☐ |
Preliminary Proxy Statement
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☐ |
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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☒ |
Definitive Proxy Statement
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☐ |
Definitive Additional Materials
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☐ |
Soliciting Material under §240.14a-12
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No fee required.
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☐ |
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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☐ |
Fee paid previously with preliminary materials.
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☐ |
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Date and Time:
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Place*:
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June 17, 2020
8:00 a.m.
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Virtual Meeting Site:
www.viewproxy.com/natus/2020/vm
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Proposal 1.
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Election of five director nominees named in the attached Proxy Statement to serve until either the 2021 annual meeting or until their respective
successors are duly elected and qualified.
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Proposal 2.
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Approval, on an advisory basis, of the named executive officer compensation disclosed in the attached Proxy Statement.
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Proposal 3.
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Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020.
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REVIEW THE PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:
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VIA THE INTERNET
Visit the website listed on your proxy
card or voting instruction form.
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BY MAIL
Sign, date, and return the enclosed proxy card or voting instruction form.
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BY TELEPHONE
Call the telephone number on your proxy card or voting instruction form.
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IN PERSON
Attend the annual meeting by live webcast and vote by ballot.
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Important notice regarding the availability of proxy materials for the
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2020 Annual Meeting of Shareholders to be held on June 17, 2020:
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Our Proxy Statement and 2019 Annual Report to shareholders are available on the Internet at www.proxyvote.com
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1
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5
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9
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12
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20
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Note Regarding Forward-Looking Statements:
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Proposal
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Board’s Voting
Recommendation
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Annual Meeting of
Shareholders
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Proposal 1:
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Election of Directors
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✓
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FOR
each nominee
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Date and Time:
June 17, 2020
8 a.m. PT
Place*:
Virtual Meeting Site:
www.viewproxy.com/natus/2020/vm
Record Date:
April 24, 2020
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Proposal 2:
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Advisory Vote to Approve Named Executive Officer Compensation
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✓
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FOR
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Proposal 3:
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Ratification of Appointment of Independent Registered Public Accounting Firm
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✓
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FOR
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Committee Membership
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||||||||
Directors(1)
|
Year Appointed or Elected
|
Independent
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Age
|
Audit Committee
|
Nominating & Governance Committee
|
Compensation Committee
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Compliance
& Quality
Committee
|
Other Public Company Boards
|
Jonathan A. Kennedy
President & Chief Executive Officer, Natus Medical Incorporated
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2018
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No
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49
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0
|
||||
Alice D. Schroeder*
Former Chair & Chief Executive Officer, WebTuner
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2019
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Yes
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63
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✓
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✓C
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✓
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2
|
|
Thomas J. Sullivan*
President & Chief Executive Officer, A&E Medical Corporation
|
2019
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Yes
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56
|
✓
|
✓C
|
0
|
||
Barbara R. Paul, M.D.
Former Chief Medical
Officer, Community
Health Systems, Inc.
|
2016
|
Yes
|
66
|
✓
|
1
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Natus Medical Incorporated | 2020
Proxy Statement
|
1 |
Committee Membership
|
||||||||
Directors(1)
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Year Appointed or Elected
|
Independent
|
Age
|
Audit Committee
|
Nominating & Governance Committee
|
Compensation Committee
|
Compliance
& Quality
Committee
|
Other Public Company Boards
|
Lisa W. Heine
President & Chief Executive Officer, Precardia, Inc.
|
2018
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Yes
|
56
|
✓
|
✓C
|
1
|
||
Joshua H. Levine
President & Chief Executive Officer, Accuray Inc.
|
2018
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Yes
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61
|
✓
|
✓ |
1
|
||
Ilan Daskal
Executive Vice President & Chief Financial Officer, Bio-Rad Laboratories, Inc.
|
2020
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Yes
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54
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✓C
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0
|
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*
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Denotes an audit committee financial expert.
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C
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Indicates a Chairperson role on the committee.
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(1) |
Mr. Kenneth E. Ludlum will not be standing for reelection at our Annual Meeting and is retiring from our Board. He will no longer serve on our Board following the Annual Meeting
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WHAT WE DO
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✓
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Proxy access rights permit a Natus shareholder (or a group of up to 20 of our
shareholders), owning at least 3% of our outstanding shares of common stock continuously for at least three years, to nominate up to the greater of two directors or 20% of the members of our Board for inclusion in our proxy statement.
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✓
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Special shareholders meetings can be called by shareholders owning at least 25%
(recently decreased from 30% by an amendment to the Natus Bylaws in April 2019) of our outstanding voting shares.
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✓
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Independent Board with seven of our eight current and nominated directors meeting
independence requirements (all but our Chief Executive Officer).
|
2
|
Natus Medical Incorporated | 2020 Proxy
Statement
|
✓
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Regular executive sessions of independent directors.
|
✓
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Senior management succession planning considered annually or as requested by the
Board.
|
✓
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Active shareholder engagement We regularly meet with shareholders throughout the
year and we annually invite major shareholders to meet independently with our Board Chair.
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✓
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Regular board refreshment with five of six of our current independent directors
joining the Board in the past three years.
|
✓
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Annual Board and committee self-assessments.
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✓
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“Clawback” policy for performance-based compensation.
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✓
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Achieved gender equality on our Board. An equal mix of men and women serve as
independent directors on the Board.
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✓
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Established Stock Ownership Guidelines for Directors and Executives.
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✓
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Independent Board Chair. Dr. Barbara Paul has served as Board Chair since June
2018 and has been heavily involved in the Company’s shareholder engagement process.
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✓
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No overboarding. Each of our independent directors serves on no more than two
other public company boards and our CEO may serve on only one outside public company Board.
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WHAT WE DON’T DO
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|
✗
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No shareholder rights plan (“poison pill”).
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✗
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No supermajority voting provisions in the Company’s organizational documents.
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✗
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Declassified board. We amended our Certificate of Incorporation in June 2019 to
phase out the classified Board, and the Board will be fully declassified in 2021.
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✗
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No Cumulative voting. We eliminated the ability of shareholders to exercise
cumulative voting in 2019.
|
• |
attract and retain individuals with the skills and performance needed to achieve our business objectives;
|
• |
competitively reward and incentivize individuals over time; and
|
• |
align the short and long-term compensation of those individuals with the Company’s performance.
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Natus Medical Incorporated | 2020
Proxy Statement
|
3 |
WHAT WE DO
|
||
✓
|
Link Pay to Performance. Annual cash bonus payouts are based on the achievement of challenging operating and financial performance goals and
Performance Stock Units (PSUs) granted to our CEO and CFO are eligible to be earned and vest based on metrics set by the Board of Directors. To further link executive compensation paid to performance attained, we include Market
Stock Units (MSUs) and PSUs as part of our compensation program for annual equity awards made to all executive officers in 2019 and 2020, as described in further detail on page 36.
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✓
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Maintain Executive Stock Ownership Guidelines. Our named executive officers are subject to stock ownership guidelines that, following
completion of a five-year phase-in period, will require them to hold shares of our common stock having a value ranging from 1.0x to 5.0x their annual base salary.
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✓
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Subject Incentive Compensation to our Clawback Policy. In 2019 we adopted a claw-back policy covering annual and long-term incentive
compensation paid to our executive officers.
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✓
|
Engage an Independent Compensation Consultant. Our Compensation Committee engages an independent compensation consultant to provide peer
group analysis and market data.
|
|
WHAT WE DON’T DO
|
||
✗
|
Provide Excise Tax Gross-Ups. None of our named executive officers or other employees is entitled to a gross-up for any excise taxes on
change in control-related compensation.
|
|
✗
|
Reprice Stock Options without Shareholder Consent. We are not permitted to reprice stock options without shareholder consent under our 2011
Stock Awards Plan.
|
|
✗
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Provide Pension Benefits. We do not maintain any defined benefit pension plans.
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✗
|
Pay Excessive Compensation. Beginning in 2019 and continuing into 2020, we have targeted the total direct compensation (base salary, target
annual bonus and target long-term equity awards) for our NEOs at the 50th percentile of the peer group market data.
|
|
✗
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Provide Excessive Perquisites or Personal Benefits. We generally do not provide perquisites or personal benefits to our named executive
officers.
|
4
|
Natus Medical Incorporated | 2020
Proxy Statement
|
|
Proposal
|
Our Board’s
Recommendation
|
||
Proposal 1.
|
Election of Directors
|
✔ FOR each nominee
|
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Proposal 2.
|
Advisory Vote to Approve Named Executive Officer Compensation
|
✔ FOR
|
|
Proposal 3.
|
Ratification of Appointment of Independent Registered Public Accounting Firm
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✔ FOR
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Natus Medical Incorporated | 2020
Proxy Statement
|
5 |
By Internet
|
• |
If you received a Notice or a printed copy of the Proxy Materials, follow the instructions in the Notice or on the proxy card.
|
By Telephone
|
• |
If you received a printed copy of the Proxy Materials, follow the instructions on the proxy card.
