the Halyard Health 401(k) Plan and the Halyard Supplemental 401(k) Plan, are not included in the table.

The amounts presented in the following table are in addition to amounts each Company named executive officer earned or accrued prior to termination, such as previously vested benefits under Company’s qualified and non-qualified plans, previously vested options, restricted stock and restricted share units and accrued salary and vacation. For information about these previously earned and accrued amounts, see the “Summary Compensation Table,” “Outstanding Equity Awards,” “Option Exercises and Stock Vested,” and “Nonqualified Deferred Compensation.”

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Compensation Tables

Name	Cash Payment($)			Equity with Accelerated Vesting($)			Additional Retirement Benefits($)			Continued Benefits and Other Amounts($)			Total($)
Robert E. Abernathy
Qualified Termination of Employment in connection with a Change in Control (1)		3,232,136			3,329,908(2	)		100,485(3	)		27,483(4	)		6,690,012
Involuntary termination absent a Change in Control (5)		3,393,749			—			—			12,470(6	)		3,406,219
Death (7)		1,161,613(8	)		2,202,755(2	)		—			—			3,364,368
Disability		161,613(8	)		2,202,755(2	)		—			—(9	)		2,364,368
Retirement		161,613			1,322,602(2	)		—			—(10	)		1,484,215
Steven E. Voskuil
Qualified Termination of Employment in connection with a Change in Control (1)		1,334,530			1,224,811(2	)		37,758(3	)		25,375(4	)		2,622,474
Involuntary termination absent a Change in Control (5)		1,059,862			—			—			11,687(6	)		1,071,549
Death (7)		1,488,964(8	)		727,269(2	)		—			—			2,216,233
Disability		58,964(8	)		727,269(2	)		—			—(9	)		786,233
Rhonda D. Gibby
Qualified Termination of Employment in connection with a Change in Control (1)		852,864			550,964(2	)		36,540(3	)		40,167(4	)		1,480,535
Involuntary termination absent a Change in Control (5)		670,012			—			—			14,927(6	)		684,939
Death (7)		531,364(8	)		333,565(2	)		—			—			864,929
Disability		30,364(8	)		333,565(2	)		—			—(9	)		363,929
Christopher M. Lowery
Qualified Termination of Employment in connection with a Change in Control (1)		1,254,022			1,269,179(2	)		33,495(3	)		40,167(4	)		2,596,863
Involuntary termination absent a Change in Control (5)		1,019,609			—			—			14,927(6	)		1,034,536
Death (7)		691,093(8	)		790,280(2	)		—			—			1,481,373
Disability		79,093(8	)		790,280(2	)		—			—(9	)		869,373
John W. Wesley
Qualified Termination of Employment in connection with a Change in Control (1)		1,169,562			444,420(2	)		47,250(3	)		40,167(4	)		1,701,399
Involuntary termination absent a Change in Control (5)		922,768			—			—			14,927(6	)		937,695
Death (7)		1,305,596(8	)		295,779(2	)		—			—			1,601,375
Disability		45,596(8	)		295,779(2	)		—			—(9	)		341,375
Retirement		45,596			176,338(2	)		—			—(10	)		221,934

(1) Represents amounts payable under the Halyard Health Executive Severance Plan.

(2) Assumes that performance-based restricted stock units would vest at target level.

(3) Includes the value of two additional years of employer contributions under the Halyard 401(k) Plan and the Halyard Supplemental 401(k) Plan, pursuant to the terms of the Executive Severance Plan.

(4) Includes an amount equal to 24 months of COBRA medical and dental coverage.

(5) Benefits payable under the Halyard Health Severance Pay Plan.

(6) Equals six months of COBRA medical coverage and outplacement services.

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(7) Balances in each executive’s accounts under the Halyard 401(k) Plan and the Halyard Supplemental 401(k) Plan are excluded because the payout of those balances upon death is a benefit available to all U.S. salaried employees.

(8) For death, includes the payment of benefits under the Company’s group life insurance plan (which is available to all U.S. salaried employees). For death and disability, assumes the Company Compensation Committee would approve payment under the Executive Officer Achievement Award Program for 2015 at the actual award level discussed in Compensation Discussion and Analysis.

(9) The cost of continued coverage under the Company’s group life insurance plans has been excluded from the table because the benefit is available to all U.S. salaried employees and does not discriminate in scope, terms or operation in favor of our named executive officers. Also does not include benefits payable under Halyard’s Long-Term Disability Plan (which is available to all U.S. salaried employees), the value of which would be dependent on the life span of the Company named executive officer and the value of any Company or government-provided income benefits received.

(10) The cost of continued coverage under the Company’s group life insurance plans has been excluded from the table because the benefit is available to all U.S. salaried employees and does not discriminate in scope, terms or operation in favor of our named executive officers.

2016 Proxy Statement 63

Proposal 4. Approval of Material Terms

of the Performance Goals Included in the Halyard Health, Inc. Equity Participation Plan

General

As discussed in the Compensation Discussion and Analysis section of this proxy statement, consistent with the Company’s compensation philosophy and objectives, we regularly grant annual and long-term compensation awards that are subject to annual and long-term performance goals. Those awards are granted under the Company’s Amended and Restated Equity Participation Plan (the “Plan”). We are requesting that you approve the material terms of the performance goals under the Plan in order to preserve our ability to continue to grant performance-based awards that meet the requirements for tax deductibility under Section 162(m) of the Internal Revenue Code. You are not being asked to approve any additional shares to be authorized for grant under the Plan.

