Edgar Filing: GREATBATCH, INC.

(2)

The difference between the actual LTIP stock award (18,065) and the computed award above (17,689) of 376 shares relates to the allocation given to all LTIP eligible employees in order to payout 100% of the LTIP funding pool. This allocation amounted to less than 110 shares for the CFO and Other Named Executive Officers in 2008.

For 2009, the Compensation Committee began granting restricted stock units to all employees under the LTIP program in place of restricted stock, due to the tax consequences upon the grant of restricted stock awards to employees in certain foreign jurisdictions. In order to achieve uniformity with respect to the timing of taxation for LTIP awards, the Committee chose restricted stock units since they are not taxable in most jurisdictions until the vest date which is similar to how restricted stock is taxed for U.S. employees.

LTIP Program stock option awards vest over four years, 25% at the end of each year, including the year of grant. The LTIP Program restricted stock or restricted stock unit awards vest 50% at the end of the second year, including the year of grant and 25% at the end of the third and fourth years.

Performance-Based

SALT Program. The objective of the SALT Program is to provide a supplemental award that targets total direct compensation up to the 75th percentile of our competitive market if 75th percentile performance goals, set at the beginning of the period, are met. This is consistent with our philosophy of providing above competitive market median compensation for above competitive market median performance. The use of SALT Program awards puts a larger percentage of our Named Executive Officers pay in equity and “at risk,” which we believe is appropriate and consistent with our compensation philosophy. SALT Program awards are determined based upon the following formula and are granted in the form of non-qualified stock options:

Non-Qualified Stock Option Grant = (Base Salary x Individual SALT %) ÷ Black Scholes Value

Individual SALT %. The SALT Program equity awards expressed as a percentage of base salary for our Named Executive Officers is as follows:

	2006			2007(1)			2008(2)			2009
· President & CEO		100	%		125	%(3)		175	%		175	%
· CFO		40	%		50	%		85	%(3)		85	%
· Other Named Executive Officers		40	%		50	%(3)		70	%		70	%

(1)

In 2007, the Compensation Committee reduced the annual cash incentive target payout percentages for certain senior level managers and increased the level of equity based compensation. This was done to better align the mix between cash and equity based compensation for our senior managers with our competitive market.

(2)

Includes an increase in order to bring total direct compensation up to the 75th percentile of the competitive market.

(3)

Includes a promotional increase.

Example Computation of 2008 SALT for Thomas J. Hook:

Non-Qualified Stock Option Grant = (Base Salary ($475,000) x Individual SALT % (175%)) ÷

Black Scholes Value ($8.80) = 94,460

The target number of shares is calculated using the Black Scholes value of our stock on the grant date. SALT Program awards are granted in the form of non-qualified stock options and are performance based. For the 2006 and 2007 SALT Programs, stock options vest either at 100% or 0% depending on whether or not the Company achieves certain three-year performance measures. In 2008, the SALT Program was modified to provide for pro rata vesting relative to the achievement of the three performance metrics utilized in the SALT program. This change was made as we found that none of our peer group was in the top 25th percentile for all three metrics and only a few were in the top 25th percentile for two of the three metrics. Thus, we believe that requiring upper quartile performance for all three metrics would not achieve our objective of awarding 75th percentile total compensation for 75th percentile performance. Starting with the 2008 SALT grant, each metric will be tracked independently and achievement of one or more will allow for at least pro rata vesting of the award depending on how many of the metrics are achieved and the lowest percentage achievement of the metric which was not achieved. For example, if two of the performance goals are met and the third metric was only 90% of the target, then 2/3 of the award multiplied by 90% will vest. Similarly, if only one of the performance goals is met and the lowest percentage achieved of the other two metrics was 80% of the target, then 1/3 of the award multiplied by 80% will vest.

The 2008 SALT Program awards performance measures were as follows:

2008 – 2010 cumulative revenue;

2008 – 2010 cumulative adjusted operating income; and

2008 – 2010 cumulative adjusted cash flow provided by operations.

The Compensation Committee sets the performance goals for SALT awards based upon the long-range financial plan of the Company. Our long range plan takes into consideration the performance of our largest customers supplemented by performance information for our peer group as well as relevant market indices. We believe the performance of our largest customers should be considered since they account for a large percentage of our sales. Additionally, we believe broader market indices are appropriate for consideration in establishing future performance metrics given that the peer group companies above do not have businesses that are exactly comparable to ours. These performance targets were set with the intent that they would represent stretch goals and would result in superior upper quartile performance relative to our customers and peers. Achievement of these targets is believed to be a challenging goal for our Company. Additionally, even after the targets are achieved they continue to incentivize management since the award is in the form of stock options. The only way an employee receives value from a stock option is if the Company’s stock price, which is heavily dependent on the performance of the Company, remains above the options’ exercise price. Thus, stock options align the goals of management with those of the Company’s shareholders.

These performance measures are subject to adjustment based upon acquisitions, as well as unusual or extraordinary items that were not contemplated when the performance measures were set. The Compensation Committee approves all adjustments. The adjustments for acquisitions are based upon the projections for the respective acquisition at the time the transaction was approved by the Board. We believe these adjustments provide incentive for senior level managers to ensure acquisitions are successful. The original 2006 and 2007 SALT Program metrics were adjusted for the acquisitions we completed in 2007 and 2008.

2008 was the final performance year for the 2006 SALT award. During the three year period from 2006 to 2008, we earned cumulative revenues of $1.14 billion, cumulative adjusted operating income of $146 million and cumulative adjusted cash flow provided by operations of $173 million. This compares to the 2006 grant metrics of $1.13 billion, $139 million and $161 million, respectively. Thus, in 2009 our Board approved the achievement of these metrics. The awards will fully vest on December 31, 2009 if continued employment is maintained up until that time. The difference between the cumulative amounts for operating income and cash flow from operations for the SALT metrics compared to the actual amounts under GAAP is the exclusion of non-recurring acquisition related charges (mainly in-process research and development and inventory step-up amortization) and costs incurred related to our consolidation initiatives, all of which were not included in the original SALT target. All of these adjustments were reviewed and approved by the Compensation Committee.

2007 was the final performance year for the 2005 SALT award. During the three year period from 2005 to 2007, we earned cumulative revenues of $804 million and cumulative Adjusted EPS of $3.83. This compares to the 2005 grant metrics of $770 million and $3.51, respectively. Thus, in 2008 our Board approved the achievement of these metrics. These awards fully vested on December 31, 2008. The difference between the cumulative revenue for the three year period from 2005 to 2007 and our revenues under GAAP of $831 million is the exclusion of revenue for acquired companies which were not included in the original SALT target. The main difference between the Adjusted EPS and our EPS under GAAP is the exclusion of non-recurring acquisition related charges (mainly in-process research and development and inventory step-up amortization), costs incurred related to our consolidation initiatives, and the gain on the extinguishment of our debt, all of which were not included in the original SALT target. All of these adjustments were reviewed and approved by the Compensation Committee.

The form of the SALT Program awards is reviewed annually by the Compensation Committee. During 2008, the Compensation Committee researched the need to incorporate either relative or absolute total shareholder return (“TSR”) as a SALT Program metric. Based upon its analysis, including analysis of our competitive market and peer group practices and in consultation with Ernst & Young, the Compensation Committee determined that a change to TSR was not appropriate at this time. This was based upon the fact that TSR is highly sensitive to investor expectations and not necessarily performance of the Company, TSR is often times out of management’s direct control and the accounting for stock awards with market conditions such as TSR is more complex and costly. Additionally, TSR has not yet become a widely accepted compensation practice among publicly traded companies, including our peer group. Based upon the 2007 NASPP Domestic Stock Plan Design and Administration Survey, only 51 of the 349 companies (15%) evaluated utilize TSR as a performance metric. Management and the Compensation Committee remain committed to its pay for performance principals, evidence of which is shown by the high percentage of Named Executive Officer Compensation that is tied to the performance of the Company of approximately 50%.

Other Equity Based Compensation. In addition to the LTIP and SALT Programs, senior level managers may receive additional equity based compensation at the date of hire, upon promotion, for special recognition or upon a significant change in responsibility. These awards are used as a recruiting and retention tool. Historically, these grants were made in the form of incentive stock options or restricted stock and were typically granted as a percentage of the respective employee’s base salary. The amount of incentive stock options granted that become exercisable in any one year by an individual employee is subject to the $100,000 limit imposed by IRC §422(d). In 2007, these awards were made in the form of non-qualified stock options and restricted stock. Also during 2007, the Company’s executive officers, except for the President and CEO who received a similar type grant upon his promotion in 2006, received a one-time restricted stock grant equal to 100% of their base salary. This grant will serve as an additional retention tool for the executive officers as they vest over four years (50% at the end of the second year and 25% at the end of the third and fourth years).

Share Ownership Guidelines. In order to better align the interests of our executives with the interests of our stockholders and to promote our commitment to sound corporate governance, the Compensation Committee designed and the Board approved stock ownership guidelines for senior level managers and non-employee directors. These guidelines require non-employee directors to own at least $90,000 in shares of the Company.