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By Mail
|
• |
If you received a printed copy of the Proxy Materials, complete, sign, date, and mail your proxy card in the enclosed, postage-prepaid envelope.
|
In Person
|
• |
You may also vote in person if you attend the Annual Meeting.
|
6
|
Natus Medical Incorporated | 2020
Proxy Statement
|
Natus Medical Incorporated |
2020 Proxy Statement
|
7 |
Voting Item
|
Vote Standard
|
Treatment of Abstentions
and Broker Non-Votes
|
||
Proposal 1.
|
Election of Directors
|
Majority of votes cast (“for” votes must exceed the number of “against” votes in an uncontested director election)
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Abstentions and broker non-votes not counted as votes cast (only “for” and “against” votes are counted)
|
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Proposal 2.
|
Executive Compensation (Advisory)
|
Majority of shares represented at the Annual Meeting and entitled to vote thereat
|
Abstentions and broker non-votes will have the effect of votes “against”
|
|
Proposal 3.
|
Ratification of Independent Registered Public Accounting Firm
|
Majority of shares represented at the Annual Meeting and entitled to vote thereat
|
Abstentions will have the effect of votes “against”; broker non-votes will have no effect
|
8
|
Natus Medical Incorporated | 2020
Proxy Statement
|
PROPOSAL 1 - ELECTION OF DIRECTORS
|
THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR
|
• |
Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the shareholders. They must also have an
inquisitive and objective perspective, practical wisdom, and mature judgment. We endeavor to have a Board representing diverse experience at policy-making levels in business, health care, and technology, and in areas that are
relevant to our global activities;
|
• |
Directors must be willing and able to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serve on the Board for an extended period of time.
Directors should not serve on more than four other boards of public companies in addition to the Natus Board; and
|
• |
Director nominees must have demonstrated a history of good business judgment and possess financial and governance literacy. They must have the experience and the value-adding temperament to be good
independent directors of a public company.
|
• |
Experience as an independent director of a publicly-traded company;
|
• |
Proven ability to understand the dynamic between management and Board members, and to effectively manage that dynamic for the benefit of the Company;
|
• |
Experience with Wall Street, transactions, and managing operations; and
|
• |
Some understanding of the medical device market.
|
Natus Medical Incorporated | 2020
Proxy Statement
|
9 |
Skills and Qualifications of Our Directors
|
||
Medical Technology
Industry Experience
|
Strategic Business Development
|
Corporate Governance
|
Regulatory and Compliance
|
Senior Leadership
|
Operations Management
|
Innovation/Technology
|
Finance and Financial
Industry
|
Financial Reporting
|
Mergers and Acquisitions
|
Risk Management
|
Research and Development
|
10
|
Natus Medical Incorporated | 2020
Proxy Statement
|
Board Members
|
Barbara R.
Paul, M.D.
Chair of
the Board
Former
Chief
Medical
Officer,
Community
Health
Systems,
Inc.
|
Jonathan
A.
Kennedy
President
& CEO
Natus
Medical
Inc.
|
Ilan Daskal
Executive
VP & CFO,
Bio-Rad
Laboratories,
Inc.
|
Lisa W.
Heine
President &
CEO
PreCardia
Inc.
|
Joshua H. Levine
President &
CEO,
Accuray,
Inc.
|
Alice D. Schroeder
Former
Chair &
CEO,
WebTuner
Corp
|
Thomas J.
Sullivan
President &
CEO, A&E
Medical
Corporation
|
|
DEMOGRAPHICS
|
Start Date
|
2016
|
2018
|
2020
|
2018
|
2018
|
2019
|
2019
|
Age
|
66
|
49
|
55
|
56
|
61
|
63
|
56
|
|
Gender
|
F
|
M
|
M
|
F
|
M
|
F
|
M
|
|
GENERAL
|
Concurrent fulltime position
|
✔
|
✔
|
✔
|
✔
|
✔
|
||
Other Public Co. Board Exp.
|
✔
|
✔
|
✔
|
✔
|
✔
|
✔
|
✔
|
|
BUSINESS
|
Public Co. CEO
|
✔
|
✔
|
✔
|
||||
Global
|
✔
|
✔
|
✔
|
✔
|
✔
|
✔
|
||
Commercial Operations
|
✔
|
✔
|
✔
|
✔
|
✔
|
|||
Regulatory / Govt. Affairs
|
✔
|
✔
|
✔
|
|||||
FINANCE
|
Finance / Accounting
|
✔
|
✔
|
✔
|
||||
Public Co. CFO
|
✔
|
✔
|
||||||
M&A
|
✔
|
✔
|
✔
|
✔
|
||||
Risk
|
✔
|
✔
|
✔
|
|||||
R&D
|
✔
|
✔
|
||||||
HEATHCARE
|
Physician
|
✔
|
||||||
Payor
|
✔
|
|||||||
Compliance
|
✔
|
✔
|
✔
|
✔
|
||||
Providers
|
✔
|
✔
|
✔
|
✔
|
✔
|
✔
|
||
TECHNOLOGY
|
High Tech
|
✔
|
✔
|
✔
|
||||
Medtech
|
✔
|
✔
|
✔
|
✔
|
✔
|
|||
Biotech
|
✔
|
*
|
This matrix does not include Kenneth E. Ludlum as Mr. Ludlum will not be standing for reelection at our Annual Meeting and is retiring from
our board. He will no longer serve on our Board following the Annual Meeting.
|
Natus Medical Incorporated |
2020 Proxy Statement
|
11 |
Jonathan A. Kennedy
Age: 49
Director Since: 2018
|
Select Professional Experience and Highlights
• Natus
Medical Incorporated
– President & Chief Executive Officer since 2018
– Member of the Board since 2018
– Executive Vice President & Chief Financial Officer from 2016 to 2018
– Senior Vice President & Chief Financial Officer from 2013 to 2016
• Intersil Corporation
– Senior Vice President & Chief Financial Officer from 2009 to 2013
– Corporate Controller from 2005 to 2009
– Director of Finance from 2004 to 2005
|
Education and Other Certifications
• M.S. Accounting, University of Central Florida
• B.S.B.A. Accounting, University of Central Florida
Select Qualifications and Skills
Mr. Kennedy has a deep understanding of Natus’ business operations, which he’s developed through his role as our Chief Executive Officer and, previously, as our Chief Financial
Officer. He has diverse experience leading both technology and medical device companies, spearing heading acquisition integration efforts and developing and implementing cost reduction initiatives on an international scale.
|
12
|
Natus Medical Incorporated | 2020
Proxy Statement
|
Barbara R. Paul, M.D.
Age: 66
Director Since: 2016
Natus Board Roles
• Chairperson
of the Board
• Compliance & Quality Committee Member
|
Select Professional Experience and Highlights
• Natus
Medical Incorporated
– Chairperson of the Board since 2018
• Community Health Systems (CHS)
– Senior Vice President & Chief Medical Officer from July 2007 to January 2015
• Beverly
Enterprises, Inc. (now Golden Living, Inc.)
– Senior Vice President & Chief Medical Officer from 2004 to 2006
• Centers
for Medicare & Medicaid Services, CMS
– Director of the Department of Quality Measurement & Health Assessment from February 1999 to February 2004
Other Current Public Company Directorships
• Quorum Health Corporation
– Member of
the Board of Directors since 2016
– Chair of
the Governance and Nominating Committee
– Member of
Patient Safety and Quality of Care Committee
|
Education
• M.D. Stanford University School of Medicine
• B.S. University of Wisconsin – Madison
Select Qualifications and Skills
Dr. Paul brings the perspective of a physician, insight into quality measurement and improvement, knowledge of federal and state healthcare regulation and policy,
and experience with Compliance programs to the Board. Dr. Paul serves as an advisor and board member to healthcare companies. She is a board-certified internist, and her career is grounded by twelve years as a full-time primary
care physician.
|
Natus Medical Incorporated | 2020
Proxy Statement
|
13 |
Alice D. Schroeder
Age: 63
Director Since: 2019
Natus Board Roles:
• Chair of the Nominating & Governance Committee
• Audit Committee Member
• Compliance & Quality Committee Member
|
Select Professional Experience and Highlights
• Natus Medical Incorporated
– Member of the Board
since February 2019
• WebTuner Corp.
– Chief Executive Officer from
2014 to 2017
– Chair of the Board
of Directors from 2014 to 2017
• Bank of America Merrill Lynch International
– Member of the Board of Directors
from 2016 to 2018
– Chair of the Audit Committee
from 2016 to 2018
– Member of the
Nominating and Governance Committee from 2016 to 2018
• Cetera Financial Group
– Member of the Board of Directors
from 2012 to 2014
– Chair of the Audit
Committee from 2012 to 2014
• Morgan Stanley:
– Various including Managing Director from 2000 to 2009.
• CIBC Oppenheimer and PaineWebber
– Various including Managing Director from 1993 to 2000
• Financial Accounting Standards Board
– Project Manager
from 1991 to 1993
• Ernst & Young
– Various including Staff Accountant and
Auditing, Senior Manager from 1980 to 1991
Other Current Public Company Directorships
• Quorum Health Corporation
– Member of the Board of Directors
since 2017
– Chair of the Audit Committee
since 2017
– Member of the
Governance and Nominating Committee since 2017
• Prudential plc
– Member of the Board of Directors
since June 2013
– Member of the Audit Committee
since June 2013
– Member of the Risk
Committee since 2018
|
Education and Other Certifications
• M.B.A. Finance, University of Texas at Austin
• B.B.A. Finance, University of Texas at Austin
Select Qualifications and Skills
Ms. Schroeder joined the Natus Board with a wealth of experience as a former CEO and chair of several audit committees. She also spent nearly two decades on Wall Street. She began her
career as a Certified Public Accountant with Ernst & Young and spent two years as a project manager at the Financial Accounting Standards Board, overseeing the issuance of several key accounting standards for the insurance industry.