Summary of Section 162(m)

Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the company’s CEO or any of the company’s three most highly compensated executive officers (other than the CFO) who are employed as of the end of the year. This limitation does not apply to compensation that meets the requirements under Section 162(m) for “performance-based” compensation. Market-priced stock options and stock appreciation rights (SARs) are two examples of performance-based compensation. Other types of awards, such as restricted shares, restricted share units (RSUs) and cash-based awards that are granted pursuant to pre-established objective performance formulas, may also qualify as fully-deductible performance-based compensation, so long as certain requirements are met.

One of the requirements for compensation to qualify as performance-based under Section 162(m) is that the material terms of the performance goals, including the list of permissible business criteria for performance objectives under the plan, be disclosed to and approved by stockholders. We currently are eligible for a post-spin-off transition rule under which amounts paid under the Plan may be exempt from the deduction limitations of Section 162(m). In order for certain awards granted under the Plan to qualify as “qualified performance-based compensation” within the meaning of Section 162(m) following the end of the transition period, we are seeking stockholder approval of the material terms of the performance goals under the Plan.

Stockholder approval of the material terms of performance goals under the Plan is only one of several requirements under Section 162(m) that must be satisfied for awards to qualify for the performance-based compensation exemption under Section 162(m), and stockholder approval of the material terms of the performance goals does not alone ensure that all compensation paid under the Plan will qualify as tax-deductible compensation. There can be no guarantee that amounts payable under the Plan will be treated as qualified performance-based compensation under Section 162(m). In addition, to maintain flexibility in compensating our executive officers, our Compensation Committee reserves the right to use its judgment to authorize compensation payments that may be subject to the Section 162(m) deduction limit when our Compensation Committee believes that such payments are appropriate. Accordingly, even if approved by our stockholders, this proposal would not limit our right to pay compensation that does not qualify as performance-based compensation for purposes of Section 162(m), in whole or in part.

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Proposal 4. Approval of Material Terms of the Performance Goals Included in the Halyard Health, Inc. Equity Participation Plan

Material Terms of the Performance Goals under the Plan

For purposes of Section 162(m), the material terms of the performance goals include:

• the employees eligible to receive compensation;

• the description of the performance objectives on which the performance goals may be based; and

• the maximum amount, or the formula used to calculate the maximum amount, of compensation that can be paid to an employee under the performance goals.

Each of these aspects is discussed below. The following summary is qualified in its entirety by reference to the complete text of the Plan, which is attached to this proxy statement as Appendix A.

Eligibility. The Plan permits the grant of awards to employees, consultants and advisers of Halyard Health, Inc. and its affiliates as selected by the Compensation Committee. The number of eligible participants in the Plan will vary from year to year. As of the Record Date, approximately 725 employees and zero non-employees would have been eligible to receive awards under the Plan. The group of employees whose compensation would be subject to the performance goals described in this Proposal 4 includes the Company’s executive officers. Although Section 162(m) only limits deductibility for compensation paid to the CEO or any of the Company’s three most highly compensated executive officers (other than the CFO) who are employed as of the end of the year, we may apply the performance goals to any of our employees, consultants or advisors who participate in the Plan.

Performance Objectives. Options and stock appreciation rights (SARs) granted under the Plan are designed to be exempt from the $1 million deduction limit imposed by Section 162(m). When granting any other performance-based award intended to qualify for the Section 162(m) exemption, the Compensation Committee must establish objectively determinable performance goals for such award within the time period prescribed by Section 162(m). The performance goals must be based on one or more of the following business criteria, which may be expressed in terms of company-wide objectives or in terms of objectives that relate to the performance of an affiliate or a division, department, region, function or business unit within Halyard Health, Inc. or an affiliate:

• Revenue (premium revenue, total revenue or other revenue measures);

• Sales (total sales, net sales, sales on a constant currency basis, organic sales, sales from new products or innovations or other sales measure);

• Margins (Gross margin, operating margin, or other margin measures);

• Profit (net profit, gross profit, operating profit, economic profit, profit margins or other profit measures, before or after tax);

• Earnings (EBIT, EBITDA, earnings per share, or other corporate earnings measures);

• Income (before or after taxes, operating income or other income measures);

• Cash (cash flow, cash generation, cash conversion cycle or other cash measures);

• Stock price or performance;

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Proposal 4. Approval of Material Terms of the Performance Goals Included in the Halyard Health, Inc. Equity Participation Plan

• Total stockholder return (stock price appreciation plus reinvested dividends divided by beginning share price);

• Economic value added or stockholder value added;

• Return measures (including, but not limited to, return on assets, capital, equity, investments or sales, and cash flow return on assets, capital, equity, investments or sales);

• Market share or position;

• Improvements in capital structure;

• Expenses (expense management, expense ratio, expense efficiency ratios or other cost or expense measures);

• Business expansion (acquisitions);

• Divestitures, corporate restructurings or other changes to the business;

• Internal rate of return or increase in net present value;

• Productivity measures;

• Cost reduction measures; and

• Strategic plan development and implementation.

Performance objectives may be absolute or relative (to our prior performance or to the performance of one or more other entities or external indices) and may be expressed in terms of a progression within a specified range.

The Compensation Committee may provide, at the time the performance goals are established, that any evaluation of performance will exclude or otherwise be objectively adjusted for any specified circumstance or event that occurs during a performance period, including for example: (a) asset write-downs or impairment charges; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (d) accruals for reorganization and restructuring programs; (e) unusual or infrequently occurring items as described in Accounting Standards Codification Topic 225-20 (or any successor pronouncements thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in our annual report to stockholders for the applicable year; (f) acquisitions or divestitures; (g) any other specific, unusual or nonrecurring events, or objectively determinable category thereof, including discontinued operations or a change in our fiscal year; (h) foreign exchange gains and losses, and (i) the effects of any changes in comparator groups for relative performance goals. [Conform, if necessary to exceptions framework being approved by Committee on February 24, 2016].