The ownership requirement for our current Named Executive Officers is calculated as a multiple of base salary as follows:

	Multiple of Base Salary
President & CEO		5.0	x
CFO		3.0	x
Other Named Executive Officers		3.0	x

The directors and executives are required to be in compliance with these guidelines within 5 years of becoming subject to the policy and “meaningful” progress must be made and is monitored throughout that time period.

The ownership guidelines also contain a holding period requirement for equity based awards. Non-employee directors are expected to hold all equity based awards, net of applicable taxes, until their tenure as a Board member has ended. Senior level managers are required to hold exercised stock options and vested restricted stock/units, net of applicable taxes, for one year following the exercise or vesting. For purposes of these guidelines, a 50% tax rate is assumed.

Retirement and Change in Control Agreements

Overview. We believe that it is in the best interest of our Company and stockholders to have the unbiased dedication of our executives, without the distraction of personal uncertainties such as retirement or a change in control. We have designed our senior level managers’ retirement and other post-employment benefit programs to reduce such distraction. We believe that our programs allow for a smooth transition in the event of retirement or a change in control without providing “windfall” benefits to senior level managers. We also believe that these benefits are competitive with those of other comparable companies.

The components of our retirement and post-employment benefits program are as follows:

Executive Retirement Guidelines

401(k) Plan

Change in Control Agreements

We do not offer our employees defined benefit pension, post-retirement or deferred compensation benefits. This decision was made as we believe that such plans are both undervalued by employees and more expensive to administer in comparison to the programs that we do offer. When designing our retirement and other post-employment benefit programs we consider IRC §409A and continue to evaluate our programs in light of the guidance issued under that rule.

We currently do not have a formal severance plan for our employees. In the past, we have provided post-employment severance benefits to our employees who are terminated in connection with a reduction-in-force or corporate reorganization. Generally these benefit amounts are based upon length of service and position level with the Company. Severance payments are at the discretion of management.

Executive Retirement Guidelines. Higher-level senior managers who are at least 59½ with a combination of age and length of service equal to at least 69½ are eligible to receive certain benefits under our Executive Retirement Guidelines. These guidelines have been approved by our Board and allow for the following:

accelerated vesting of all outstanding time-based stock incentive awards;

discretionary vesting of all outstanding performance-based stock incentive awards; and

a discretionary extension of the time eligible to exercise outstanding stock options.

In exchange for these benefits, the executives are required to sign a two-year non-compete agreement. In order to be considered for these benefits, executives must submit a voluntary retirement request form at least one year prior to their anticipated retirement date and facilitate the transition of their responsibilities to their successor. All requests for retirement and benefits under our Executive Retirement Guidelines by Named Executive Officers are reviewed and approved by our Board.

401(k) Plan. Nearly all of our employees are eligible to participate in our defined contribution 401(k) plan. This plan provides for the deferral of employee compensation up to the maximum IRC limit and a discretionary Company match. From 2006 to 2008, this match was $0.35 per dollar of participant deferral, up to 6% of the base salary for each participant.

In addition to the discretionary contributions described above, employees are eligible to receive an additional discretionary contribution of up to 5% of their base salary to the 401(k) plan. This discretionary contribution is made in the form of Common Stock and is subject to certain Internal Revenue Service limits.

Each year we perform standard year-end coverage, nondiscrimination and compliance testing on our 401(k) plan to ensure compliance with applicable Internal Revenue Service rules and regulations. In the event the plan does not meet the nondiscrimination requirements, a prorated portion of the contributions made by “highly compensated” employees will be returned to the respective employee in order to ensure compliance.

Participants immediately vest in their own contributions and earnings, and in the matching and stock contributions made by the Company.

Change in Control Agreements. We have entered into change in control agreements with our Named Executive Officers. These agreements provide for continued employment with the same base salary, annual cash incentive and benefits for two years following a change of control. If the employee is terminated after the change of control, other than for death, disability or cause, or the executive terminates the agreement for good reason, then the executive will be entitled to certain benefits. The most significant components of those benefits are as follows:

two times annual salary;

two times average bonus for the three year period prior to the date of termination;

two times the Company’s 5% discretionary contributions to the Company’s 401(k) Plan;

$25,000 for outplacement services;

continued coverage under the Company’s medical and other benefit plans (i.e. education assistance, financial planning, physicals) for a period of two years; and

all time-based unvested equity awards immediately vest.

Based upon the hypothetical termination date of January 2, 2009, the change in control termination benefits for our Named Executive Officers would be as follows:

	Salary & Bonus		Acceleration of Stock- Based Awards(1)		Continuance of Benefits(2)		401(k) Plan		Outplace- ment Services		Tax Gross- Up(3)(4)(5)		Modified Cut-Back(5)			Total

Thomas J. Hook	$	2,128,947	$	2,573,287	$	68,993	$	23,000	$	25,000	$	1,038,807	$	-		$	5,858,034

Thomas J. Mazza		1,075,126		457,964		128,182		23,000		25,000		-		(49,002	)		1,660,270

Mauricio Arellano		985,381		407,677		32,848		23,000		25,000		-		(11,009	)		1,462,897

Susan M. Bratton		981,447		392,438		165,987		23,000		25,000		-		-			1,587,872

Susan H. Campbell		995,647		405,311		28,045		23,000		25,000		-		-			1,477,003

(1)	Based upon our closing stock price of $26.72 per share as of January 2, 2009.

(2)	Includes the continuation of all benefits described in the Other Personal Benefits section below.

(3)	Computed based upon the assumption that equity awards are paid out in cash and does not consider the value that could be assigned to the non-compete agreement signed by Thomas J. Hook.

(4)

It is assumed that the hypothetical transaction would result in a cash-out of the outstanding equity awards. In the event an actual transaction would occur in which equity awards were converted into equity awards of the buyer, then the value of the equity acceleration for tax purposes could be higher.

(5)

Our change in control agreements provide that an executive is not entitled to a gross-up if the present value of payments does not exceed 110% of the safe harbor threshold. Instead, the payments due to these executives would be reduced to the maximum that could be paid so that the value of the payment would not exceed the safe harbor threshold. To the extent the change in control parachute payment exceeds 110% of the safe harbor threshold, then the participant would be entitled to an excise tax gross-up payment, which is included in the amounts shown above.

In exchange for the above, the terminated executive is required to sign a 36-month confidentiality agreement. In designing these agreements, we considered IRC §280G. IRC §280G denies a tax deduction for any and all excess parachute payments for corporations undergoing a change in control. In addition, the individual recipient of such payment must pay an extra 20% excise tax on the amount of the payment. IRC §280G provides a safe harbor from this excise tax if the present value of any parachute payments under a change in control does not exceed certain thresholds as defined in the IRC.

Other Personal Benefits

In addition to the elements of compensation discussed above, we also provide senior level managers with various other benefits as follows:

Education Assistance

Life Insurance

Long-Term Disability

Executive Financial Planning

Executive Physical

We provide these benefits in order to remain competitive with the market and believe that these benefits help us to attract and retain qualified executives. These benefits also reduce the amount of time and attention that senior level managers must spend on personal matters and allow them to dedicate more time to our Company. We believe that these benefits are in-line with the market, are reasonable in nature, are not excessive and are in the best interest of our Company and its stockholders.

Education Assistance. All employees and their dependents are eligible to participate in our Education Assistance Program. This program is provided to support our innovation and commitment to improving our abilities. We believe that education will support the development of our employees for new positions and enhance their contributions to the achievement of our strategic goals. This program was pioneered by our founder, Wilson Greatbatch, who believed as we do that “education is always worth more than it costs in time, money and effort.”

Under our Education Assistance Program we reimburse tuition, textbooks and laboratory fees for all of our employees and their dependents. All fulltime employees are eligible for 100% reimbursement upon the successful completion of job related courses or degree program. The dependent children benefit vests on a straight-line basis over ten years. For employees hired after January 1, 2003, the maximum amount of dependent children reimbursable tuition is the cost of tuition at the recognized local state university. For employees hired prior to January 1, 2003 and for all of the Named Executive Officers, there is no maximum limit for dependent children reimbursement. Minimum academic achievement is required in order to receive reimbursement under all Education Assistance Programs. In 2008, Thomas J. Mazza and Susan M. Bratton were the only Named Executive Officers who received benefits under this program.

Life Insurance. Beginning in 2008, our executive officers receive term life insurance paid by the Company equal to $5 million for the President & CEO (consistent with prior years) and $1 million for other executive officers. Additionally, the Company reimburses the executive officers for any additional tax burden resulting from this benefit. We believe this benefit is consistent with and will allow us to remain competitive with the market and believe that these benefits help us to attract and retain qualified executives.

Long-Term Disability. Beginning in 2008, our executive officers receive long-term disability insurance paid by the Company equal to 60% of salary plus STIC at the 100% level, with no cap. Additionally, the Company reimburses the executive officers for any additional tax burden resulting from this benefit. We believe this benefit is consistent with and will allow us to remain competitive with the market and believe that these benefits help us to attract and retain qualified executives.