Ms. Schroeder is the author of the #1 New York Times and Wall Street Journal Bestseller The Snowball: Warren Buffett and the Business of Life.
|
14
|
Natus Medical Incorporated | 2020 Proxy
Statement
|
Thomas J. Sullivan
Age: 56
Director Since: 2019
Natus Board Roles:
• Chair
of the Compensation Committee
• Audit
Committee Member
|
Select Professional Experience and Highlights
• Natus
Medical Incorporated
– Member of the Board since February 2019
• A&E
Medical Corporation
– President & Chief Executive Officer since July 2018
– Member of the Board of Directors since July 2018
• Symmetry
Surgical, Inc.
– President & Chief Executive Officer from 2014 to 2018
– Member of the Board of Directors from 2014 to 2018
• Span-America
Medical Systems Inc.
– Member of the Board of Directors from 2015 to 2017
– Chair of the Governance Committee from 2016 to 2017
• Symmetry
Medical, Inc.
– President & Chief Executive Officer from 2011 to 2014
– Member of the Board of Directors from 2011 to 2014
|
Education and Other Certifications
• M.B.A. and Palmer Scholar, Strategic Management and
Management Information Systems, The Wharton School
• B.S. Computer Science and Applied Mathematics, University
of Pittsburgh
• Certified
Governance Fellow of the National Association of Corporate Directors
Select Qualifications and Skills
Mr. Sullivan brings the perspective of a current medical device CEO as well as that of a former CEO of two publicly traded companies and an independent director of a
third. Mr. Sullivan’s qualifications to serve on our Board include his broad healthcare experience, operational / manufacturing skills, strategic planning, and business execution. In addition, Mr. Sullivan brings global expertise in
the medical technology industry from years of experience as a global executive at Johnson & Johnson including several President roles at the Supply Chain & Business Process Division of J&J Health Care Systems Inc., DePuy
Orthopaedics, Inc. and J&J Medical Products Canada.
|
|
Natus Medical Incorporated | 2020
Proxy Statement
|
15 |
Ilan Daskal
Age: 54
Director Since: 2020
Natus Board Roles:
• Member of the
Audit Committee
|
Select Professional Experience and Highlights
• Natus Medical
Incorporated
– Member of the Board since March 2020
• Bio-Rad Laboratories,
Inc.
– Executive Vice President and
Chief Financial Officer since April 2019
• Lumileds
– Chief Financial Officer from 2017 to 2019
• Ixia,
Inc.
– Member of the Board of Directors from 2015 to
2017
– Chair of the Audit Committee from 2015 to 2017
• International
Rectifier Corporation
– Executive Vice President and
Chief Financial Officer from 2008 to 2015
|
Education and Other Certifications
• M.S. Finance, City University of New York
• B.B. Accounting, Tel-Aviv College of Business
Select Qualifications and Skills
Mr. Daskal brings over 25 years of experience in senior financial roles and has held several CFO positions at both public and private companies that include Bio-Rad
Laboratories, International Rectifier Corporation and Infineon. Mr. Daskal’s qualifications to serve on our Board include his breadth of experience in finance, operations, IT, as well as mergers and acquisitions, all in a global
setting.
|
16
|
Natus Medical Incorporated | 2020
Proxy Statement
|
BIOGRAPHIES OF OTHER CURRENT DIRECTORS
|
|
Lisa W. Heine
Age: 56
Director Since: 2018
Natus Board Roles
• Chair of the
Compliance & Quality Committee
• Nominating & Governance Committee Member
|
Select Professional Experience and Highlights
• Natus Medical
Incorporated
– Member
of the Board since 2018
• PreCardia,
Inc.
– President & Chief Executive Officer since 2019
• Miltralign,
Inc.
– Chief Operating Officer from 2015 to 2018
• deArca
Strategic Solutions, LLC
– Founder
and Principal from 2014 to 2015
Other Current Public Company Directorships
• Surmodics
Inc.
– Member of the Board of Directors
since 2017
– Member of the Organization and
Compensation Committee since 2017
– Member of the
Corporate Governance and Nominating Committee since 2017
|
Education
• M.S. University of
Manitoba
• B.A. St. Olaf
College
Select Qualifications and Skills
Ms. Heine has also served in multiple leadership roles at Covidien, Inc. (formerly ev3, Inc., now Medtronic), including Global Vice President of Medical Affairs for
Vascular Therapies. During her tenure at Covidien, she helped drive the strategy in support of a $1.7B business and was also responsible for leading the strategy and operations of Clinical Affairs, Healthcare Economics, Policy and
Reimbursement and Medical Education functions. Ms. Heine speaks frequently on healthcare matters and has published several articles in leading medical journals. In addition, she has served on various advisory boards, including the
American Heart Association Go Red for Women Executive Leadership Team, and was previously an adjunct faculty member in the Medical Device graduate program of St. Cloud State University.
|
Natus Medical Incorporated | 2020
Proxy Statement
|
17 |
Joshua H. Levine
Age: 61
Director Since: 2018
Natus Board Roles
• Compensation
Committee Member
• Nominating &
Governance Committee Member
|
Select Professional Experience and Highlights
• Natus
Medical Incorporated
– Member of the Board since 2018
• Immucor Corporation
– President
& Chief Executive Officer from June 2011 to October 2011
– Member of the Board of Directors from June 2011 to October 2011
• Mentor Corporation
– President
& Chief Executive Officer from June 2004 to January 2009
– Member of the Board of Directors from June 2004 to January 2009
Other Current Public Company Directorships
• Accuray Incorporated
– Member of the Board
since 2012
– President & Chief Executive Officer since 2012
|
Education
• B.A.
University of Arizona
Select Qualifications and Skills
Mr. Levine brings diverse, global healthcare industry experience and a strong track record of creating and unlocking strategic value for the companies he has led.
Mr. Levine’s qualifications to serve on our Board include, among other skills and qualifications, his strategic business development skills, commercial leadership experience, and executive vision. In addition, Mr. Levine brings
expertise in the medical device and medical technology industries from 10+ years of experience as a chief executive officer with two other publicly traded, small- and mid-size-cap medical device manufacturing companies.
|
18
|
Natus Medical Incorporated | 2020 Proxy
Statement
|
Kenneth E. Ludlum*
Age: 66
Director Since: 2002
Natus Board Roles
• Chair of the Audit
Committee
• Compensation Committee Member
|
Select Professional Experience and Highlights
• Natus Medical Incorporated
– Member
of the Board since 2002
• CareDx
– Chief Financial Officer from 2014 to 2016
• Endogastric Solutions, Inc.
– Vice
President, Chief Financial Officer & Head of Operations from 2011 to 2013
Other Current Public Company Directorships
• Personalis, Inc.
– Member
of the Board since 2015
• Iridex
Corporation
– Member of the Board since 2019
|
Education
• M.B.A. Columbia
University Graduate School of Business
• B.S. Business
Administration, Lehigh University
Select Qualifications and Skills
Mr. Ludlum has served on the Board and as Chair of the Audit Committee of several public and private medical and biotechnology companies. Mr. Ludlum brings to the
Board over 30 years of business and financial experience working with healthcare and biotechnology companies. His service as chief financial officer at several public companies has provided him with extensive financial and accounting
experience, and knowledge of accounting principles, financial reporting rules, and regulations. With his background in investment banking, he also brings a broad perspective to the Board.
|
* |
Mr. Ludlum will not be standing for reelection at our Annual Meeting and is retiring from our Board. He will no longer serve on our Board following the Annual Meeting.
|
Natus Medical Incorporated | 2020
Proxy Statement
|
19 |
WHAT WE DO
|
|
P
|
Proxy access rights permit a Natus shareholder (or a
group of up to 20 of our shareholders), owning at least 3% of our outstanding shares of common stock continuously for at least three years, to nominate up to the greater of two directors or 20% of the members of our Board for
inclusion in our proxy statement.
|
P
|
Special shareholders meetings can be called by shareholders owning at least 25% (recently decreased from 30% by an amendment to the Natus Bylaws in April 2019) of our outstanding voting shares.
|
P
|
Independent Board with seven of our eight current
directors meeting independence requirements (all but our Chief Executive Officer).
|
P
|
Regular executive sessions of independent directors.
|
P
|
Senior management succession planning considered annually
or as requested by the Board.
|
P
|
Active shareholder engagement We regularly meet with
shareholders throughout the year and we annually invite major shareholders to meet independently with our Board Chair.
|
P
|
Regular board refreshment with five of six of our current
independent directors joining the Board in the past three years.
|
P
|
Annual Board and committee self-assessments.
|
P
|
“Clawback” policy for performance-based compensation.
|
P
|
Achieved gender equality on our Board. An equal mix of
men and women serve as independent directors on the Board.
|
P
|
Established Stock Ownership Guidelines for Directors and Executives.
|
P
|
Independent Board Chair. Dr. Barbara Paul has served as
Board Chair since June 2018 and has been heavily involved in the Company’s shareholder engagement process.
|
P
|
No overboarding. Each of our independent directors
serves on no more than two other public company boards and our CEO may serve on only one outside public company Board.
|
WHAT WE DON’T DO
|
|
✗
|
No shareholder rights plan (“poison pill”).
|
✗
|
No supermajority voting provisions in the Company’s organizational documents.
|
✗
|
Declassified board. We amended our Certificate of
Incorporation in June 2019 to phase out the classified Board, and the Board will be fully declassified in 2021.
|
✗
|
No Cumulative voting. We eliminated the ability of
shareholders to exercise cumulative voting in 2019.