Limitations on Individual Awards. The maximum aggregate number of shares of our common stock subject to stock-based awards that may be granted under the Plan in any calendar year to any one participant is as follows:

Options	400,000
Stock appreciation rights	200,000
Performance-Based Stock Awards	400,000

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Proposal 4. Approval of Material Terms of the Performance Goals Included in the Halyard Health, Inc. Equity Participation Plan

The maximum aggregate amount awarded or credited with respect to cash-based performance awards under the Plan to any one participant in any calendar year is $4,000,000. Cash-based performance awards granted under the Plan includes annual bonuses paid under our Executive Officer Achievement Award Program or Management Achievement Award Program, which operate as sub-plans of the Plan. These limits are subject to anti-dilution adjustments in the event of stock splits, mergers, consolidations, stock dividends, recapitalizations and similar transactions, but may not otherwise be amended without stockholder approval.

Important Provisions of the Plan

The Plan contains the following provisions that the Compensation Committee believes are consistent with the interests of our stockholders and sound corporate governance practices:

• No repricing of stock options or SARs. The Equity Participation Plan prohibits the repricing of stock options or stock appreciation rights, or SARs, without stockholder approval.

• No discounted stock options or SARs. All stock options and SARs must have an option price or grant price equal to or greater than the fair market value of the underlying stock on the date of grant.

• No liberal change of control definition. The change of control definition contained in the Plan is not a “liberal” definition that would be activated on mere stockholder approval of a transaction.

• “Double-trigger” change of control vesting. If awards granted under the Plan are replaced by a successor in connection with a change of control, such awards will not automatically vest and pay out solely as a result of the change of control. Options will vest in the event a qualifying termination of employment occurs within two years following the change of control.

• No dividends on unearned performance awards. The Plan prohibits the current payment of dividends or dividend equivalent rights on unearned performance awards.

Summary of Other Significant Terms of the Plan

A summary of the other significant terms of the Plan is set forth below. This summary is qualified in its entirety by the full text of the Plan, which is attached to this proxy statement as Appendix A.

Adoption of Plan. The Halyard Equity Participation Plan was originally approved by our Board and by our sole stockholder on October 7, 2014, in connection with our spin-off from Kimberly-Clark. On February 24, 2016, our Board approved an Amended and Restated Equity Participation Plan and added certain provisions relating to qualified performance-based awards under Section 162(m) of the Internal Revenue Code, and to add our Executive Officer Achievement Award Plan and our Management Achievement Award Plan as sub-plans under the Equity Participation Plan.

Purpose. The Plan is intended to aid in attracting and retaining highly qualified personnel and to encourage those persons who materially contribute to our success (by managerial, scientific or other innovative means) to acquire an ownership interest in Halyard Health, thereby increasing their motivation for and interest in our long-term success.

Term. The Plan has a ten-year term, beginning November 1, 2014 and ending October 31, 2024, unless earlier terminated by the Compensation Committee. No award may be granted or awarded after the termination date, but awards granted or awarded before the termination date may continue in force beyond that date pursuant to their terms.

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Proposal 4. Approval of Material Terms of the Performance Goals Included in the Halyard Health, Inc. Equity Participation Plan

Administration. The Plan is administered by the Compensation Committee. The Compensation Committee has the authority to select participants, determine the extent of participation and make all other necessary decisions and interpretations under the Plan. The Compensation Committee may delegate its authority in certain circumstances, provided that only the Compensation Committee may grant awards to participants who are subject to Section 16 of the Securities and Exchange Act of 1934 (the “Exchange Act”).

Permissible Awards. The Plan authorizes the granting of awards in any of the following forms:

• options to purchase shares of our common stock;

• SARs, which give the holder the right to receive the difference (payable in cash or stock, as specified in the award agreement) between the fair market value per share of our common stock on the date of exercise over the grant price of the award (which cannot be less than the fair market value of our underlying stock as of the grant date);

• restricted shares, which are subject to restrictions on transferability and subject to forfeiture on terms set by the Compensation Committee;

• restricted share units, or RSUs, which represent the right to receive shares of our common stock (or an equivalent value in cash or other property, as specified in the award agreement) in the future, based upon the attainment of stated vesting or performance criteria;

• performance awards, which are awards payable in cash, common stock, other securities, or other awards, upon the attainment of specified performance goals; and

• other stock-based awards in the discretion of the Compensation Committee.

Dividend equivalent rights, which entitle the participant to payments in cash or property calculated by reference to the amount of dividends paid on the shares of stock underlying an award, may be granted with respect to RSUs, performance awards and other stock-based awards.

Shares Available for Awards. Subject to adjustment as provided in the Plan, the maximum number of shares reserved for issuance under the Plan is 4,500,000 shares. Any of these shares may be issued pursuant to options or SARs, but only 2,000,000 shares may be issued pursuant to restricted shares, RSUs, performance awards settled in stock and other stock-based awards settled in stock.

Share Counting. Shares subject to awards that terminate or expire unexercised or are cancelled, forfeited or lapse will again become available for future grants of awards under the Plan. Any award that may be settled only in cash will not reduce the number of shares available for awards. The following may not again be made available for issuance as awards under the Plan:

(i) shares of our common stock not issued or delivered as a result of the net settlement or net exercise of an outstanding option or SAR; or

(ii) shares of our common stock used to pay the withholding taxes related to an award.

Limitations on Transfer; Beneficiaries. During a participant’s lifetime, options are exercisable only by that participant. Awards are not transferable other than by will or the laws of descent and distribution upon the participant’s death. However, the Compensation Committee may grant to designated participants the right to transfer awards, to the extent allowed under Rule 16b-3 of the Exchange Act, subject to the terms and conditions of administrative rules approved by the Compensation Committee.