Executive Financial Planning. Senior level managers are eligible for reimbursement of financial planning services. Reimbursement is approved for dollar amounts up to $5,000 in the first year of the program and up to $2,500 in all other years ($3,000 for the President & CEO). Qualified expenses include income tax preparation, estate planning and investment planning, among others.

Executive Physical. We provide senior level managers with annual physicals. We cover 100% of the cost of this program. This program was developed to promote the physical well being and health of our senior level managers. We believe this program is in the best long-term interest of our stockholders.

Other Benefits. Senior level managers also participate in other benefit plans that we fully or partially subsidize. Their participation is on the same terms as other employees of the Company. Some of the more significant of these benefits include medical, dental and vision insurance, as well as relocation reimbursement and vacation.

Employment Agreements

The Company has entered into an employment agreement with Thomas J. Hook. No other Named Executive Officer has an employment agreement.

We entered into an employment agreement with Mr. Hook in order to secure his services upon his appointment as President & Chief Executive Officer. That agreement provides certain benefits in addition to the other benefits discussed elsewhere in this section as follows:

Term extends through December 31, 2009 with automatic 1 year renewals after that;

Grant of 25,000 shares of non-qualified options and 50,000 shares of restricted stock that vest 25% on December 31, 2008, 25% on December 31, 2009 and 50% on December 31, 2010;

Company financed term life insurance policy of at least $5 million in face value;

In the event of death or disability – i) salary and fringe benefit continuation through the term of the contract or one year whichever is longer; and ii) immediate vesting of all non-vested equity based awards, except SALT awards;

In the event of termination without cause or with good reason – i) one year salary and STIC incentive payment; and ii) immediate vesting of all non-vested equity based awards, except SALT awards. Right to exercise vested options upon termination is extended to twelve months; and

Non-compete agreement during the term of the contract and 24 months from the date of last payment under the contract.

The following table presents the benefits that would be received by Mr. Hook in the event of a hypothetical termination as of January 2, 2009 as follows:

	Salary & Bonus		Acceleration of Stock- Based Awards(1)		Continuance of Benefits		401(k) Plan		Tax & Financial Planning		Total

Permanent Disability	$	475,000	$	2,573,287	$	31,497	$	11,500	$	3,000	$	3,094,284
Death		475,000		2,573,287		9,752		-		-		3,058,039
Termination Without Cause		855,000		2,573,287		-		-		-		3,428,287
Termination With Good Reason		855,000		2,573,287		-		-		-		3,428,287
Termination for Cause		-		-		-		-		-		-
Termination Without Good Reason		-		-		-		-		-		-
Retirement		-		2,573,287		-		-		-		2,573,287

(1)	Based upon our closing stock price of $26.72 per share as of January 2, 2009.

Compensation and Organization Committee Report

The Compensation and Organization Committee has reviewed and discussed the Compensation Discussion and Analysis appearing in this document with management and based upon this review and discussion recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for filing with the SEC.

Respectively submitted,

Pamela G. Bailey

Michael Dinkins

Peter H. Soderberg

William B. Summers, Jr. (Chair)

Members of the Compensation and Organization Committee

Compensation Tables

Summary Compensation Table

The following table summarizes the total compensation paid or earned by each of the Named Executive Officers for fiscal year 2008, 2007 and 2006. We have entered into an employment agreement with Thomas J. Hook – see the “Employment Agreements” section of the Compensation Discussion and Analysis for further discussion. The Named Executive Officers were not entitled to receive payments which would be characterized as “Bonus” payments for fiscal year 2008, 2007 or 2006. Total cash compensation, which includes salary and non-equity incentive plan compensation, is based on individual performance as well as on the overall performance of the Company as more fully described in the “Base Salary” and “Annual Cash Incentives” sections of the Compensation Discussion and Analysis. Generally, the emphasis that is placed on stock-based compensation increases as the level of responsibility of the individual employee increases.

Name and Principal						Stock		Option		Non-Equity Incentive Plan		All Other
Position	Year	Salary(1)		Bonus		Awards(2)		Awards(3)		Comp.(4)		Comp.(5)		Total

Thomas J. Hook	2008	$	475,000	$	─	$	489,163	$	875,015	$	431,278	$	50,778	$	2,321,234
President &	2007		448,231		─		439,586		639,882		527,421		41,511		2,096,631
Chief Executive Officer	2006		378,558		─		168,377		356,264		646,000		49,494		1,598,693

Thomas J. Mazza	2008		262,200		─		163,841		200,379		208,307		91,019		925,746
Senior Vice President &	2007		247,962		─		92,211		147,074		242,089		76,005		805,341
Chief Financial Officer	2006		215,654		─		20,041		112,028		292,600		40,077		680,400

Mauricio Arellano	2008		248,800		─		149,413		192,045		183,543		30,864		804,665
Senior Vice President,	2007		228,962		─		85,708		143,794		223,161		76,079		757,704
Cardiac & Neurology	2006		201,808		─		19,570		94,480		254,410		27,109		597,377

Susan M. Bratton	2008		241,700		─		147,630		171,419		178,305		92,694		831,748
Senior Vice President,	2007		228,962		─		86,377		120,340		223,161		72,132		730,972
Commercial	2006		205,769		─		22,105		90,602		254,410		70,693		643,579

Susan H. Campbell	2008		248,800		─		149,313		176,478		183,543		21,788		779,922
Senior Vice President,	2007		228,962		─		87,484		131,163		223,161		15,975		686,745
Orthopaedics	2006		205,769		─		21,373		98,526		254,410		14,766		594,844

(1)	The amounts indicated represent the dollar value of base salary earned during fiscal year 2008, 2007 and 2006.

(2)

The amounts indicated represent the aggregate dollar amount of compensation expense related to restricted stock and restricted stock unit awards granted that was recognized in our financial statements. The determination of this expense is based on the methodology set forth in notes 1 and 10 to our financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on March 3, 2009.

(3)

The amounts indicated represent the aggregate dollar amount of compensation expense related to stock option awards granted that was recognized in our financial statements. The determination of this expense is based on the methodology set forth in notes 1 and 10 to our financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on March 3, 2009.

(4)	The amounts indicated represent cash awards earned in the indicated fiscal year and paid in the subsequent fiscal year under our STIC Program. See “Annual Cash Incentives” section of the Compensation Discussion and Analysis for a discussion of this program.

(5)

The amounts indicated include cash and stock we contributed to the respective employees’ 401(k) plan account, term life insurance premiums paid by the Company for the benefit of the Named Executive Officers, tax gross-ups related to term life insurance and long-term disability benefits, as well as other compensation. The dollar value of cash and stock contributed to the 401(k) plan, term life insurance premiums paid, tax gross-ups, perquisites for items in excess of $10,000 and all other is as follows:

	Year	401 (k) Contribution		Term Life Insurance Premiums		Tax Gross-Up		Perquisites		Other		Total

Thomas J. Hook	2008	$	16,225	$	13,250	$	10,802	$	─	$	10,501	$	50,778
	2007		15,956		12,900	─			12,655	─			41,511
	2006		14,975		12,900		127		21,492	─			49,494

Thomas J. Mazza(1)	2008		16,225		5,780		3,922		49,980		15,112		91,019
	2007		15,975	─		─			52,817		7,213		76,005
	2006		15,512	─			106		22,273		2,186		40,077

Mauricio Arellano(2)	2008		14,483		1,740		2,800	─			11,841		30,864
	2007		15,975	─		─			47,635		12,469		76,079
	2006		14,405	─			231		12,473	─			27,109

Susan M. Bratton	2008		16,225		1,420		1,628		71,651		1,770		92,694
	2007		15,975	─		─			56,157	─			72,132
	2006		14,633	─			1,111		54,949	─			70,693

Susan H. Campbell	2008		16,225		980		1,880	─			2,703		21,788
	2007		15,975	─		─		─		─			15,975
	2006		14,610	─			156	─		─			14,766

(1)	Other compensation for 2008 includes $13,210 related to the payment of excess vacation in accordance with Company policy.

(2)	Other compensation for 2007 includes $12,469 related to the payment of excess vacation in accordance with Company policy.

Perquisites for the Named Executive Officers are included in “All Other Compensation” if the aggregate value is equal to or greater than $10,000. The perquisites included were comprised of the following. No perquisite exceeded the greater of $25,000 or 10% of the total perquisites provided to the respective executive, except as noted:

Year

Car

Allowance (1)

Financial

Planning

Executive

Physical

Dependent

Education

Assistance (2)

Relocation

Service

Awards/

Gifts

Personal

Travel

Personal use of

Company Provided

Cell-Phone

($)

Thomas J. Hook

2008

2007

2006

Thomas J. Mazza

2008

44,370

2007

46,360

2006

Mauricio Arellano

2008

2007

39,353

2006

Susan M. Bratton

2008

68,469

2007

48,425

2006

43,271

Susan H. Campbell

2008

2007

2006

(1)	This benefit was discontinued in March 2007.