|
20
|
Natus Medical Incorporated |
2020 Proxy Statement
|
BOARD MATTERS
|
• |
At its regularly scheduled meetings, the Board receives management updates on our business operations, financial results and strategy, and discusses risks related to the business;
|
• |
Our Audit Committee assists the Board in its oversight of risk management by discussing with management our guidelines and policies regarding financial and enterprise risk management, including major risk
exposures, and the steps management has taken to monitor and control such exposures;
|
• |
Through management updates and committee reports, the Board monitors our risk management activities, including the enterprise risk management process, risks relating to our compensation programs, and
financial and operational risks; and
|
• |
The Company’s Quality and Compliance Committee receives regular reports from management regarding the management of the Company’s risk profile, as well as Company-wide compliance activities.
|
Natus Medical Incorporated | 2020
Proxy Statement
|
21 |
BOARD MATTERS
|
Audit Committee Membership
|
Kenneth E. Ludlum, Chair (until the 2020 Annual Meeting)
|
Ilan Daskal
|
Alice D. Schroeder
|
Thomas J. Sullivan
|
• |
Mr. Daskal was appointed to the Audit Committee on March 21, 2020.
|
• |
Mr. Sullivan, Ms. Schroeder and Mr. Daskal are each “independent” and “audit committee financial experts” under the applicable rules of the Nasdaq Stock Market and the SEC.
|
• |
The Audit Committee held 10 meetings in 2019.
|
22
|
Natus Medical Incorporated | 2020
Proxy Statement
|
BOARD MATTERS
|
Compensation Committee Membership
|
Thomas J. Sullivan, Chair
|
Joshua H. Levine
|
Kenneth E. Ludlum (until the 2020 Annual Meeting)
|
• |
Each member is “independent” under the rules of the Nasdaq Stock Market, a “nonemployee director” under Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an
“outside director” as defined in Treasury Regulation § 1.162-27(e)(3).
|
• |
The Compensation Committee held 6 meetings in 2019.
|
Nominating & Governance Committee Membership
|
Alice D. Schroeder, Chair
|
Lisa W. Heine
|
Joshua H. Levine
|
• |
Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the shareholders. They must also have an
inquisitive and objective perspective, practical wisdom, and mature judgment. We endeavor to have a Board representing diverse experience at policy-making levels in business, health care, and technology, and in areas that are
relevant to our global activities;
|
Natus Medical Incorporated | 2020
Proxy Statement
|
23 |
BOARD MATTERS
|
• |
Directors must be willing and able to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serve on the Board for an extended period of time.
Directors should not serve on more than four other boards of public companies in addition to the Natus Board; and
|
• |
Director nominees must have demonstrated a history of good business judgment and possess financial and governance literacy. They must have the experience and the value-adding temperament to be good
independent directors of a public company.
|
• |
Experience as an independent director of a publicly-traded company;
|
• |
Proven ability to understand the dynamic between management and Board members, and to effectively manage that dynamic for the benefit of the Company;
|
• |
Experience with Wall Street, transactions, and managing operations; and
|
• |
Some understanding of the medical device market.
|
Compliance & Quality Committee Membership
|
Lisa W. Heine, Chair
|
Barbara R. Paul, M.D.
|
Alice D. Schroeder
|
24
|
Natus Medical Incorporated | 2020
Proxy Statement
|
Principal Shareholder Name and Address
|
Total Shares
Beneficially Owned
|
Percentage
of Class |
BlackRock, Inc.(1)
55 East 52nd Street New York, NY 10055 |
5,373,825
|
15.9%
|
The Vanguard Group(2)
100 Vanguard Blvd. Malvern, PA 19355 |
2,786,669
|
8.2%
|
Janus Henderson Group plc(3)
201 Bishopsgate EC2M 2AE
United Kingdom
|
3,269,186
|
9.7%
|
(1) |
Based solely on information contained in the Schedule 13G/A filed with the SEC by BlackRock, Inc. on its own behalf, on February 4, 2020. The Schedule 13G/A indicates BlackRock, Inc. has sole voting
power for 5,312,427 shares and sole dispositive power for 5,373,825 shares.
|
(2) |
Based solely on information contained in the Schedule 13G/A filed with the SEC by The Vanguard Group, on its own behalf, on February 12, 2020. The Schedule 13G/A indicates The Vanguard Group has sole
voting power for 71,320 shares, shared voting power for 6,005 shares, sole dispositive power for 2,713,760 shares and shared dispositive power for 72,909 shares.
|
(3) |
Based solely on information contained in the Schedule 13G/A filed with the SEC by Janus Henderson Group plc, on its own behalf, on February 12, 2020. The Schedule 13G/A indicates Janus Henderson Group
plc has shared voting power for 3,269,186 shares and shared dispositive power for 3,269,186 shares.
|
Named Executive Officers,
Executive Officers, Directors and Director Nominees: |
Outstanding
Shares
Beneficially
Owned
|
RSUs and
Shares
Underlying
Options
|
Total Shares
Beneficially
Owned
|
Percentage of
Class
|
Mr. Kennedy(1)
|
150,898
|
18,531
|
169,429
|
*
|
Dr. Paul(2)
|
17,438
|
0
|
17,438
|
*
|
Ms. Heine(2)
|
10,078
|
0
|
10,078
|
*
|
Mr. Levine(2)
|
19,978
|
0
|
19,978
|
*
|
Mr. Ludlum(2)x
|
39,406
|
0
|
39,406
|
*
|
Mr. Daskal
|
7,588
|
0
|
7,588
|
*
|
Ms. Schroeder(3)
|
7,931
|
0
|
7,931
|
*
|
Mr. Sullivan(3)
|
7,931
|
0
|
7,931
|
*
|
Mr. Davies(4)
|
35,903
|
0
|
35,903
|
*
|
Mr. Noll(5)
|
85,193
|
0
|
85,193
|
*
|
Dr. Chung(6)
|
141,757
|
0
|
141,757
|
*
|
All directors, director nominees and executive officers as a group (11 persons)
|
516,513
|
0
|
534,044
|
1.5%
|
* |
Less than 1%
|
Natus Medical Incorporated |
2020 Proxy Statement
|
25 |
x |
Mr. Ludlum will not be standing for reelection at our Annual Meeting and is retiring from the Board. He will no longer serve on the Board
following the Annual Meeting.
|
26
|
Natus Medical Incorporated | 2020
Proxy Statement
|
B. Drew Davies, age 54. Mr. Davies has been Executive Vice President and Chief
Financial Officer since October 2018. Mr. Davies most recently served as Executive Vice-President and Chief Financial Officer of Extreme Networks since June 2016. Prior to that, he served as Vice-President and Corporate Controller
at Marvell Semiconductor Inc. from December 2015 until May 2016. From August 2012 until December 2015, Mr. Davies was the Senior Vice President, Corporate Controller at Spansion, Inc., a provider of flash memory products that
merged with Cypress Semiconductor Corporation in March 2015. Prior to Spansion, Mr. Davies was Corporate Controller at Intersil Corporation from April 2009 to August 2012 and served as operations controller at Intersil from March
2008 to April 2009. He also served as Chief Financial Officer of Nanoconduction, Inc. from March 2007 to March 2008 and as Director Finance and Administration for STATSChipPac from September 1999 to March 2007. Mr. Davies holds a
Master of Business Administration degree from Santa Clara University and a Bachelor of Science, Business Accounting degree from the University of Idaho.
|
|
Austin F. Noll, III, age 53. Mr. Noll has been Executive Vice President and
Chief Commercial Officer since January 2019. Mr. Noll joined Natus in August 2012 as the Vice President and General Manager, Neurology SBU. Prior to joining Natus, Mr. Noll served as the President and CEO of Simpirica Spine, a
California-based start-up company that developed and commercialized a novel device for spinal stabilization from June 2009 to August 2012. Prior to joining Simpirica Spine, Mr. Noll served as the President and CEO of NeoGuide
Systems, a medical robotics company acquired by Intuitive Surgical, from November 2006 to May 2009. Prior to joining NeoGuide Systems, Mr. Noll held numerous management positions at Medtronic over 13-year period, where he served as
the Vice President and General Manager of the Powered Surgical Solutions and the Neurosurgery businesses from April 2004 to June 2005. Mr. Noll received a bachelor's degree in business administration from Miami University and a
master's of business administration from the University of Michigan.
|
|
D. Christopher Chung, M.D., age 56. Dr. Chung has served as our Vice President
of Quality, Regulatory Affairs and Chief Medical Officer since January 2019. Dr. Chung previously served as our Vice President of R&D and most recently as our Vice President Medical Affairs, Quality and Regulatory. Dr. Chung
also served as our Medical Director from October 2000 to February 2003. From 2000 to 2007, Dr. Chung also served as a Pediatric Hospitalist at the California Pacific Medical Center in San Francisco. From 1997 to 2000, Dr. Chung
trained as a pediatric resident at Boston Children’s Hospital and Harvard Medical School. Dr. Chung holds a Bachelor of Arts degree in Computer Mathematics from the University of Pennsylvania and a Doctor of Medicine degree from
the Medical College of Pennsylvania-Hahnemann University School of Medicine. Dr. Chung is board certified in Pediatrics and is a Fellow of the American Academy of Pediatrics.
|
Natus Medical Incorporated |
2020 Proxy Statement
|
27 |
• |
Jonathan A. Kennedy, our President and Chief Executive Officer;
|
• |
B. Drew Davies, our Executive Vice President and Chief Financial Officer;
|
• |
Austin F. Noll, III, our Executive Vice President and Chief Commercial Officer;
|
• |
D. Christopher Chung, M.D., our Vice President of Quality, Regulatory Affairs and Chief Medical Officer;
|
• |
Carsten Buhl, our former President and Chief Executive Officer, Otometrics SBU*; and
|
• |
Leslie McDonnell, our former Vice President and General Manager, Newborn Care SBU*.