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Proposal 4. Approval of Material Terms of the Performance Goals Included in the Halyard Health, Inc. Equity Participation Plan

Vesting. Under the Plan, no award (other than awards subject to performance goals) may vest in whole in less than three years from the date of grant, except in certain situations such as for new hires, retirement, and other situations warranting a shorter or no vesting period as determined by the Committee. Awards subject to performance goals generally may not vest in whole in less than one year from the date of grant.

Effect of a Change of Control. The Plan provides that, if pending a Change of Control, the Compensation Committee determines that Halyard Health common stock will cease to exist without an adequate replacement security that preserves the economic rights and positions of the participants in the Plan (for example, as a result of the failure of the acquiring company to assume outstanding grants), then all options (other than incentive stock options) and SARs will become exercisable, in a manner deemed fair and equitable by the Compensation Committee, immediately prior to the consummation of the Change of Control. In addition, the restrictions on all restricted shares will lapse and all RSUs, performance awards and other stock-based awards will vest immediately prior to the consummation of the Change of Control and will be settled upon the Change of Control in cash equal to the fair market value of the restricted share units, performance awards and other stock-based awards at the time of the Change of Control (with any performance-based awards deemed earned at the target level) or in such other manner as is necessary to comply with Section 409A of the tax code.

In the event a participant’s employment or service is terminated within two years following a Change of Control, other than by reason of death or disability, a termination by us for “cause,” or a resignation by the participant without “good reason” (as such terms are defined in the Equity Participation Plan), any option held by the participant will become exercisable immediately.

If any amounts payable under the Plan constitute a parachute payment under Section 280G of the tax code, the Plan provides that the amounts will be reduced to the extent necessary to provide the participant with the greatest aggregate net after tax receipt.

Adjustments. In the event there are any changes in the common stock or the capitalization of Halyard Health through a merger, acquisition, consolidation, reorganization or other corporate transaction, appropriate adjustments and changes shall be made by the Compensation Committee, to the extent necessary to preserve the benefit to the participant, to reflect such changes in (i) the aggregate and maximum number of shares subject to the Plan, Plan, (ii) the maximum number of shares for which awards may be granted to any participant, (iii) the number of shares and the option price per share of all shares of Halyard Health common stock subject to outstanding options, (iv) the maximum number of shares of Halyard Health common stock covered by awards which may be granted pursuant to delegated authority within any calendar year period, (v) the maximum number of shares of Halyard Health common stock available for option and sale and available for grant as restricted shares and RSUs, (vi) the number of restricted shares, RSUs, performance awards and other stock-based awards awarded to participants, and (vii) any other provisions of the Plan and individual awards as may be necessary and equitable to carry out the foregoing purposes.

Prohibition on Repricing. Unless approved by our stockholders, no option or SAR may be re-priced, replaced, regranted through cancellation, or modified if the effect would be to reduce the exercise price for the shares underlying the option, and no stock option or SAR may be repurchased or otherwise cancelled for cash or other awards at a time when the exercise price is equal to or greater than the fair market value of the underlying shares.

Termination and Amendment. The Compensation Committee may amend, suspend or discontinue the Plan or amend any or all awards thereunder to the extent permitted by law and the rules of any stock exchange on which Halyard Health common stock is listed. Except as provided in the Plan, no amendment, suspension or termination of the Plan will adversely alter any rights granted a participant under the Plan.

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Proposal 4. Approval of Material Terms of the Performance Goals Included in the Halyard Health, Inc. Equity Participation Plan

Certain Federal Income Tax Effects

The U.S. federal income tax discussion set forth below is intended for general information only and does not purport to be a complete analysis of all of the potential tax effects of the Plan. It is based upon laws, regulations, rulings and decisions now in effect, all of which are subject to change. State and local income tax consequences are not discussed and may vary from locality to locality.

Nonstatutory Stock Options. There will be no federal income tax consequences to the optionee or to us upon the grant of a nonstatutory stock option under the Plan. When the optionee exercises a nonstatutory option, however, he or she will recognize ordinary income in an amount equal to the excess of the fair market value of our common stock received upon exercise of the option at the time of exercise over the exercise price, and we will be allowed a corresponding federal income tax deduction. Any gain that the optionee realizes when he or she later sells or disposes of the option shares will be short-term or long-term capital gain, depending on how long the shares were held.

Incentive Stock Options. There typically will be no federal income tax consequences to the optionee or to us upon the grant or exercise of an incentive stock option. If the optionee holds the acquired option shares for the required holding period of at least two years after the date the option was granted and one year after exercise, the difference between the exercise price and the amount realized upon sale or disposition of the option shares will be long-term capital gain or loss, and we will not be entitled to a federal income tax deduction. If the optionee disposes of the option shares in a sale, exchange or other disqualifying disposition before the required holding period ends, he or she will recognize taxable ordinary income in an amount equal to the excess of the fair market value of the option shares at the time of exercise over the exercise price, and we will be allowed a federal income tax deduction equal to such amount. While the exercise of an incentive stock option does not result in current taxable income, the excess of the fair market value of the option shares at the time of exercise over the exercise price will be an item of adjustment for purposes of determining the optionee’s alternative minimum taxable income.

SARs. A participant receiving a SAR under the Plan will not recognize income, and we will not be allowed a tax deduction, at the time the award is granted. When the participant exercises a SAR, the amount of cash and the fair market value of any shares of common stock received will be ordinary income to the participant, and we will be allowed a corresponding federal income tax deduction at that time.