(2)	Includes reimbursement for tuition, textbooks and laboratory fees for the Named Executive Officer and their dependents. See “Education Assistance” section of the Compensation Discussion and Analysis.

2008 Grants of Plan-Based Awards

The following table summarizes the grants of plan-based awards to each of the Named Executive Officers during fiscal year 2008. All stock-based awards in 2008 were granted under our 2005 Stock Incentive Plan. Under the 2005 Stock Incentive Plan, all stock options expire 10 years from the date of grant and acceleration of vesting occurs for time-based awards upon a change in control. Acceleration of vesting does not automatically occur upon death, disability or retirement.

Prior to vesting, employees who receive a grant of restricted stock are eligible to participate in the rights or privileges of a stockholder of the Company in respect to those shares, including the right to receive dividends and vote. We did not pay any cash dividends in 2008 and currently intend to retain all earnings to further develop and grow our business.

Estimated Future Payouts Under

Non-Equity Incentive Plan

Awards(1)

Estimated Future Payouts

Under Equity Incentive Plan

Awards(2)

All Other

Stock

Awards:

Number of

Shares of

All Other

Option

Awards:

Number of

Securities

Exercise

Price of

Grant

Date Fair

Value of

Stock and

Name

Grant Date

Threshold

Target

Maximum

Threshold

Target

Maximum

Stock

or Units

Underlying

Options

Option

Awards

Option

Awards(4)

(#)

(#)(3)

($/Sh)

Thomas J. Hook

190,000

380,000

760,000

─

N/A

3/4/2008

─

18,065

43,417

20.14

727,663

10/13/2008

─

31,487

94,460

─

21.88

831,248

Thomas J. Mazza

91,770

183,540

367,080

─

N/A

3/4/2008

─

5,318

12,781

20.14

214,210

10/13/2008

─

8,442

25,325

─

21.88

222,860

Mauricio Arellano

80,860

161,720

323,440

─

N/A

3/4/2008

─

4,415

10,611

20.14

177,838

10/13/2008

─

6,596

19,788

─

21.88

174,134

Susan M. Bratton

78,553

157,105

314,210

─

N/A

3/4/2008

─

4,289

10,309

20.14

172,769

10/13/2008

─

6,408

19,225

─

21.88

169,180

Susan H. Campbell

80,860

161,720

323,440

─

N/A

3/4/2008

─

4,415

10,611

20.14

177,838

10/13/2008

─

6,596

19,788

─

21.88

174,134

(1)

The amounts indicated represent potential cash awards that could be paid under our STIC Program. Awards can range from 50% to 200% of the target amount if 75% to 133% of the performance metric is achieved, respectively. Award would be $0 if threshold target is not achieved. See “Annual Cash Incentives” section of the Compensation Discussion and Analysis for discussion of this program. See the “Non-Equity Incentive Plan Comp.” column of the Summary Compensation Table above for the actual amounts earned in 2008, which were paid in 2009.

(2)

The amounts indicated represent performance-based non-qualified stock options that were awarded under our SALT Program. The 2008 SALT Program awards vest on December 31, 2010 depending on whether or not the Company achieves certain three-year performance measures. See the “Long-Term Equity Awards – Performance-Based” section of the Compensation Discussion and Analysis for discussion of this program.

(3)

The amounts indicated represent non-qualified stock option and restricted stock awards that were granted under our LTIP Program. The LTIP Program stock option awards vest 25% at the end of each year, including the year of grant. The LTIP Program restricted stock awards vest 50% at the end of the second year, including the year of grant and 25% at the end of the third and fourth year. See the “Long-Term Equity Awards – Time-Based” section of the Compensation Discussion and Analysis for discussion of this program.

(4)	The valuation of stock options and restricted stock are based on the methodology set forth in notes 1 and 10 to our financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on March 3, 2009.

Outstanding Equity Awards at 2008 Fiscal Year-End

The following table summarizes the number and terms of stock option and restricted stock awards outstanding for each of the Named Executive Officers as of January 2, 2009.

Option Awards

Stock Awards

Name

Option

Grant

Date

Number of

Securities

Underlying

Unexercised

Options

Exercisable

Number of

Securities

Underlying

Unexercised

Options

Unexercisable

Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options

Option

Exercise

Price

Option

Expiration

Date

Stock

Award

Grant

Date

Number of

Shares of

Stock That

Have Not

Vested

Market Value

of Shares of

Stock That

Have Not

Vested(4)

Equity

Incentive Plan

Awards:

Number of

Unearned

Shares, Units

or Other

Rights That

Have

Not Vested

(#)(1)

(#)(2)

(#)(3)

(#)

Thomas J. Hook

9/1/2004

39,558

10,442

─

16.70

8/31/2014

10/5/2004

5,000

133,600

─

3/31/2005

18,742

─

18.24

3/30/2015

2/11/2005

7,000

187,040

─

5/24/2005

322

178

─

24.62

5/23/2015

2/12/2006

1,262

33,721

─

6/8/2005

25,431

─

23.60

6/7/2015

8/8/2006

37,500

1,002,000

─

2/12/2006

18,918

6,307

─

25.22

2/11/2016

3/6/2007

6,296

168,229

─

8/8/2006

6,250

18,750

41,996

22.38

8/7/2016

3/4/2008

18,065

482,697

─

3/6/2007

15,740

15,741

─

25.50

3/5/2017

─

5/22/2007

─

37,920

29.65

5/21/2017

─

3/4/2008

10,854

32,563

─

20.14

3/3/2018

─

10/13/2008

─

94,460

21.88

10/12/2018

─

Thomas J. Mazza

11/10/2003

4,665

─

37.51

11/9/2013

10/1/2004

200

5,344

─

7/1/2004

2,800

─

27.50

6/30/2014

2/12/2006

454

12,131

─

2/11/2005

3,220

1,780

─

16.99

2/10/2015

3/6/2007

1,629

43,527

─

3/31/2005

7,074

─

18.24

3/30/2015

5/22/2007

4,804

128,363

─

6/8/2005

6,684

─

23.60

6/7/2015

3/4/2008

5,318

142,097

─

2/12/2006

6,810

2,271

─

25.22

2/11/2016

─

8/8/2006

─

8,695

22.38

8/7/2016

─

3/6/2007

4,071

4,072

─

25.50

3/5/2017

─

5/22/2007

─

8,407

29.65

5/21/2017

─

3/4/2008

3,195

9,586

─

20.14

3/3/2018

─

10/13/2008

─

25,325

21.88

10/12/2018

─

Mauricio Arellano

11/10/2003

1,946

─

37.51

11/9/2013

10/1/2004

1,000

26,720

─

5/25/2004

4,000

1,000

─

26.65

5/24/2014

2/12/2006

374

9,993

─

7/1/2004

1,875

─

27.50

6/30/2014

3/6/2007

1,496

39,973

─

3/31/2005

6,535

─

18.24

3/30/2015

5/22/2007

4,412

117,889

─

6/8/2005

6,176

─

23.60

6/7/2015

3/4/2008

4,415

117,969

─

2/12/2006

5,600

1,867

─

25.22

2/11/2016

─

8/8/2006

─

8,142

22.38

8/7/2016

─

3/6/2007

3,739

─

25.50

3/5/2017

─

5/22/2007

758

3,036

7,721

29.65

5/21/2017

─

3/4/2008

2,652

7,959

─

20.14

3/3/2018

─

10/13/2008

─

19,788

21.88

10/12/2018

─

Option Awards

Stock Awards

Name

Option

Grant

Date

Number of

Securities

Underlying

Unexercised

Options

Exercisable

Number of

Securities

Underlying

Unexercised

Options

Unexercisable

Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options

Option

Exercise

Price

Option

Expiration

Date

Stock

Award

Grant

Date

Number of

Shares of

Stock That

Have Not

Vested

Market

Value of

of Stock

That

Have

Not

Vested(4)

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares,

Units or

Other

Rights That

Have

Not Vested

(#)(1)

(#)(2)

(#)(3)

(#)