|
• |
Neuro, which includes products and services that provide diagnostic, therapeutic and surgical solutions in neurodiagnostics, neurocritical care and neurosurgery;
|
• |
Newborn Care, which includes products and services for newborn care, including hearing screening, brain monitoring, eye imaging, jaundice management and various disposable newborn care supplies; and
|
• |
Hearing & Balance (otometrics), which includes products for hearing assessment and diagnostics, and hearing aid fitting, including computer-based audiological, otoneurologic and vestibular
instrumentation and sound rooms for hearing care professionals.
|
28
|
Natus Medical Incorporated | 2020
Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
• |
To further link compensation paid to performance attained, we granted market stock units (MSUs) and PSUs to our executive officers in 2019. The MSUs are eligible to vest based on our stock price
performance over a three-year performance period. The PSUs will only be eligible to be earned and to vest if pre-established performance goals related to relative TSR are achieved. Our 2019 equity program for our executive
officers generally consisted of 50% restricted stock unit awards (RSUs), 25% MSUs and 25% PSUs (based on grant date fair value, assuming target performance). Our CEO received an equity grant in 2019 that was consistent with other
grants made to our executive officers.
|
• |
We adopted a clawback policy covering incentive compensation paid or awarded to our executive officers to disincentivize excessive risk-taking.
|
• |
Attract Strong Executives. We believe that attracting strong, qualified executive talent is essential to achieving our business objectives and continuing our growth trajectory, and that offering
competitive compensation is necessary to attract this talent. To that end, our Compensation Committee regularly reviews compensation paid by our peer group companies and in the market in which we compete for talent and seeks to
offer market competitive compensation to executive officers.
|
• |
Retain Executive Talent. We operate in a market and in geographical areas where there is significant competition for executive talent and we view our executive compensation program as a key factor
in our efforts to retain our executive team, who are important to our success in achieving our business objectives. To enhance retention, the long-term equity awards made to our executive officers are eligible to vest based on
continued employment over multiple years and, for performance-based equity awards, our long-term performance. As described in further detail below, in 2019 we began granting performance-based equity awards to all of our executive
officers.
|
• |
Link Compensation to Achievement of our Business Objectives. We believe that a significant portion of our executive officers’ compensation should be tied to the achievement of key business
objectives in order to incentivize our executives to create shareholder value. Accordingly, annual bonuses are based on our achievement of business goals and objectives and are only paid if certain pre-established business goals
and objectives are achieved.
|
• |
Incentivize Increases in Long-Term Shareholder Value. We believe that to effectively align the interests of our executive officers with those of our shareholders and properly incentivize them to
drive long-term shareholder value, our executive officers should be impacted by changes in the value of our common stock
|
Natus Medical Incorporated |
2020 Proxy Statement
|
29 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
over time. Accordingly, we grant our executives long-term equity awards on an annual basis and have adopted stock ownership guidelines that will require them to acquire and maintain specified levels
of our common stock. To further link compensation paid to performance attained, we implemented MSUs and PSUs as part of our executive compensation program for annual equity awards granted in 2019.
|
WHAT WE DO
|
||
P
|
Link Pay to Performance. Annual bonus payouts are based on the achievement of pre-established strategic and financial performance goals, with
no discretionary adjustments for individual performance. To further link pay to performance, in 2019, we implemented MSUs and PSUs as part of our executive compensation program for annual long-term equity awards made to all of our
executive officers, as described in further detail on page 35.
|
|
P
|
Maintain Executive Stock Ownership Guidelines. Our named executive officers are subject to stock ownership guidelines that, following
completion of a five-year phase-in period, will require them to hold equity having a value ranging from 1.0x to 5.0x their annual base salary.
|
|
P
|
Subject Incentive Compensation to our Clawback Policy. In 2019 we adopted a clawback policy covering annual and long-term incentive
compensation paid to our executive officers.
|
|
P
|
Engage an Independent Compensation Consultant. Our Compensation Committee engages an independent compensation consultant to provide peer
group analysis and market data.
|
|
WHAT WE DON’T DO
|
||
✗
|
Provide Excise Tax Gross-Ups. None of our named executive officers or other employees is entitled to a gross-up for any excise taxes on change
in control-related compensation.
|
|
✗
|
Reprice Stock Options without Shareholder Consent. We are not permitted to reprice stock options without shareholder consent under our 2018
Equity Incentive Plan.
|
|
✗
|
Provide Pension Benefits. We do not maintain any defined benefit pension plans.
|
|
✗
|
Pay Excessive Compensation. Beginning in 2019 and continuing into 2020, we have targeted the total direct compensation (base salary, target
annual bonus and target long-term equity awards) for our NEOs at the 50th percentile of the peer group market data.
|
|
✗
|
Provide Excessive Perquisites or Personal Benefits. We generally do not provide perquisites or personal benefits to our named executive
officers.
|
30
|
Natus Medical Incorporated | 2020
Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
• |
Apprising our Compensation Committee of compensation-related trends and market developments;
|
• |
Providing updates on legal and regulatory developments;
|
• |
Developing, reviewing and assessing our compensation peer group;
|
• |
Providing data regarding the compensation practices of our peer group and other companies;
|
• |
Assessing the market competitiveness of our executive and non-employee director compensation programs; and
|
• |
Identifying potential changes to our executive and non-employee director compensation programs.
|
2019 Peer Group
|
|||
|
Avanos Medical, Inc.
|
|
Nevro Corp.
|
NuVasive, Inc.
|
Omnicell, Inc.
|
Quidel Corporation
|
AngioDynamics, Inc.
|
Haemonetics Corporation
|
Merit Medical Systems, Inc.
|
Insulet Corporation
|
Lantheus Holdings, Inc.
|
CONMED Corporation
|
Globus Medical, Inc.
|
Accuray Incorporated
|
Penumbra, Inc.
|
Natus Medical Incorporated |
2020 Proxy Statement
|
31 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
• |
Adopted stock ownership guidelines for our named executive officers and non-employee directors.
|
• |
Adopted a clawback policy covering incentive compensation awarded or paid to our executive officers.
|
• |
The Committee adopted a pay philosophy for 2019 of targeting market median for total direct compensation for our executive officers.
|
• |
Departed from our historical practice of granting only time-vesting restricted stock and RSUs and in 2018 granted Mr. Kennedy PSUs and a stock option in connection with his promotion
and Mr. Davies PSUs in connection with his hire.
|
• |
Implemented performance-based equity in the form of PSUs and MSUs as part of our executive compensation program for annual equity awards made to all of our executive officers in 2019
in order to further align the interests of our executives and our shareholders.
|
32
|
Natus Medical Incorporated | 2020
Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Executive
|
2018 Annual Base
Salary
|
2019 Annual Base
Salary
|
Jonathan A. Kennedy
|
$650,000
|
$650,000
|
B. Drew Davies
|
$450,000
|
$450,000
|
Austin F. Noll, III
|
$375,000
|
$420,000
|
D. Christopher Chung, M.D.
|
$310,000
|
$360,000
|
Executive
|
Target Annual Bonus
(as a percentage of annual base salary)
|
Jonathan A. Kennedy
|
100%
|
B. Drew Davies
|
65%
|
Austin F. Noll, III
|
65%
|
D. Christopher Chung, M.D.
|
50%
|
Natus Medical Incorporated |
2020 Proxy Statement
|
33 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Performance Metric
|
Weighting
|
Performance Goal
|
Threshold Goal
|
Target Goal
|
Maximum Goal
|
|
Strategic
|
Restructuring
|
20%
|
Identify and notify all impacted employees in all functional areas other than manufacturing
|
Complete by or after September 2019
|
Complete by August 2019
|
Complete by June 2019
|
Divestitures of hearing screening service, in-home neurological screening service, Argentinian subsidiary, and sound room businesses
|
Complete two divestitures
|
Complete three divestitures
|
Complete sale of hearing screening service to third party
|
|||
Product Rationalization and Strategic Plan
|
10%
|
Present a strategic plan for all products and markets
|
Complete and present after September 2019
|
Complete and present in September 2019
|
Complete and present by June 5, 2019
|
|
Quality and Compliance
|
10%
|
Establish a plan to consolidate the Company’s nine Quality Systems to five by 2022
|
Plan established by May 2019
|
Plan established by May 2019 and one quality system closed in 2019
|
Plan established by May 2019 and two quality systems closed in 2019
|
|
Achieve Medical Device Regulation (MDR) product readiness
|
Deliver product plan by April 30, 2019
|
Achieve product readiness by year end of 2019 and have first product technical document file approved by the notified body for all 9 quality systems