Restricted Shares. Unless a participant makes an election to accelerate recognition of the income to the date of grant as described below, a participant will not recognize income, and we will not be allowed a tax deduction, at the time restricted shares are granted, provided that the award is nontransferable and is subject to a substantial risk of forfeiture. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of our common stock as of that date (less any amount he or she paid for the stock), and we will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Section 162(m). If the participant files an election under Section 83(b) of the tax code within 30 days after the date of grant of the restricted shares, he or she will recognize ordinary income as of the date of grant equal to the fair market value of the stock as of that date (less any amount paid for the stock), and we will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Section 162(m). Any future appreciation in the stock will be taxable to the participant at capital gains rates. However, if the stock is later forfeited, the participant will not be able to recover the tax previously paid pursuant to the Section 83(b) election.

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Proposal 4. Approval of Material Terms of the Performance Goals Included in the Halyard Health, Inc. Equity Participation Plan

Restricted or Deferred Share Units. A participant will not recognize income, and we will not be allowed a tax deduction, at the time a share unit award is granted. When the participant receives or has the right to receive shares of common stock (or the equivalent value in cash or other property) in settlement of a share unit award, a participant will recognize ordinary income equal to the fair market value of our common stock or other property as of that date (less any amount he or she paid for the stock or property), and we will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Section 162(m).

Performance Awards Payable in Cash. A participant will not recognize income, and we will not be allowed a tax deduction, at the time a performance award payable in cash is granted (for example, when the performance goals are established). Upon receipt of cash in settlement of the award, a participant will recognize ordinary income equal to the cash received, and we will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Section 162(m).

Benefits to Named Executive Officers and Others

Since the spin-off, the Plan (prior to its amendment and restatement) has been the primary vehicle by which our Compensation Committee has granted equity awards to our employees. Pursuant to SEC rules, the table below shows the number of shares issued to, or subject to outstanding awards granted to, our named executive officers and the other individuals and groups indicated under the Equity Participation Plan as of March 1, 2016.

	Time-Based RSUs				Performance-Based RSUs				Time-Based Options
Name and Position	Value ($)(1)		Shares (#)		Value ($)(1)		Shares (#)(2)		Value ($)(1)		Shares (#)
Robert E. Abernathy
Chairman of the Board and Chief   Executive Officer		1,648,623		60,081		1,800,010		105,185		5,591,421		203,769
Steven E. Voskuil
Senior Vice President and Chief   Financial Officer		593,802		21,640		480,008		27,720		3,271,013		119,206
Rhonda D. Gibby
Senior Vice President and Chief   Human Resources Officer		275,799		10,051		218,999		12,599		1,419,773		51,741
Christopher M. Lowery
Senior Vice President and Chief   Operating Officer		626,044		22,815		629,995		36,154		3,009,592		109,679

2016 Proxy Statement 71

Proposal 4. Approval of Material Terms of the Performance Goals Included in the Halyard Health, Inc. Equity Participation Plan

	Time-Based RSUs				Performance-Based RSUs				Time-Based Options
Name and Position	Value ($)(1)		Shares (#)		Value ($)(1)		Shares (#)(2)		Value ($)(1)		Shares (#)
John W. Wesley
Senior Vice President and Chief   Ethics and Compliance Officer		220,179		8,024		300,002		16,211		725,431		26,437
All Executive Officers as a Group		3,364,447		122,611		3,429,014		197,869		14,017,230		510,832
All Employees as a Group   (Including all Officers who are not   Executive Officers)		11,434,248		416,700		7,207,336		262,658		31,321,964		1,141,471
All Non-Executive Directors as a Group(3)		—		—		—		—		—		—

⁽¹⁾  Based on the closing price of our stock on March 1, 2016 ($27.44).

⁽²⁾  Number of shares are the target number of shares to be issued at the end of the restricted period if the performance metrics established at the time of grant are satisfied.

⁽³⁾  Our Non-Employee Directors are compensated under a separate plan, the Outside Directors’ Compensation Plan. They do not participate in the Amended and Restated Equity Participation Plan.

The Board unanimously recommends a vote FOR the proposal to approve the material terms of the performance goals included in our Amended and Restated Equity Participation Plan.

72 2016 Proxy Statement

Other Information

Security Ownership Information

The following table shows the number of shares of our common stock beneficially owned as of March 4, 2016, by each director and nominee, by each named executive officer, and by all directors, nominees and executive officers as a group.

Name	Number of Shares (1)(2)(3)(4)		Percent of Class
Robert E. Abernathy		191,827	*
Gary D. Blackford		8,225	*
John P. Byrnes		8,253	*
Ronald W. Dollens		8,225	*
Heidi K. Fields		8,230	*
Rhonda D. Gibby		47,938	*
William A. Hawkins, III		10,572	*
Christopher M. Lowery		92,146	*
Patrick J. O’Leary		8,275	*
Maria Sainz		7,417	*
Dr. Julie Shimer		8,225	*
Steven E. Voskuil		111,829	*
John W. Wesley		26,050	*
All directors, nominees and executive officers as a group (15 persons)		560,262	1.2

* Each director, nominee, and named executive officer owns less than one percent of the outstanding shares of our common stock.

(1) Except as otherwise noted, the directors, nominees and named executive officers, and the directors, nominees and executive officers as a group, have sole voting and investment power with respect to the shares listed.

(2) A portion of the shares owned by certain executive officers and directors may be held in margin accounts at brokerage firms. Under the terms of the margin account agreements, stocks and other assets held in these accounts may be pledged to secure margin obligations. As of the date of this proxy statement, none of the executive officers or directors has any outstanding margin obligations under any of these accounts.

(3) Share amounts include unvested restricted share units granted to the following named executive officers under the Halyard Health, Inc. Equity Participation Plan as indicated below. Amounts representing performance-based restricted share units (“PRSUs”) in the table below represent target levels for the awards. The PRSUs in the table below were granted on March 5, 2015 and March 1, 2016.