Susan M. Bratton

9/24/1999

402

─

15.00

9/23/2009

11/15/2002

200

5,344

─

1/1/2000

1,880

─

15.00

12/31/2009

11/1/2003

200

5,344

─

2/16/2000

1,000

─

15.00

2/15/2010

10/1/2004

200

5,344

─

1/1/2001

1,178

─

28.25

12/31/2010

2/12/2006

385

10,287

─

2/5/2001

1,350

─

20.64

2/4/2011

3/6/2007

1,496

39,973

─

5/18/2001

4,000

─

32.48

5/17/2011

5/22/2007

4,412

117,889

─

1/1/2002

2,037

─

25.82

12/31/2011

3/4/2008

4,289

114,602

─

7/26/2002

5,000

─

25.36

7/25/2012

─

7/1/2003

5,000

─

35.70

6/30/2013

─

7/1/2004

5,600

─

27.50

6/30/2014

─

3/31/2005

7,112

─

18.24

3/30/2015

─

6/8/2005

6,721

─

23.60

6/7/2015

─

2/12/2006

5,764

1,922

─

25.22

2/11/2016

─

8/8/2006

─

8,142

22.38

8/7/2016

─

3/6/2007

3,739

─

25.50

3/5/2017

─

5/22/2007

─

7,721

29.65

5/21/2017

─

3/4/2008

2,577

7,732

─

20.14

3/3/2018

─

10/13/2008

─

19,225

21.88

10/12/2018

─

Susan H. Campbell

5/9/2003

3,552

─

33.78

5/8/2013

11/1/2003

200

5,344

─

7/1/2003

3,750

─

35.70

6/30/2013

10/1/2004

700

18,704

─

7/1/2004

2,800

─

27.50

6/30/2014

2/12/2006

385

10,287

─

10/5/2004

2,500

─

17.77

10/4/2014

3/6/2007

1,496

39,973

─

3/31/2005

6,920

─

18.24

3/30/2015

5/22/2007

4,412

117,889

─

6/8/2005

6,539

─

23.60

6/7/2015

3/4/2008

4,415

117,969

─

2/12/2006

5,764

1,922

─

25.22

2/11/2016

─

8/8/2006

─

8,142

22.38

8/7/2016

─

3/6/2007

3,739

─

25.50

3/5/2017

─

5/22/2007

379

1,518

7,721

29.65

5/21/2017

─

3/4/2008

2,652

7,959

─

20.14

3/3/2018

─

10/13/2008

─

19,788

21.88

10/12/2018

─

(1)	Stock option awards become exercisable as follows:

Option Grant Date		Vesting Schedule
5/18/01, 5/9/03, 11/10/03, 5/25/04, 9/1/04, 2/11/05, 5/24/05		See Other Equity Based Compensation discussion within the “Long-Term Equity Awards” section of the Compensation Discussion and Analysis. The amount of stock options exercisable is determined each year by the Compensation Committee and is based upon the financial performance of the Company for the preceding year. Notwithstanding the foregoing, the option becomes exercisable in full on the seventh anniversary of the grant date if employment with the Company has not terminated. The historical vesting of these awards is as follows: 2001 – 26.9%; 2002 – 15.1%; 2003 – 24.4%; 2004 – 15.6%; 2005 – 24.4%; 2006 24.0%; 2007 16.0% and 2008 20%.

5/22/07		See Other Equity Based Compensation discussion within the “Long-Term Equity Awards” section of the Compensation Discussion and Analysis. The amount of stock options exercisable is determined each year by the Compensation Committee and is based upon the financial performance of the Company for the preceding year. Notwithstanding the foregoing, the option becomes exercisable in full on the seventh anniversary of the grant date if employment with the Company has not terminated. The historical vesting of these awards is as follows: 2007 – 20.0% and 2008 – 20.0%.

1/1/00, 1/1/01, 1/1/02		Stock options become exercisable 33 1/3% on the anniversary of the grant date each year for three years following the date of grant.

9/24/99, 2/16/00, 2/5/01, 7/26/02, 7/1/03, 7/1/04, 10/5/04		Stock options become exercisable 33 1/3% on the last day of each fiscal year for three years following the date of grant, including the year of grant.

3/31/05, 2/12/06, 3/6/07, 3/4/08		See LTIP Program discussion within the “Long-Term Equity Awards – Time-Based” section of the Compensation Discussion and Analysis. Stock options become exercisable 25% on the last day of each fiscal year for four years following the date of grant, including the year of grant.

6/8/05		The performance metrics for these awards have been met. Thus, stock options became exercisable on January 2, 2009.

8/8/06		Stock option becomes exercisable 25% on December 31, 2008, 25% on December 31, 2009 and 50% on December 31, 2010.

(2)	Stock option awards become exercisable as follows:

Option Grant Date		Vesting Schedule
8/8/06		See SALT Program discussion within the “Long-Term Equity Awards – Performance-Based” section of the Compensation Discussion and Analysis. Stock options become exercisable on December 31, 2009 if certain performance goals are met. The achievement of the performance metrics related to this award was approved by the Board on March 2, 2009.

5/22/07, 10/13/08		See SALT Program discussion within the “Long-Term Equity Awards – Performance-Based” section of the Compensation Discussion and Analysis. Stock options become exercisable on December 31, 2010 if certain performance goals are met.

(3)	Stock awards vest as follows:

Stock Award Grant Date		Vesting Schedule
11/15/02, 11/1/03, 10/1/04, 10/5/04, 2/11/05		Stock awards vest upon the achievement of certain earnings per share targets. Notwithstanding the foregoing, the awards vest in full on the seventh anniversary of the grant date if employment with the Company has not terminated. The earnings per share targets are as follows: 2002 grant - $2.00; 2003 grant - $2.40; and 2004 and 2005 grants - $2.88.

2/12/06, 3/6/07, 3/4/08		See LTIP Program discussion within the “Long-Term Equity Awards – Time-Based” section of the Compensation Discussion and Analysis. Stock awards vest 50% at the end of the second year following the year of grant, including the year of grant and 25% at the end of the third and fourth year.

8/8/06		Stock award vests 25% on December 31, 2008, 25% on December 31, 2009 and 50% on December 31, 2010.

5/22/07		See Other Equity Based Compensation discussion within the “Long-Term Equity Awards” section of the Compensation Discussion and Analysis. Stock awards vest 50% at the end of the second year following the year of grant, including the year of grant and 25% at the end of the third and fourth year.

(4)	Market value of shares of stock that have not vested is calculated as the product of the closing price of our stock on January 2, 2009 of $26.72 and the number of unvested shares.

2008 Option Exercises and Stock Vested

The following table summarizes the number of stock option awards exercised and the value realized upon exercise during 2008 for the Named Executive Officers, as well as the number of stock awards vested and the value realized upon vesting.

	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise(1)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting(2)
Thomas J. Hook	─		$	─		21,171	$	565,689

Thomas J. Mazza	─		─			7,306		195,216

Mauricio Arellano	─		─			6,668		178,169

Susan M. Bratton		1,620		15,267		6,713		179,371

Susan H. Campbell	─		─			6,701		179,051

(1)	Based upon the difference between the price of the Company’s Common Stock on the New York Stock Exchange at the time of exercise and the exercise price for the stock options exercised.

(2)	Based upon the closing price of the Company’s Common Stock on the New York Stock Exchange on the date the stock awards vested.

Pension Benefits and Nonqualified Deferred Compensation Tables

These tables are not required as we do not offer our Named Executive Officers the pension or nonqualified deferred compensation benefits required to be reported in these tables. See the “Change in Control Agreements” and “Employment Agreements” section of the Compensation Discussion and Analysis for a description of potential post-employment payments.

CORPORATE GOVERNANCE AND BOARD MATTERS

The business of the Company is managed under the direction of the Board. The Board has adopted Corporate Governance Guidelines (the “Guidelines”) for the Company that reflect the Company’s commitment to good corporate governance. The full text of the Guidelines is posted in the Investor Relations section of the Company’s website at www.greatbatch.com under “Governance.”

The Board has also adopted a Code of Business Conduct and Ethics for all directors, executive officers and employees of the Company. The full text of the code is also posted in the Investor Relations section of the Company’s website under “Governance.” The Company intends to post on its website any amendment to or waiver from any provision in the Code of Business Conduct and Ethics that relates to any element of the standards enumerated in the rules of the Securities and Exchange Commission.

A copy of the Guidelines and the Code of Business Conduct and Ethics may be obtained without charge by any stockholder of record by written request made to the Manager of External Reporting and Investor Relations, Greatbatch, Inc., 10000 Wehrle Drive, Clarence, New York 14031.

Board Independence

Each of the Company’s directors is independent under the standards set by the New York Stock Exchange’s Corporate Governance Listing Standards, as amended, and consistent with the Company’s Guidelines, other than Mr. Hook. The Guidelines specify the criteria by which the independence of the Company’s directors will be determined and provide that a director is independent if the director is neither a current or former employee or officer of the Company, the director does not receive any remuneration from the Company, either directly or indirectly, in any capacity other than as a director, and the director is not a partner or controlling stockholder or executive officer of any organization that has a business relationship with the Company. When making an independence determination, the Board endeavors to consider all relevant facts and circumstances.

In making determinations of independence, the Board also uses categorical standards set forth by the New York Stock Exchange to assist it in making independence determinations. Under these standards, absent other material relationships with the Company that the Board believes to jeopardize a director’s independence from management, a director will be independent unless the director or any of his or her immediate family members had any of the following relationships with the Company: employment during any of the past three years (as an executive officer in the case of family members); the receipt of more than $120,000 per year in direct compensation (other than director fees) during any of the past three years; affiliation or employment with a present or former internal or external auditor during any of the past three years; employment with another company where any executive officers of the Company serve on that company’s compensation committee during any of the past three years; being an executive officer of a charitable organization to which the Company contributed the greater of $1 million or 2% of such charitable organization’s consolidated gross revenues in any single fiscal year during the preceding three years; or being an executive officer of a company that makes payments to, or receives payments from, the Company for property or services in a fiscal year in an amount in excess of the greater of $1 million or 2% of such other company’s consolidated gross revenues.