|
Achieve product readiness by September 2019
|
|||
Financial
|
Non-GAAP Operating Margin
|
60%
|
2019 Non-GAAP Operating Margin
|
12%
|
12.7%
|
17% or more
|
34
|
Natus Medical Incorporated | 2020
Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Performance Metric
|
Weighting
|
2019 Performance
|
Payout
Percentage
|
Weighted
Payout
Percentage
|
|
Strategic
|
Restructuring
|
20%
|
100%
|
100%
|
25%
|
200%
|
|||||
Product Rationalization and Strategic Plan
|
10%
|
200%
|
200%
|
20%
|
|
Quality and Compliance
|
10%
|
100%
|
100%
|
20%
|
|
100%
|
|||||
Financial
|
Non-GAAP Operating Margin*
|
60%
|
12.2%
|
64%
|
39%
|
Total
|
95%
|
Executive
|
Annual Bonus Payout
|
Jonathan A. Kennedy
|
$ 617,760
|
B. Drew Davies
|
$ 277,992
|
Austin F. Noll, III
|
$259,459
|
D. Christopher Chung, M.D.
|
$171,072
|
Natus Medical Incorporated | 2020 Proxy Statement
|
35 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Executive
|
RSUs
|
PSUs
(at target)
|
MSUs
(at target)
|
Jonathan A. Kennedy
|
40,572
|
20,286
|
20,286
|
B. Drew Davies
|
14,877
|
7,438
|
7,439
|
Austin F. Noll, III
|
10,414
|
5,207
|
5,207
|
D. Christopher Chung, M.D.
|
6,694
|
3,347
|
3,347
|
Relative TSR Percentile
Rank
|
Percentage of PSUs
Earned
|
<35th Percentile
|
0%
|
35th Percentile
|
50%
|
60th Percentile
|
100%
|
90th Percentile or above
|
200%
|
36
|
Natus Medical Incorporated |
2020 Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Natus Medical Incorporated |
2020 Proxy Statement
|
37 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Position
|
Required Stock Ownership
|
Chief Executive Officer
|
5.0x annual base salary
|
Chief Financial Officer
|
2.0x annual base salary
|
Other Named Executive Officer
|
1.0x annual base salary
|
Non-Employee Director
|
5.0x annual retainer
|
38
|
Natus Medical Incorporated |
2020 Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Name and principal
position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
awards
($)(3)
|
Option
awards
($)(4)
|
Non-equity
incentive
plan
compensation
($)(5)
|
All other
compensation
($)(6)
|
Total
($)
|
|||||||||
Jonathan A. Kennedy
President and Chief
Executive Officer
|
2019
|
650,000
|
617,760
|
2,062,478
|
—
|
—
|
5,310
|
3,355,548
|
|||||||||
2018
|
569,231
|
—
|
2,179,067
|
817,803
|
—
|
5,560
|
4,645,618
|
||||||||||
2017
|
489,103
|
—
|
1,113,600
|
—
|
182,578
|
5,578
|
1,790,859
|
||||||||||
B. Drew Davies
Executive Vice President
and Chief Financial
Officer(1)
|
2019
|
450,000
|
277,992
|
750,007
|
—
|
—
|
5,742
|
1,483,741
|
|||||||||
2018
|
103,846
|
—
|
1,788,590
|
—
|
—
|
153,306
|
1,957,301
|
||||||||||
Austin F. Noll, III
Executive Vice President
and Chief Commercial
Officer
|
2019
|
420,000
|
259,459
|
350,415
|
—
|
—
|
5,742
|
1,035,216
|
|||||||||
2018
|
375,000
|
—
|
603,560
|
—
|
—
|
5,992
|
984,552
|
||||||||||
2017
|
367,244
|
—
|
556,800
|
—
|
—
|
6,020
|
1,021,840
|
||||||||||
D. Christopher Chung,
M.D.
Vice President of Quality,
Regulatory Affairs and
Chief Medical Officer
|
2019
|
340,000
|
171,072
|
224,985
|
—
|
—
|
6,822
|
737,093
|
|||||||||
2018
|
310,000
|
—
|
435,480
|
—
|
—
|
7,072
|
752,552
|
||||||||||
2017
|
310,000
|
—
|
320,160
|
—
|
—
|
6,020
|
636,180
|
||||||||||
Carsten Buhl
Former President and
Chief Executive Officer,
Otometrics SBU(2)
|
2019
|
325,980
|
—
|
656,383
|
—
|
—
|
—
|
982,363
|
|||||||||
2018
|
286,080
|
—
|
725,006
|
—
|
—
|
51,989
|
1,063,075
|
||||||||||
Leslie McDonnell
Former Vice President and
General Manager,
Newborn Care SBU(2)
|
2019
|
18,847
|
—
|
504,575
|
—
|
—
|
—
|
523,422
|
|||||||||
2018
|
297,427
|
—
|
500,012
|
—
|
—
|
162,500
|
959,939
|
(1) |
Mr. Davies commenced employment with us on October 1, 2018 as our Executive Vice President and Chief Financial Officer.
|
(2) |
Mr. Buhl and Ms. McDonnell commenced employment with us in February 2018 and ceased employment with us in January 2019. Mr. Buhl’s cash compensation was paid in Danish Kroners (DKK) and is
converted in the table above and the tables below to U.S. dollars based on the conversion rate in effect on December 31, 2018 of 6.6628 DKK to one U.S. dollar.
|
(3) |
The amounts reported in this column reflect the aggregate grant date fair value of restricted stock awards, RSUs, PSUs and MSUs granted to our named executive officers in the applicable year,
computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. The grant date fair value of PSUs and MSUs was calculated using a Monte Carlo simulation model, in each case, based the probable
outcome of the performance conditions as of the date of grant. The assumptions that we used in computing the foregoing amounts are described in Note 16 to the consolidated financial statements filed with our Annual Report
on Form 10-K for the year ended December 31, 2019 and in Note 14 to the consolidated financial statements filed with our Annual Report on Form 10-K for the year ended December 31, 2018 and December 31, 2017. The aggregate
grant date fair value of the PSUs and MSUs reported in this column are also included in the table below (based on the probable outcome of performance conditions), along with the aggregate grant date fair value of such
awards if the maximum level of performance conditions is achieved.
|
Executive
|
Grant Date Fair Value of
PSUs and MSUs (based on
the probable outcome of
performance conditions)
($)
|
Grant Date Fair Value of PSUs
and MSUs (based on the
maximum achievement of
performance conditions)
($)
|
||
Jonathan A. Kennedy
|
2019
|
1,375,000
|
2,750,000
|
|
2018
|
800,000
|
1,600,000
|
||
B. Drew Davies
|
2019
|
500,000
|
1,000,000
|
|
2018
|
850,000
|
1,700,000
|
||
Austin F. Noll, III
|
2019
|
350,000
|
700,000
|
|
D. Christopher Chung, M.D.
|
2019
|
225,000
|
450,000
|
Natus Medical Incorporated | 2020 Proxy Statement
|
39 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
No PSUs or MSUs were granted to Mr. Null or Dr. Chung prior to 2019 or to Messrs. Kennedy or Davies prior to 2018 and no PSUs or MSUs were granted to Mr. Buhl or Ms. McDonnell. The amount reported in this column for
2019 for Mr. Buhl and Ms. McDonnell reflects the incremental fair value, computed in accordance with ASC Topic 718, associated with the accelerated vesting of the stock awards in connection with their cessation of
employment.
|
(4) |
The amount reported in this column reflects the aggregate grant date fair value of the stock option granted to Mr. Kennedy in connection with his promotion, computed in accordance with ASC Topic
718, excluding the effect of estimated forfeitures. The assumptions that we used in computing this amount are described in Note 14 to the consolidated financial statements filed with our Annual Report on Form 10-K for the
year ended December 31, 2018.
|
(5) |
The amounts reported in this column reflect the annual bonuses earned by our named executive officers in the applicable year.
|
(6) |
The amounts reported in this column for 2019 for all of the named executive officers other than Mr. Buhl, Ms. McDonnell, and Mr. Davies reflect 401(k) matching contributions and group life
insurance premiums paid on behalf of our named executive officers. For Mr. Davies, the amount reported also includes $150,000 of relocation expenses that were reimbursed to him during 2018. For Mr. Buhl and Ms.
McDonnell, the amounts included represent severance payments made in conjunction with the termination of their employment with the Company.
|
40
|
Natus Medical Incorporated | 2020 Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Name
|
Grant date
|
Estimated future payouts under
non-equity incentive plan awards
|
Estimated future payouts under equity
incentive plan awards
|
All
other
stock
awards:
Number
of
shares
of
stock
or units
(#)
|
Grant date
fair value
of stock
and option
awards
($)(6)
|
|||||
Threshol
d ($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target (#)
|
Maximum
(#)
|
|||||
Jonathan A.
Kennedy
|
— (1)
|
325,000
|
650,000
|
1,300,000
|
—
|
—
|
—
|
—
|
—
|
|
1/17/2019(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
40,572
|
1,374,945
|
||
1/17/2019(3)
|
—
|
—
|
—
|
10,143
|
20,286
|
40,572
|
—
|
687,472
|
||
1/17/2019(4)
|
—
|
—
|
—
|
14,208
|
20,286
|
40,572
|
—
|
687,472
|
||
B. Drew
Davies
|
— (1)
|
146,250
|
292,500
|
585,000
|
—
|
—
|
—
|
—
|
—
|
|
1/17/2019(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
14,877
|
500,001
|
||
1/17/2019(3)
|
—
|
—
|
—
|
3,719
|
7,438
|
14,877
|
—
|
249,984
|
||
1/17/2019(4)
|
—
|
—
|
—
|
5,209
|
7,438
|
14,877
|
—
|
249,984
|
||
Austin F.
Noll, III
|
— (1)
|
121,875
|
243,750
|
487,500
|
—
|
—
|
—
|
—
|
—
|
|
1/17/2019(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
10,414
|
350,004
|
||
1/17/2019(3)
|
—
|
—
|
—
|
2,604
|
5,207
|
10,414
|
—
|
175,002
|
||
1/17/2019(4)
|
—
|
—
|
—
|
3,647
|
5,207
|
10,414
|
—
|
175,002
|
||
D.