Name	Time-Vested Restricted Share Units(#)		Performance-Based Restricted Share Units(#)
Robert E. Abernathy		60,081		105,185
Steven E. Voskuil		21,640		27,720
Rhonda D. Gibby		10,051		12,599
Christopher M. Lowery		22,815		36,154
John W. Wesley		8,024		16,211

(4) For each director who is not an officer or employee of the Company, share amounts include restricted share units granted under our Outside Directors’ Compensation Plan. These awards are restricted and may not be transferred or sold until the Outside Director retires from or otherwise terminates service on the Board.

2016 Proxy Statement 73

Other Information

(5) Includes the following shares which could be acquired within 60 days of March 4, 2016 by:

Name	Number of Shares
Robert E. Abernathy		6,599
Steve E. Voskuil		55,380
Rhonda D. Gibby		23,480
Christopher M. Lowery		31,414
John W. Wesley		660
All directors, nominees and executive officers as a group (15 persons)		149,295

Our Corporate Governance Policies provide that, within five years of joining the Board, all Outside Directors should own an amount of our common stock or restricted share units at least equal in value to five times the annual Board cash compensation. For the purpose of these stock ownership guidelines, a director is deemed to own beneficially-owned shares, as well as restricted share units (whether or not any applicable restrictions have lapsed).

The following table sets forth the information, as of December 31, 2015, regarding persons or groups known to us to be beneficial owners of more than five percent of our common stock.

Name and Address of  Beneficial Owner	Number of Shares of Common Stock Beneficially Owned	Percentage of Common Stock Outstanding
T. Rowe Price Associates, Inc. (1)  100 E. Pratt Street  Baltimore, MD 21202	5,678,943	12.1
Blackrock, Inc. (2)  55 East 52nd Street  New York, NY 10022	4,858,503	10.4
Shapiro Capital Management LLC (3)  3060 Peachtree Road, N.W. Suite 1555  Atlanta, GA 30305	3,657,263	7.9
The Vanguard Group (4)  100 Vanguard Way  Malvern, PA 19355	3,200,793	6.8

(1) The address, number and percentage of shares of our common stock beneficially owned by T. Rowe Price Associates, Inc. (“Price Associates”)are based on the Schedule 13G filed by Price Associates with the SEC on February 11, 2016. According to the filing, Price Associates had sole voting power with respect to 1,214,046 shares, sole dispositive power with respect to 5,678,943 shares, and did not have shared voting or dispositive power as to any shares.

(2) The address, number and percentage of shares of our common stock beneficially owned by Blackrock, Inc. are based on the Schedule 13G filed by Blackrock, Inc. with the SEC on January 8, 2016. According to the filing, Blackrock, Inc. had sole voting power with respect to 4,731,910 shares, sole dispositive power with respect to 4,858,503 shares, and did not have shared voting or dispositive power as to any shares.

(3) The address, number and percentage of shares of our common stock beneficially owned by Shapiro Capital Management LLC are based on the Schedule 13G filed by Shapiro Capital Management LLC with the SEC on February 12, 2016. According to the filing, Shapiro Capital Management LLC had sole voting power with respect to 3,210,263 shares, sole dispositive power with respect to 3,657,263 shares, shared voting power with respect to 447,000 shares, and did not have shared dispositive power as to any shares.

(4) The address, number and percentage of shares of our common stock beneficially owned by The Vanguard Group are based on the Schedule 13G filed by The Vanguard Group with the SEC on February 11, 2016. According to the filing, The Vanguard Group had sole voting power with respect to 59,011 shares, sole dispositive power with respect to 3,141,982 shares, shared voting power with respect to 2,600 shares, and shared dispositive power with respect to 58,811 shares.

74 2016 Proxy Statement

Other Information Transactions With Related Persons

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers, chief accounting officer, and any person beneficially owning more than 10 percent of our common stock to file reports with the SEC regarding their ownership of our stock and any changes in ownership. We maintain a compliance program to assist our directors, executive officers and chief accounting officer in making these filings. Based solely on a review of the Section 16 forms filed with the SEC during 2015 and certifications from our executive officers, directors, and chief accounting officer, that no other reports were required for them, we believe that our executive officers, directors, and chief accounting officer and persons who beneficially own more than 10 percent of our common stock timely complied with their filing requirements for 2015 with the exception of a late Form 4 filing for Renato Negro, the Company’s chief accounting officer. On October 31, 2014, Mr. Negro received 98 shares of stock in connection with the Company’s spin-off from Kimberly-Clark. The Form 4 that reported his ownership of these shares was filed on May 8, 2015.

Transactions with Related Persons

Policies and Procedures for Review, Approval or Ratification of Related Person Transactions. The Board has adopted written procedures for reviewing any transactions between the Company and certain “related persons” that involve amounts above certain thresholds. The SEC requires that our proxy statement disclose these “related person transactions.” A related person is defined under the SEC’s rules and includes our directors, executive officers and five percent stockholders.

The Board’s procedures provide that:

^u  The Governance Committee is best suited to review, approve and ratify related person transactions involving any director, nominee for director, any five percent stockholder, or any of their immediate family members or related firms.

^u  The Audit Committee is best suited to review, approve and ratify related person transactions involving executive officers (or their immediate family members or related firms), other than any executive officer that is also a Board member.

^u  Either Committee may, in its sole discretion, refer its consideration of related person transactions to the full Board.

Each director, director nominee and executive officer is required to promptly provide written notification of any material interest that he or she (or an immediate family member) has or will have in a transaction with the Company. Based on a review of the transaction, a determination will be made as to whether the transaction constitutes a related person transaction under the SEC’s rules. As appropriate, the Governance Committee or the Audit Committee will then review the terms and substance of the transaction to determine whether to ratify or approve the related person transaction.