In accordance with the Guidelines, the Board undertook its annual review of director independence. During this review, the Board considered the materiality of any relationships with the Company from the director’s perspective and the perspective of any persons or organizations with which the director is affiliated. Material relationships may include commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationships and can also be indirect, such that serving as a partner or officer, or holding shares, of an organization that has a relationship with the Company may cause the director not to be independent. As provided in the Guidelines, the purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the director is independent.

Pursuant to the Guidelines and following the review described above, the Board has affirmatively determined that no current director has a material relationship with the Company that is inconsistent with a determination of independence, except Mr. Hook. Therefore, the Board affirmatively determined that all the current directors, with the exception of Mr. Hook, are independent.

Meetings and Committees of the Board

The Board has standing Audit, Compensation and Organization, Corporate Governance and Nominating, and Technology Innovation Committees. Each committee has a written charter posted on the Investor Relations section of the Company’s website under “Governance.” Copies of the charters may be obtained without charge by any stockholder of record by written request made to the Manager of External Reporting and Investor Relations, Greatbatch, Inc., 10000 Wehrle Drive, Clarence, New York 14031.

The Board held six meetings in 2008. Each director attended at least 75% of the meetings of the Board and meetings of the committees of the Board on which each director served. All of the Company’s directors then serving on the Board attended the 2008 annual meeting of stockholders. The Company requests, but has no formal policy regarding director attendance at its annual meeting of stockholders.

Audit Committee - The Audit Committee consists of Messrs. Dinkins, Melia (Chair), Soderberg, Summers and Wareham. The Audit Committee’s primary purpose is assisting the Board in overseeing the (i) integrity of the Company’s financial statements, (ii) Company’s compliance with legal and regulatory requirements, (iii) Company’s independent registered public accounting firm qualifications and independence, (iv) performance of the Company’s internal audit function and independent registered public accounting firm and (v) Company’s system of disclosure controls and system of internal controls regarding finance, accounting, legal compliance, related person transactions and ethics that management and the Board have established. The Audit Committee had eight meetings in 2008.

Compensation and Organization Committee - The Compensation and Organization Committee consists of Ms. Bailey and Messrs. Dinkins, Soderberg and Summers (Chair). The Compensation and Organization Committee’s primary purpose is establishing the Company’s executive compensation philosophy that will attract, retain and motivate superior executives and ensure that senior executives of the Company and its wholly owned subsidiaries are compensated appropriately in a manner consistent with the compensation philosophy, internal equity considerations, competitive practice and the requirements of the appropriate regulatory bodies. The Compensation and Organization Committee also administers the Company’s 1997 and 1998 Stock Option Plans, the 2002 Restricted Stock Plan and the 2005 Stock Incentive Plan. The Compensation and Organization Committee had seven meetings in 2008.

Corporate Governance and Nominating Committee - The Corporate Governance and Nominating Committee consists of Ms. Bailey (Chair), Dr. Miller, Mr. Sanford and Dr. Wisniewski. The Corporate Governance and Nominating Committee identifies qualified individuals to become members of the Board, recommends to the Board the selection of director nominees, develops and recommends to the Board a set of corporate governance principles applicable to the Company and evaluates the effectiveness of the Board. The Corporate Governance and Nominating Committee reviews with the Board, on an annual basis, the composition of the Board and whether the Company is being well served by the directors taking into account their independence, age, skills, experience and availability for service. The Corporate Governance and Nominating Committee recommends director nominees to the Board considering the factors discussed above, provided that no director may sit on the board of, or beneficially own stock in (other than through mutual funds or similar non-discretionary, undirected arrangement), any of the Company’s competitors in its principal lines of business. The Corporate Governance and Nominating Committee may, and has sole authority to, retain a search firm to assist in identifying qualified director candidates. Michael Dinkins was initially identified as a potential candidate for election to the Board by a search firm retained by the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee’s policy is to consider director candidates recommended from all sources, including stockholder recommendations, to the extent those candidates will improve the Board’s composition based on the factors discussed above. The Corporate Governance and Nominating Committee uses the same process for evaluating candidates for director regardless of the source of the recommendation. Stockholders wishing to submit recommendations for candidates to the Board must supply information in writing regarding the candidate to the Corporate Governance and Nominating Committee at the Company’s executive offices at 10000 Wehrle Drive, Clarence, New York 14031. The information should include, at a minimum, the candidate’s name, biographical information, qualifications and availability for service. The Corporate Governance and Nominating Committee had five meetings in 2008.

Technology Innovation Committee - The Technology Innovation Committee, formerly known as the Science and Technology Development Committee, consists of Dr. Miller (Chair), Messrs. Hook, Melia and Wareham and Dr. Wisniewski. The Technology Innovation Committee periodically examines and provides oversight to management’s direction and investment in the Company’s research and development, as well as in its technology and commercialization initiatives and advises the Board on scientific matters that include major internal projects, interaction with academic and other outside research organizations and the acquisition of technologies and products. The Technology Innovation Committee had three meetings in 2008.

Executive Sessions of the Board

The independent non-management directors, consisting of all current directors except for Mr. Hook, meet without management at regularly scheduled executive sessions at the conclusion of each regular quarterly Board meeting and at such other times as they deem appropriate. Mr. Sanford, Board Chairman, serves as the “lead outside director” of the Company and has been designated as the presiding director of the non-management directors when they meet in executive sessions without management.

Communications with the Board

Any stockholder or interested party who wishes to communicate with the Board may do so electronically by sending an e-mail to Messrs. Sanford or Melia via the Whistleblower Information page of the Investor Relations section of the Company’s website (www.greatbatch.com) under “Governance”, by leaving a confidential voicemail message for either Mr. Sanford (716-759-5501) or Mr. Melia (716-759-5508), or by writing to the following address: Board of Directors, Greatbatch, Inc., 10000 Wehrle Drive, Clarence, NY 14031.

Compensation Committee Interlocks and Insider Participation

In fiscal year 2008, Ms. Bailey and Messrs. Dinkins, Soderberg and Summers served on the Compensation and Organization Committee. No person who served as a member of the Compensation and Organization Committee during fiscal year 2008 was (i) an officer or employee of the Company or any of its subsidiaries during such fiscal year (ii) formerly an officer of the Company or any of its subsidiaries or (iii) had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K under the Securities Act of 1933.

2008 Director Compensation

The Company uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. For 2008, each non-employee director was paid a retainer of $150,000 ($210,000 for the Chairman) in a combination of cash and equity awards. In setting director compensation, the Company considers the significant amount of time that directors expend in fulfilling their duties to the Company as well as the skill-level required for members of the Board. Directors who are also employees of the Company receive no additional remuneration for services as a director. All awards and changes to director’s compensation are approved by the Board.

Cash Compensation - For 2008, the cash portion of each non-employee director’s annual retainer was $30,000. With respect to Dr. Wisniewski and Mr. Dinkins, that amount was pro rated to reflect their partial year of service. Directors also received additional cash payments as follows:

Chairman of the Board	$	40,000
Audit Committee Chair	$	20,000
Compensation and Organization Committee Chair	$	15,000
Corporate Governance and Nominating Committee Chair	$	10,000
Technology Innovation Committee Chair	$	10,000
Committee Meeting Fees	$ 1,000 per meeting attended
Board Meeting Fees for each Meeting Attended in Excess of Five	$ 1,000 per meeting attended

Equity Compensation – For 2008, the equity-based portion of each non-employee director’s annual retainer was equal in value to $120,000 ($180,000 for the Chairman). With respect to Dr. Wisniewski and Mr. Dinkins, that amount was pro rated to reflect their partial year of service. The equity compensation is based upon the guidelines of the LTIP Program and was comprised of ½ non-qualified stock options and ½ restricted stock. The amount of stock options awarded is calculated using the Black-Scholes value of our stock on the date of grant. The amount of restricted shares granted is calculated using the closing price of the Company’s Common Stock on the date of grant. All equity-based awards are granted on the first business day of the fiscal year and vest on the last day of the fiscal year in which they were granted. For 2007, the equity award was granted and vested on the first business day of 2008. Thus, during 2008 directors were granted their equity awards for fiscal years 2007 and 2008.

Retirement – Upon Board approved retirement, each retiring director receives; 1) immediate vesting of any unvested equity-based awards; and 2) the right to exercise all outstanding stock options for a period of 3 years.

On the date a non-employee first becomes a member of the Board, such non-employee Director is granted a stock option award for Common Stock equal in value to $100,000. The shares granted under such stock option have an exercise price equal to the closing price of the Common Stock as of the close of business on the grant date. Each such stock option is exercisable in three equal annual installments beginning on the first occurrence of December 31st which is at least six months after the date of grant.