Christopher
Chung, M.D.
|
— (1)
|
77,500
|
155,000
|
310,000
|
—
|
—
|
—
|
—
|
—
|
|
1/17/2019(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
6,400
|
224,978
|
||
1/17/2019(3)
|
—
|
—
|
—
|
1,674
|
3,347
|
6,694
|
—
|
175,006
|
||
1/17/2019(4)
|
—
|
—
|
—
|
2,345
|
3,347
|
6,694
|
—
|
175,002
|
||
Carsten
Buhl(5)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
656,383
|
|
Leslie
McDonnell(5)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
504,575
|
(1) |
The amounts reported in these rows reflect the threshold, target and maximum annual bonus opportunity for the applicable named executive officer for 2019. The actual annual bonuses paid to our
named executive officers are reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above.
|
(2) |
The number of shares reported in these rows reflects the number of RSUs granted to the applicable named executive officer. The RSUs vest as to 25% of the shares on each of January 2, 2020,
January 2, 2021, January 2, 2022 and January 2, 2023, generally subject to the named executive officer’s continued employment with us through the applicable vesting date.
|
(3) |
The number of shares reported in these rows reflects the threshold, target and maximum number of PSUs granted to the applicable named executive officer that may be earned based on our TSR
compared to our peer group over a performance period ending on December 31, 2021. If our TSR is in the 35th percentile compared to the TSR
of this peer group, 50% of the target number of PSUs will be earned, if our TSR is in the 60th percentile, 100% of the target number of PSUs
will be earned, and if our TSR is in the 90th percentile or above, 200% of the target number of PSUs will be earned. No PSUs will be earned
if our TSR is below the 35th percentile compared to the TSR of our peer group. To the extent earned, the PSUs will vest on December 31,
2021, generally subject to the applicable named executive officer’s continued employment with us through such date.
|
(4) |
The number of shares reported in these rows reflects the threshold, target and maximum number of MSUs granted to the applicable named executive officer that may be earned based on our stock
price. The number of MSUs that are earned is calculated by multiplying the target number of MSUs by a fraction determined by dividing the closing price of our common stock on December 31, 2021 by $34.04, the closing price
of our common stock on December 31, 2018, up to a maximum of 200% of the target number of MSUs. If the closing price of our common stock on December 31, 2021 does not exceed $23.83 (70% of the closing price of our common
stock on December 31, 2018), no MSUs will be earned. To the extent earned, the MSUs will vest on December 31, 2019, generally subject to the applicable named executive officer’s continued employment with us through such
date.
|
(5) |
Mr. Buhl and Ms. McDonnell ceased employment with us in January 2019. They were not eligible to receive annual bonuses for 2019 and were not granted any equity awards for 2019. The amounts
reported for Mr. Buhl and Ms. McDonnell reflect the incremental fair
|
Natus Medical Incorporated | 2020 Proxy Statement
|
41 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
value, computed in accordance with ASC Topic 718, associated with the accelerated vesting of the stock awards in connection with their cessation of employment.
|
(6) |
The amounts reported in this column reflect the aggregate grant date fair value of the applicable stock award granted to the applicable named executive officer, computed in accordance with ASC
Topic 718, excluding the effect of estimated forfeitures. The grant date fair value of PSUs and MSUs was calculated using a Monte Carlo simulation model, in each case, based the probable outcome of the performance
conditions as of the date of grant. See note (3) to the Summary Compensation Table above for more information as to how these awards were valued and for the grant date fair value of the PSUs and MSUs if maximum
performance levels were achieved.
|
Name
|
Option awards
|
Stock awards
|
|||||||
Number of
securities
underlying unexercised
options
(#)
exercisable
|
Number of
securities
underlying
unexercised
options
(#)
unexercisable
|
Option
exercise
price
($)
|
Option
expiration
date
|
Number of
shares or
units of stock
that have not
vested
(#)
|
Market
value of
shares or
units of stock
that have
not
vested
($)(1)
|
Equity
incentive
plan
awards:
number of
unearned
shares,
units or
other
rights
that have
not
vested
(#)
|
Equity
incentive
plan
awards:
market
or
payout
value of
unearned
shares,
units or
other
rights
that
have not
vested
($)(1)
|
||
Jonathan A.
Kennedy
|
—
|
—
|
—
|
—
|
5,495(2)
|
181,280
|
|||
—
|
—
|
—
|
—
|
16,000(3)
|
527,840
|
||||
—
|
—
|
—
|
—
|
34,100(4)
|
1,124,959
|
||||
22,695(5)
|
748,708
|
||||||||
40,572 (6)
|
1,338,470
|
||||||||
—
|
—
|
—
|
—
|
20,286(7)
|
699,235
|
||||
—
|
—
|
—
|
—
|
20,286(8)
|
699,235
|
||||
18,531
|
55,593(9)
|
35.25
|
7/11/2024
|
—
|
—
|
—
|
—
|
||
B. Drew Davies
|
—
|
—
|
17,884(10)
|
589,993
|
—
|
—
|
|||
23,845(5)
|
786,647
|
||||||||
14,877 (6)
|
490,793
|
||||||||
—
|
—
|
7,438(7)
|
245,380
|
||||||
7,438(8)
|
245,380
|
||||||||
Austin F. Noll, III
|
—
|
—
|
—
|
—
|
—
|
—
|
|||
—
|
—
|
—
|
—
|
2,913(2)
|
96,100
|
—
|
—
|
||
—
|
—
|
—
|
—
|
8,000(3)
|
263,920
|
—
|
—
|
||
—
|
—
|
—
|
—
|
15,800(4)
|
521,242
|
—
|
—
|
||
10,414(6)
|
343,558
|
||||||||
—
|
—
|
—
|
—
|
—
|
—
|
5,207 (7)
|
171,779
|
||
—
|
—
|
—
|
—
|
—
|
—
|
5,207 (8)
|
171,779
|
42
|
Natus Medical Incorporated | 2020 Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
D. Christopher
Chung, M.D.
|
1,648
|
54,368
|
|||||||
4,600
|
|||||||||
11,400
|
|||||||||
6,694 (6)
|
220,836
|
||||||||
3,347(7)
|
110,418
|
||||||||
3,347(8)
|
110,418
|
||||||||
Carsten Buhl(11)
|
|||||||||
Leslie
McDonnell(11)
|
(1) |
The amounts reported in this column reflect the market value of the applicable award based on the closing price of a share of our common stock on December 31, 2019 ($32.99). For this purpose,
the PSUs and MSUs are valued based on the target level of achievement of applicable performance conditions.
|
(2) |
The number of shares reported reflects shares of restricted stock that were granted to the named executive on January 1, 2016 and were not vested as of December 31, 2019. These shares vested on
January 1, 2020.
|
(3) |
The number of shares reported reflects shares of restricted stock that were granted to the named executive on January 1, 2017 and were not vested as of December 31, 2019. 50% of these shares
vested on January 1, 2020 and the remaining 50% of these shares are scheduled to vest on January 1, 2121, generally subject to the named executive officer’s continued employment with us through the applicable vesting date.
|
(4) |
The number of shares reported reflects the number of shares of restricted stock granted to the named executive officer on January 2, 2018. 50% of these shares vested on January 2, 2020 and 25%
of these shares are scheduled to vest on each of the third and fourth anniversaries of the date of grant, generally subject to the named executive officer’s continued employment with us through the applicable vesting date.
|
(5) |
The number of shares reported reflects the number of shares that would be earned by Mr. Kennedy or Mr. Davies, as applicable, in
respect of the PSUs that were granted to them in 2018 if the applicable performance conditions were achieved at target levels. The PSUs are eligible to be earned based on our TSR compared to a pre-established comparator
group of companies over a performance period that ends on December 31, 2020. To the extent earned, the PSUs will vest on December 31, 2020, generally subject to the named executive officer’s continued employment with us
through such date.
|
(6) |
The number of shares reported reflects the number of RSUs granted to the named executive officer on January 17, 2019. The RSUs are scheduled to vest as to 25% of the shares on each of January 2,
2020, January 2, 2022, January 2, 2023 and January 2, 2024, generally subject to the named executive officer’s continued employment with us through the applicable vesting date.
|
(7) |
The number of shares reported reflects the number of shares that would be earned by the named executive officers in respect of the
PSUs that were granted to them on January 17, 2019 if the applicable performance conditions were achieved at target levels. The PSUs are eligible to be earned based on our TSR compared to a pre-established comparator
group of companies over a performance period that ends on December 31, 2021. To the extent earned, the PSUs will vest on December 31, 2021, generally subject to the named executive officer’s continued employment with us
through such date.
|
(8) |
The number of shares reported reflects the number of shares that would be earned by the named executive officers in respect of the
MSUs that were granted to them on January 17, 2019 if the applicable performance conditions were achieved at target levels. The MSUs are eligible to be earned based on the closing price of our common stock as of the last
day of a performance period that ends on December 31, 2021 compared to the closing price of our common stock as of December 31, 2018. To the extent earned, the MSUs will vest on December 31, 2021, generally subject to
the named executive officer’s continued employment with us through such date.
|
(9) |
The number of shares reported reflects the number of shares that are subject to the stock option that was granted to Mr. Kennedy in 2018. The stock option vested as to 25% of the shares on July
11, 2019 and is scheduled to vest as to the remaining shares in equal annual installments on July 11, 2020, July 11, 2021 and July 11, 2020, generally subject to Mr. Kennedy’s continued employment with us through the
applicable vesting date.
|
(10) |
The number of shares reported reflects the number of shares of restricted stock granted to Mr. Davies on October 1, 2018 in connection with his hire. This restricted stock award.is scheduled to
vest as to the remaining shares in equal installments on October 1, 2020, October 1, 2021 and October 1, 2022, generally subject to Mr. Davies’ continued employment with us through the applicable vesting date.