In determining whether the transaction is consistent with the Company’s best interest, the Governance Committee or the Audit Committee may consider any factors deemed relevant or appropriate, including:

^u  Whether the transaction is on terms comparable to those that could be obtained in arm’s-length dealings with an unrelated third party;

^u  Whether the transaction constitutes a conflict of interest under our Code of Conduct, the nature, size or degree of any conflict, and whether mitigation of the conflict is feasible;

^u  The impact of the transaction on a director’s independence; and

^u  Whether steps have been taken to ensure fairness to the Company.

2016 Proxy Statement 75

Other Information Stockholder Nominations for Board of Directors

2015 Related Person Transactions. Based on SEC rules, the Board’s procedures, and the factors listed above, there was only one “related party transaction” in 2015. That involved the Company’s sales of products to Lincare Corporation (“Lincare”), where Mr. Byrnes was the CEO (and a director) through February 2015. The Company’s sales to Lincare prior to Mr. Byrnes’ resignation were $438,408. Because the Company’s sales to Lincare were arm’s length transactions, the dollar value of the sales through February 2015 were not material to the Company or to Lincare, and the sales would not have an impact on Mr. Byrnes’ independence, especially given his resignation from Lincare in February 2015, the Company ratified the transaction with Lincare.

Stockholders Sharing the Same Household

As permitted by SEC rules, multiple shareholders sharing the same address who hold their stock through a bank, broker, or other holder of record may receive a single copy of our annual report to stockholders and this proxy statement. Upon written or oral request, we will promptly deliver a separate copy of the annual report to stockholders and this proxy statement to any stockholder at a shared address to which a single copy of each document was delivered. Please contact Stockholder Services by mail at 5405 Windward Parkway, Suite 100 South, Alpharetta, GA 30004, by telephone at 678-425-9273, or by e-mail at stockholder.services@hyh.com. In addition, any stockholder who wants to receive separate copies of the proxy statement or the annual report to stockholders in the future, or who is currently receiving multiple copies and would like to receive only one copy for his or her household, should contact his or her bank, broker, or other nominee record holder.

2017 Stockholder Proposals

Proposals by stockholders for inclusion in our proxy statement and form of proxy pursuant to SEC Rule 14a-8 for the Annual Meeting of Stockholders to be held in 2017 should be addressed to the Corporate Secretary, Halyard Health, Inc. 5405 Windward Parkway, Suite 100 South, Alpharetta, GA 30004, and must be received at this address no later than November 11, 2016; provided that if the date of the 2017 Annual Meeting of Stockholders is more than 30 days before or after April 28, 2017 (the anniversary date of the 2016 Annual Meeting), the deadline will be a reasonable time before we begin to print and send our proxy materials to stockholders. Upon receipt of a proposal, we will determine whether or not to include the proposal in the proxy statement and form of proxy in accordance with applicable law. It is suggested that proposals be forwarded by certified mail, return receipt requested.

Stockholder Nominations for Board of Directors

Under our By-Laws, a stockholder who wishes to nominate a candidate for election to the Board is required to give written notice to our Corporate Secretary at our principal executive offices. We must receive this notice at least 90 days, but not more than 120 days, before the anniversary of the prior year’s Annual Meeting of stockholders (unless the date of the annual meeting is more than 30 days before or more than 60 days after the anniversary date, in which case the notice must be received at least 90 days, but not more than 120 days, before the annual meeting date; or if we give less than 100 days’ notice of the annual meeting date, in which case the notice must be received within 10 days after the meeting date is announced). For a special meeting, we must receive the written nomination at least 90 days, but not more than 120 days, before the special meeting date (unless we give less than 100 days’ notice of the special meeting date, in which case the notice must be received within 10 days after the meeting date and the nominees proposed by the Board to be elected at the meeting are announced).

Our By-Laws specify information that the notice must contain about both the nominee and the nominating stockholder, including information sufficient to allow the Governance Committee to determine if the candidate meets the director nominee criteria described in this proxy statement.

The notice must contain:

• the name and address of the nominating stockholder;

• information about certain Company stock holdings of the nominating stockholder, including shares of stock, derivative holdings, arrangements under which the nominating stockholder has

76 2016 Proxy Statement

Other Information Annual Report

a right to vote shares, short interests, dividend rights that are separated or separable from the underlying shares, shares held through general or limited partnerships, and certain performance-related fees;

• information about any interests of the nominating stockholder in contracts with the Company, its affiliates or principal competitors, as well as any significant equity interests, derivative holdings, or short interests in the Company’s principal competitors;

• as to the nominee and the nominating stockholder, any information that would be required to be disclosed in connection with a proxy solicitation (and whether a proxy solicitation will be conducted);

• information about certain related person transactions, contact and related information regarding the nominee; and

• information about any compensation and other understandings during the past three years, and other material relationships, between the nominating stockholder and the nominee.

The notice must be accompanied by each nominee’s written consent to being named in the proxy statement and to serving as a director if elected, and a completed and signed questionnaire, representation and agreement as required by our By-Laws.

A nomination that does not comply with the requirements set forth in our By-Laws will not be considered for presentation at the annual meeting, but will be considered by the Governance Committee for any vacancies arising on the Board between annual meetings in accordance with the process described in “Proposal 1. Election of Directors — Process and Criteria for Nominating Directors.”

Annual Meeting Advance Notice Requirements

Our By-Laws require advance notice for any business to be brought by a stockholder before a meeting of stockholders. In general, for business to be properly brought before an annual meeting by a stockholder (other than in connection with the election of directors; see “Other Information — Stockholder Nominations for Board of Directors”, and other than pursuant to SEC Rule 14a-8), written notice of the stockholder proposal must be received by our Corporate Secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s Annual Meeting of stockholders (unless the date of the annual meeting is more than 30 days before or more than 60 days after the anniversary date, in which case the notice must be received at least 90 days, but not more than 120 days, before the annual meeting date; or if we give less than 100 days’ notice of the annual meeting date, the notice must be received within 10 days after the meeting date is announced). Assuming that the 2017 Annual Meeting is held on April 28, 2017, our Corporate Secretary must receive the proposal, which must conform to the notice requirements in our By-Laws, between December 29, 2016 and January 28, 2017.