The following table contains information concerning the total compensation earned by each individual who served as a director of Greatbatch during 2008, other than directors who are also Named Executive Officers:

Name	Fees Earned or Paid in Cash(1)		Stock Awards(2)		Option Awards(2)		Non- Equity Incentive Plan Comp.		Change in Pension Value and Non- Qualified Deferred Comp. Earnings		All Other Comp.		Total

Pamela G. Bailey	$	51,000	$	89,986	$	89,994	$	-	$	-	$	-	$	230,980
Michael Dinkins(3)		7,000		9,978		15,257		-		-		-		32,235
Kevin C. Melia		52,667		72,489		85,552		-		-		-		210,708
Dr. Joseph A. Miller, Jr.		48,000		89,986		89,994		-		-		-		227,980
Bill R. Sanford		76,000		132,467		132,490		-		-		-		340,957
Peter H. Soderberg		41,000		89,986		89,994		-		-		-		220,980
Thomas S. Summer(4)		27,833		29,989		29,996		-		-		-		87,818
William B. Summers, Jr.		60,000		89,986		89,994		-		-		-		239,980
John P. Wareham		41,000		89,986		89,994		-		-		-		220,980
Dr. Helena S. Wisniewski(5)		33,000		49,987		83,324		-		-		-		166,311

(1)	The amounts indicated represent the amount earned for retainers and Board or committee meeting fees.

(2)

The amounts indicated represent the aggregate dollar amount of compensation expense related to restricted stock and stock option awards granted that was recognized in our financial statements during 2008 and includes amounts from awards granted prior to 2008. The determination of this expense is based on the methodology set forth in notes 1 and 10 to our financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on March 3, 2009. No director stock or option awards were repriced or modified during 2008. Due to a change in director compensation policy in 2008, equity grants were made at the beginning of the year with a 1 year vest versus the end of the year with immediate vesting. Thus, during 2008 directors were awarded both their 2007 and 2008 equity retainers.

(3)	Mr. Dinkins was appointed to the Board in November 2008 and was granted a stock option award for Common Stock equal in value to $100,000 on the date he became a director and received a pro-rata portion of his cash and equity compensation for 2008.

(4)	Effective May 20, 2008, Mr. Summer’s term as a member of the Board expired. He did not stand for reelection at the 2008 Annual Meeting of Stockholders.

(5)	Dr. Wisniewski was appointed to the Board in March 2008 and was granted a stock option award for Common Stock equal in value to $100,000 on the date she became a director and received a pro-rata portion of her cash and equity compensation for 2008.

The following table contains information concerning the equity -based compensation for each individual who served as a director of Greatbatch during 2008, other than directors who are also Named Executive Officers:

	Aggregate Grant Date Fair Value Received in 2008				Aggregate
Name	Stock Awards(1)		Option Awards(1)		Number of Stock Options held at January 2, 2009
						(#)
Pamela G. Bailey	$	89,986	$	89,994		32,416
Michael Dinkins(2)		9,978		109,986		10,334
Kevin C. Melia		72,489		72,498		16,275
Dr. Joseph A. Miller, Jr.		89,986		89,994		27,166
Bill R. Sanford		132,467		132,490		39,025
Peter H. Soderberg		89,986		89,994		32,416
Thomas S. Summer(3)		29,989		29,996		N/A
William B. Summers, Jr.		89,986		89,994		32,416
John P. Wareham		89,986		89,994		26,916
Dr. Helena S. Wisniewski(4)		49,987		149,986		17,304

(1)	Due to a change in director compensation policy in 2008, equity grants were made at the beginning of the year with a 1 year vest versus the end of the year with immediate vesting. Thus, during 2008 directors were awarded both their 2007 and 2008 equity retainers.

(2)	Mr. Dinkins was appointed to the Board in November 2008 and was granted a stock option award for Common Stock equal in value to $100,000 on the date he became a director and received a pro-rata portion of his cash and equity compensation for 2008.

(3)	Effective May 20, 2008, Mr. Summer’s term as a member of the Board expired. He did not stand for reelection at the 2008 Annual Meeting of Stockholders.

(4)	Dr. Wisniewski was appointed to the Board in March 2008 and was granted a stock option award for Common Stock equal in value to $100,000 on the date she became a director and received a pro-rata portion of her cash and equity compensation for 2008.

Related Person Transactions

The Board has adopted a written policy setting forth procedures for the review, approval and monitoring of transactions involving the Company and related persons (directors and executive officers or their immediate family members). A copy of the Company’s policy on related person transactions is available in the Investor Relations section of the Company’s website at www.greatbatch.com under “Governance.” Under this policy, every proposed transaction between the Company and a director, executive officer, a nominee director, stockholder owning in excess of 5% of the Company or any immediate family member or entity of the foregoing persons involving an amount in excess of $100,000 and in which the related person will have a direct or indirect material interest, must be approved or ratified by the Audit Committee. If the transaction involves a related person who is a director or an immediate family member of a director, such director may not participate in the deliberations or vote regarding such approval. In the event management determines it is impractical or undesirable to wait until an Audit Committee meeting to consummate a related person transaction, the Chairperson of the Audit Committee may review and approve the related person transaction. The Chairperson of the Audit Committee will report any such approval to the Audit Committee at the next regularly scheduled meeting. All related person transactions are reported by the Audit Committee to the Board. In the event the Company becomes aware of a related person transaction that has not been approved, the matter shall be reviewed by the Audit Committee who shall evaluate all options available to the Company, including ratification, revision or termination of such transaction. The Audit Committee will also examine the facts and circumstances pertaining to the failure of such transaction to have been presented to the Audit Committee and shall take any such action as deemed appropriate under the circumstances. The Board has determined that there were no related person transactions as defined above that occurred in 2008.

Audit Committee Report

The Audit Committee currently consists of Messrs. Dinkins, Melia (Chair), Soderberg, Summers and Wareham, each of whom the Board has determined is “independent” in accordance with applicable laws and the listing standards of the New York Stock Exchange and qualifies as an “audit committee financial expert” under applicable rules of the Securities and Exchange Commission. The Audit Committee functions pursuant to a written charter, a copy of which is posted in the Investor Relations section of the Company’s website at www.greatbatch.com under “Governance” and “Committee Composition and Charters.”

The Audit Committee reviewed and discussed the information contained in the 2008 first, second, third and fourth quarter earnings announcements with management of the Company and independent registered public accounting firm prior to public release. They also reviewed and discussed the information contained in the 2008 first, second and third quarters’ Forms 10-Q and full year Form 10-K with management of the Company and independent registered public accounting firm prior to filing with the Securities and Exchange Commission. In addition, the Audit Committee met regularly with management, internal auditors and independent registered public accounting firm on various financial and operational matters, including to review plans and scope of audits and audit reports and to discuss necessary action.

In connection with the Company’s fiscal 2008 consolidated financial statements, the Audit Committee has:

	•	reviewed and discussed with management the Company’s audited consolidated financial statements as of and for fiscal year 2008;

	•	discussed with the Company’s independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 114, The Auditor’s Communication with those Charged with Governance, and SEC rule 2-07; and

	•	received and reviewed the written disclosures and the letter from the Company’s independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the Company’s independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that the audited consolidated financial statements referred to above be included in the Company’s Annual Report on Form 10-K for fiscal year 2008.

Respectfully submitted,

Michael Dinkins

Kevin C. Melia (Chair)

Peter H. Soderberg

William B. Summers, Jr.

John P. Wareham

Members of the Audit Committee

STOCKHOLDER PROPOSALS

Any stockholder who intends to present a proposal intended to be considered for inclusion in the proxy statement for presentation at the Company’s 2010 Annual Meeting of Stockholders must submit such proposal so that the Company receives it by January 15, 2010. The proposal should be submitted to the Company’s offices in Clarence, New York by certified mail, return receipt requested, and should be directed to the Vice President, General Counsel & Secretary of the Company. In addition, the Company’s by-laws require that notice of any business proposed by a stockholder to be brought before an annual meeting, whether or not proposed for inclusion in the Company’s proxy statement, must be received by the Secretary of the Company not later than 90 days nor more than 120 days in advance of the anniversary date of the prior year’s annual meeting, which for business proposed for the 2010 Annual Meeting is between January 15, 2010 and February 14, 2010.

OTHER MATTERS

Management does not know of any matters to be presented at this Annual Meeting other than those set forth in this proxy statement and in the notice accompanying this proxy statement. If other matters should properly come before the Annual Meeting, it is intended that the proxy holders will vote on such matters in accordance with their best judgment.

A copy of the Company’s Annual Report on Form 10-K for fiscal year 2008 may be obtained without charge by any stockholder of record by written request made to Christopher J. Thome, Manager of External Reporting and Investor Relations, Greatbatch, Inc., 10000 Wehrle Drive, Clarence, New York 14031. Additionally, the Company’s Annual Report on Form 10-K for fiscal year 2008 may be obtained through the Financial Information link of the Investor Relations section of the Company’s website under “SEC Filings.”

By Order of the Board of Directors,

/s/ Timothy G. McEvoy

Timothy G. McEvoy

Vice President, General Counsel & Secretary

Clarence, New York

April 13, 2009

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned		Percent of Class

FMR LLC, Fidelity Management & Research Company, Edward C. Johnson 3d and Magellan Fund (1) 82 Devonshire Street Boston, MA 02109		2,181,700		9.4	%

Barclays Global Investors, NA(2) 400 Howard Street San Francisco, CA 94105		1,623,494		7.0	%

Wells Fargo & Company (3) 420 Montgomery Street San Francisco, CA 94163		1,532,818		6.6	%

Capital Research Global Investors(4) 333 South Hope Street Los Angeles, CA 90071		1,395,600		6.0	%

Plan Term:	March 2, 2009 to March 1, 2019.

Eligible Participants:	Employees of the Company (including employees who are also directors and prospective employees conditioned on their becoming employees), non-employee consultants or service providers and non-employee directors of the Company as the Compensation Committee designates from time to time. The Company has approximately 3,300 employees and 9 non-employee directors who would be eligible to participate in the 2009 Plan.

Shares Authorized:	1,350,000, subject to adjustment only to reflect stock splits and similar events. Awards that are forfeited, expire, cancelled or lapse become available for future grants. Shares used to pay the exercise price of a stock option and shares withheld to satisfy tax withholding obligations will not be available for future grants. When a stock settled stock appreciation right is exercised, the shares subject to a stock appreciation right grant agreement will be counted against the shares available for award as one share for every share subject thereto, regardless of the number of shares used to settle the stock appreciation right upon exercise.
Shares Authorized as a Percent of Outstanding Common Stock:	5.8%

Award Types:	(1)	Non-qualified and incentive stock option - the right to purchase a certain number of shares of stock, at a certain exercise price, in the future.
	(2)	Restricted stock - share award conditioned upon continued employment, the passage of time or the achievement of performance objectives.
	(3)	Restricted stock unit - the right to receive the market price of a share of stock, in stock or cash, in the future.

Award Terms:	Stock options and stock appreciation rights will have a term no longer than ten years. All awards made under the 2009 Plan may be subject to vesting and other contingencies as determined by the Compensation Committee and will be evidenced by agreements which set forth the terms and conditions of each award. The Compensation Committee, in its discretion, may accelerate or extend the period for the exercise or vesting of any awards.

Shares Authorized for Stock Options or Stock Appreciation Rights:	Maximum of 1,350,000 shares issued as either non-qualified or incentive stock options, or stock appreciation rights.

Shares Authorized for Restricted Stock, Restricted Stock Units or Stock Bonuses:	Maximum of 200,000 shares issued as either restricted stock, restricted stock units or stock bonuses.

Vesting:	Determined by the Compensation Committee, subject to exceptions in the event of a change of control. Upon the consummation of an event constituting a change in control of the Company as defined in the 2009 Plan, all awards outstanding will become immediately vested.

Not Permitted:	(1)	Granting stock options or stock appreciation rights at a price below market price on the date of grant. As of April 2, 2009, the closing price per share of the Company's Common Stock was $19.84 per share.
	(2)	Repricing of a stock option or stock appreciation right without stockholder approval.
	(3)	Granting more than 150,000 shares of restricted stock or restricted stock units in any fiscal year.
	(4)	Granting time-based stock options or stock appreciation rights to any one employee during any fiscal year in excess of 100,000 shares.

	Stock Option Grants
Name	Number of Shares (#)		Grant Date Value ($)
Thomas J. Hook		76,297		830,874
Thomas J. Mazza		20,456		222,766
Mauricio Arellano		15,985		174,077
Susan M. Bratton		15,529		169,111
Susan H. Campbell		15,985		174,077
Other Senior Managers		175,599		1,912,273

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights or upon vesting of shares granted under restricted stock plan		Weighted-average exercise price of outstanding options, warrants and rights; Weighted-average share price of restricted stock shares granted		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	( a )		( b )		( c )
Equity compensation plans approved by security holders (1)		2,296,858	$	24.05		436,050

Equity compensation plan approved by security holders (2)		207,765	$	22.86		436,050
Total		2,504,623	$	25.03		436,050

Contents		Page

Introduction		2

Voting Rights		2

Principal Beneficial Owners of Shares		3

Company Proposals		3
Proposal 1 – Election of Directors		3
Proposal 2 – Approval of the adoption of the Greatbatch, Inc. 2009 Stock Incentive Plan		6
Proposal 3 – Ratification of the Appointment of Independent Registered Public Accounting Firm		9

Stock Ownership by Directors and Executive Officers		10
Section 16(a) Beneficial Ownership Reporting Compliance		11

Executive Compensation - Compensation Discussion and Analysis		11
Overview		11
Compensation Committee Practices and Procedures		12
Competitive Market Review		13
Base Salary		14
Annual Cash Incentives		14
Long-Term Equity Awards		16
Retirement and Change in Control Agreements		20
Other Personal Benefits		22
Employment Agreements		23
Compensation and Organization Committee Report		23

Compensation Tables		24
Summary Compensation Table		24
2008 Grants of Plan-Based Awards		26
Outstanding Equity Awards at 2008 Fiscal Year-End		27
2008 Option Exercises and Stock Vested		30
Pension Benefits and Nonqualified Deferred Compensation Tables		30

Corporate Governance and Board Matters		30
Board Independence		30
Meetings and Committees of the Board		31
Executive Sessions of the Board		32
Communications with the Board		32
Compensation and Organization Committee Interlocks and Insider Participation		32
2008 Director Compensation		32
Related Person Transactions		34
Audit Committee Report		35

Stockholder Proposals		35

Other Matters		36

	(4)	Stock appreciation right - the right to receive the net of the market price of a share of stock and the exercise price of the right, in stock, in the future.
	(5)	Stock bonus - a bonus payable in shares of stock.

	2008		2007

Audit Fees(1)	$	1,341,200	$	1,035,700
Audit-Related Fees(2)		-		18,900

Total Audit and Audit-Related Fees		1,341,200		1,054,600
Tax Fees(3)		24,300		24,800
All Other Fees(4)		-		2,100

Total Fees	$	1,365,500	$	1,081,500

(1)	The amounts indicated represent fees billed by Deloitte & Touche for services rendered for the audit of the Company’s annual consolidated financial statements and for its review of the Company’s quarterly condensed consolidated financial statements.
(2)	The amounts indicated represent fees billed by Deloitte & Touche for audit-related services, including services related to the review of registration statements.
(3)	The amounts indicated represent fees billed by Deloitte & Touche for tax compliance, planning and consulting.
(4)	The amounts indicated represent fees billed by Deloitte & Touche for due diligence services.

Name of Beneficial Owner	Number of Shares		Percent of Class
Pamela G. Bailey(1)		44,216		*
Michael Dinkins(2)		3,700		*
Thomas J. Hook(3)		243,458		1.0	%
Kevin C. Melia(4)		21,352		*
Dr. Joseph A. Miller, Jr.(5).		37,100		*
Bill R. Sanford(6)		81,115		*
Peter H. Soderberg(7)		43,180		*
William B. Summers, Jr.(8)		53,758		*
John P. Wareham(9)		36,337		*
Dr. Helena S. Wisniewski(10)		14,590		*
Thomas J. Mazza(11)		60,488		*
Mauricio Arellano(12)		54,555		*
Susan M. Bratton(13)		123,962		*
Susan H. Campbell(14)		59,378		*
All Directors and Executive Officers as a group (17 persons)		962,484		4.1	%

CONMED Corporation		ResMed Inc.
CTS Corporation		SonoSite, Inc.
Datascope Corporation		Symmetry Medical, Inc.
DJO, Inc.		Thoratec Corporation
Edwards Lifesciences Corp.		Vital Signs, Inc.
Ev3, Inc.		Wright Medical Group, Inc.
Integra LifeSciences Holdings Corp.		ZOLL Medical Corporation
Merit Medical Systems, Inc.

Title	Publisher	Year
Executive Compensation Assessor	ERI	2008
U.S. Executive Survey Report	Mercer HR Consulting	2007
Top Management Compensation Calculator	Watson Wyatt Data Services	2007/2008

	2008 Base Salary		% of Competitive Market Median

Thomas J. Hook	$	475,000		104	%
Thomas J. Mazza		262,200		106	%
Mauricio Arellano		248,800		87	%
Susan M. Bratton		241,700		84	%
Susan H. Campbell		248,800		87	%

	2009 Base Salary

Thomas J. Hook	$	491,600
Thomas J. Mazza		271,500
Mauricio Arellano		267,500
Susan M. Bratton		250,200
Susan H. Campbell		267,500

Achievement of Performance Measure		Funding %

0% - 74.9%		0%
75% - 99.9%		50% - 100%
100% - 133%		100% - 200%