Under our By-Laws, the stockholder’s notice to the Corporate Secretary must contain certain information regarding the stockholder, including name and address, shares held, derivative positions, dividend rights that are separate or separable from the underlying shares and certain performance-related fees. Additional information concerning the advance notice requirements and a copy of our By-Laws may be obtained from the Corporate Secretary of the Company at the address provided below. A copy of our By-Laws is also available in the Investors section of our website at www.halyardhealth.com.

Annual Report

Copies of our Annual Report on Form 10-K may be obtained without charge by: writing to Halyard Health, Inc., Attn: Corporate Secretary, 5405 Windward Parkway, Suite 100 South, Alpharetta, Georgia 30004; accessing the Investors section of our website at www.halyardhealth.com; or accessing the SEC’s EDGAR database at www.sec.gov.

2016 Proxy Statement 77

Other Information Annual Report

Other Matters

to Be Presented at the

Annual Meeting

Our management does not know of any other matters to be presented at the Annual Meeting. Should any other matter requiring a vote of the stockholders arise at the meeting, the persons named in the proxy will vote the proxies in accordance with their best judgment.

Halyard Health, Inc. 5405 Windward Parkway, Suite 100 South Alpharetta, Georgia 30004 Telephone (678) 425-9273 March 11, 2016	By Order of the Board of Directors.
	Ross Mansbach Vice President — Deputy General Counsel Corporate Secretary

78 2016 Proxy Statement

HALYARD HEALTH, INC. 5405 WINDWARD PARKWAY ALPHARETTA, GA 30004 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on April 27, 2016. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.   ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.   VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on April 27, 2016. Have your proxy card in hand when you call and then follow the instructions.   VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. In order for your mailed proxy to be voted at the meeting, it must be received by the company at the address set forth in the proxy statement by close of business on April 27, 2016.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

M99416-P73155             KEEP THIS PORTION FOR YOUR RECORDS

 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

HALYARD HEALTH, INC.
	The Board of Directors recommends a vote FOR all nominees and FOR Proposals 2-4.
	1.    Election of Class II Directors (Serving until the Annual Meeting in 2019).
			For		Withhold
	Nominees:
	1a.	John P. Byrnes	¨		¨
	1b.	Maria Sainz	¨		¨
	1c.	Dr. Julie Shimer	¨		¨
							For	Against	Abstain
	2.    Ratification of the selection of Deloitte & Touche LLP as the independent registered public accounting firm to audit the Company’s 2016 financial statements.						¨	¨	¨
	3.    Advisory vote to approve named executive officer compensation.						¨	¨	¨
	4.    Approval of the material terms of the performance goals under the Company’s Equity Participation Plan.						¨	¨	¨
	For address changes and/or comments, please check this box and write them on the back where indicated.				¨		Yes	No
	Please indicate if you plan to attend this meeting.			¨ Yes	¨ No	HOUSEHOLDING ELECTION - Please indicate if you consent to receive certain future investor communications in a single package per household.	¨	¨
	Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

Signature [PLEASE SIGN WITHIN BOX]   Date   Signature (Joint Owners)   Date  

2016 Annual Meeting Admission Ticket

2016 Annual Meeting of

Halyard Health, Inc. Stockholders

April 28, 2016

9:00 a.m. Eastern Time

5405 Windward Parkway

Alpharetta, GA 30004

Upon arrival, please present this admission ticket

and photo identification at the registration desk.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Notice and Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com.

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

M99417-P73155 

                

Proxy — Halyard Health, Inc.

Notice of 2016 Annual Meeting of Stockholders

Proxy Solicited by Board of Directors for Annual Meeting – April 28, 2016

Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be held on April 28, 2016.

The Halyard Health, Inc. proxy statement, Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and this proxy card are available at www.proxyvote.com.

Robert Abernathy, Steve Voskuil, and John Wesley or any of them, with full power of substitution to each, hereby are appointed proxies and are authorized to vote, as specified on the reverse side of this card, all shares of common stock that the undersigned is entitled to vote at the Annual Stockholders Meeting of Halyard Health, Inc., to be held at the Company’s headquarters, 5405 Windward Parkway, Alpharetta, GA 30004 on April 28, 2016 at 9:00 a.m. Eastern Time and at any adjournment thereof. The undersigned hereby revokes any other proxy previously executed by the undersigned for the Annual Stockholders Meeting and acknowledges receipt of notice of the Annual Stockholders Meeting and the proxy statement. In their discretion, the proxies are authorized to vote on such other business as may properly come before the meeting.

IF YOU RETURN THIS PROXY AND NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1-4. IF YOU PREFER TO VOTE SEPARATELY ON INDIVIDUAL PROPOSALS YOU MAY DO SO BY MARKING THE APPROPRIATE BOXES AND SIGNING AND DATING ON THE REVERSE SIDE. This proxy, when properly executed, will be voted as you direct on the reverse side.

Please date, sign and return this proxy/voting instruction card promptly. If you own shares directly and plan to attend the Annual Stockholders Meeting, please so indicate in the space provided on the reverse side. To attend the Annual Meeting and vote these shares in person, please see “Attending the Annual Meeting” and “How to Vote” in the Halyard Health, Inc. proxy statement.

IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE PLEASE RETURN THIS CARD IN THE SELF-ADDRESSED ENVELOPE PROVIDED.

Address Changes/Comments:

(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)

(Items to be voted appear on reverse side.)