|
(11) |
Mr. Buhl and Ms. McDonnell ceased employment with us in January 2019 and, as of December 31, 2019 did not hold any outstanding stock awards or option awards.
|
Natus Medical Incorporated | 2020 Proxy Statement
|
43 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Name
|
Option awards
|
Stock awards
|
|||||||
Number of shares
acquired on
exercise
(#)
|
Value
realized on
exercise
($)(1)
|
Number of shares
acquired on vesting
(#)
|
Value realized on
vesting
($)(1)
|
||||||
Jonathan A. Kennedy
|
17,600
|
183,502
|
27,495
|
914,323
|
|||||
B. Drew Davies
|
-
|
-
|
5,962
|
183,510
|
|||||
Austin F. Noll, III
|
34,250
|
345,080
|
14,037
|
466,906
|
|||||
D. Christopher Chung, M.D.
|
30,000
|
356,880
|
8,247
|
274,467
|
|||||
Carsten Buhl
|
-
|
-
|
23,501
|
656,383
|
|||||
Leslie McDonnell
|
-
|
-
|
16,836
|
504,575
|
(1) |
The value realized on exercise or vesting, as applicable, is equal to the number of shares of our common stock acquired on the exercise of the stock option or the number of shares of restricted
stock or RSUs that vested, as applicable, multiplied by the closing price of our common stock on the exercise or vesting date.
|
• |
A lump sum payment equal to two times his annual base salary as then in effect, payable within 30 days following such termination;
|
• |
Immediate vesting and, if applicable, exercisability of all equity awards, other than PSUs, held by Mr. Kennedy that are then outstanding;
|
• |
Prorated vesting of PSUs based on actual relative TSR through the termination date and the period of time elapsed as of the termination date relative to the term of the PSUs; and
|
44
|
Natus Medical Incorporated | 2020 Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
• |
Up to 18 months of Company-paid group health coverage at the level provided at the time of termination for Mr. Kennedy and his eligible dependents.
|
• |
A lump sum payment equal to two times the sum of his annual base salary and target annual bonus as then in effect or, if greater, as in effect immediately prior to our entering into the
agreement providing for such change in control (or, if there is no agreement, immediately prior to the change in control), payable within 30 days following such termination;
|
• |
Immediate vesting and, if applicable, exercisability of all equity awards, other than PSUs, held by Mr. Kennedy that are then outstanding;
|
• |
Vesting of PSUs at 100% of target; and
|
• |
Up to 24 months of Company-paid group health coverage at the level provided at the time of termination for Mr. Kennedy and his eligible dependents.
|
• |
Base salary continuation for 12 months following such termination, beginning on the latest payroll date that is within 70 days from the date of
termination (with the first payment to include all amounts that would have been paid prior to such date);
|
• |
Immediate vesting and, if applicable, exercisability of all restricted stock awards held by Mr. Davies that are outstanding on the date of termination; and
|
• |
Up to 12 months of Company-paid group health coverage at the level provided at the time of termination for Mr. Davies and his eligible dependents.
|
• |
Base salary continuation for 12 months following such termination, beginning on the latest payroll date that is within 70 days from the date of
termination (with the first payment to include all amounts that would have been paid prior to such date);
|
• |
Immediate vesting and, if applicable, exercisability of all equity awards held by Mr. Noll that are outstanding on the date the release of claims becomes effective; and
|
• |
Up to 12 months of Company-paid group health coverage at the level provided at the time of termination for Mr. Noll and his eligible dependents.
|
Natus Medical Incorporated | 2020 Proxy Statement
|
45 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
• |
Base salary continuation for 12 months following such termination, beginning on the latest payroll date that is within 70 days from the date of
termination (with the first payment to include all amounts that would have been paid prior to such date);
|
• |
Immediate vesting and, if applicable, exercisability of all equity awards held by Dr. Chung that are outstanding on the date the release of claims becomes effective; and
|
• |
Up to 12 months of Company-paid group health coverage at the level provided at the time of termination for Dr. Chung and his eligible dependents.
|
46
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Natus Medical Incorporated | 2020 Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Name
|
Cash
Severance
Payment
($)(1)
|
Continued
Health
Coverage
($)(2)
|
Acceleration of
Equity Awards
($)(3)
|
Total Termination
Benefits
($)(4)
|
|
Jonathan A. Kennedy
|
|||||
Qualifying termination
|
1,300,000
|
5,310
|
$5,259,727
|
6,565,037
|
|
Qualifying termination within 12
months following a change in
control
|
2,600,000
|
10,620
|
5,259,727
|
7,865,037
|
|
B. Drew Davies
|
|||||
Qualifying termination
|
450,000
|
5,742
|
2,358,159
|
2,813,901
|
|
Qualifying termination within 6
months following a change in
control
|
742,500
|
5,742
|
2,358,159
|
3,106,401
|
|
Austin F. Noll, III
|
|||||
Qualifying termination
|
420,000
|
5,742
|
1,568,378
|
1,994,120
|
|
Qualifying termination within 6
months following a change in
control
|
693,000
|
5,742
|
1,568,378
|
2,267,120
|
|
D. Christopher Chung, M.D.
|
|||||
Qualifying termination
|
360,000
|
6,822
|
1,023,879
|
1,390,701
|
|
Qualifying termination within 6
months following a change in
control
|
540,000
|
6,822
|
1,023,879
|
1,570,701
|
(1) |
For Messrs. Kennedy, Davies and Noll and Dr. Chung, the amount reported in this column reflects the amounts payable under the named executive officer’s employment agreement, based on the named
executive officer’s base salary and target annual bonus as in effect on December 31, 2019.
|
(2) |
The amount reported in this column reflects the estimated cost of Company-paid group health coverage for the named executive officer based on the cost of such coverage as of December 31, 2019.
|
(3) |
For Messrs. Kennedy, Davies and Noll and Dr. Chung, the amount reported in this column reflects the value of the unvested restricted stock held by the named executive officer on December 31,
2019, based on the closing price of a share of our common stock on that date of $32.99 per share.
|
(4) |
The amounts reported in this table do not include any potential reduction in payments or benefits that may be made in connection with a change in control or a qualifying termination thereafter as
a result of Section 4999 of the Code.
|
Natus Medical Incorporated | 2020 Proxy Statement
|
47 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
48
|
Natus Medical Incorporated | 2020 Proxy Statement
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Type of Retainer
|
Amount of Retainer
|
|
Board Retainer
|
$60,000
|
|
Additional Retainer for Committee Chairs
|
||
Audit Committee
|
$20,000
|
|
Compensation Committee
|
$10,000
|
|
Quality & Compliance Committee
|
$10,000
|
|
Nominating & Governance Committee
|
$7,500
|
|
Additional Retainer for Committee Member
|
||
Audit Committee
|
$15,000
|
|
Compensation Committee
|
$10,000
|
|
Quality & Compliance Committee
|
$10,000
|
|
Nominating & Governance Committee
|
$6,000
|
|
Additional Retainer for Board Chair
|
$75,000
|
Natus Medical Incorporated | 2020 Proxy Statement
|
49 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Name
|
Fees Earned or Paid
in Cash ($)
|
Stock Awards ($)(1)
|
Total ($)
|
|
Robert A. Gunst(2)
|
41,500
|
145,250
|
186,750
|
|
Kenneth E. Ludlum
|
107,500
|
101,478
|
208,978
|
|
Barbara R. Paul
|
150,875
|
101,478
|
252,353
|
|
Joshua H. Levine
|
78,250
|
101,478
|
179,728
|
|
Lisa W. Heine
|
83,500
|
101,478
|
184,978
|
|
Tom Sullivan(3)
|
86,250
|
86,250
|
||
Alice Schroeder(3)
|
88,875
|
88,875
|
(1) |
The amounts reported in this column reflect the aggregate grant date fair value of restricted stock awards granted to our non-employee directors in 2019, which was computed in accordance with ASC
Topic 718, excluding the effect of estimated forfeitures. The assumptions that we used in computing these amounts are described in Note 16 to the consolidated financial statements filed with our Annual Report on Form 10-K
for the year ended December 31, 2019. As of December 31, 2019, each of our non-employee directors held 5,846 unvested shares of restricted stock, except for Mr. Sullivan and Ms. Schroeder who held 7,931 unvested shares
each.
|
(2) |
Mr. Gunst retired from the Board in June, 2019.
|
(3) |
Mr. Sullivan and Ms. Schroeder were elected to the Board on February 11, 2019. Their cash compensation reflects the cash compensation they received for the portion of 2019 during which they were
directors.
|
50
|
Natus Medical Incorporated | 2020 Proxy Statement
|
PROPOSAL 2 – ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
|
Natus Medical Incorporated | 2020 Proxy Statement
|
51 |
PROPOSAL 3 – AUDIT MATTERS
|
• |
Shareholder ratification of the selection of KPMG as our independent registered public accounting firm is not required by applicable law, our Restated
Certificate of Incorporation, our Bylaws or otherwise. However, the Board is submitting the selection of KPMG to the shareholders for ratification as a matter of good corporate practice. If the shareholders fail to
ratify the selection, the Audit Committee will reconsider retaining KPMG. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public
accounting firm at any time during the year if they determine that such a change would be in the best interests of Natus and its shareholders.
|
THE BOARD RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
|
2019
|
2018
|
|
(in millions)
|
||
Audit Fees
|
$3,284,147.34
|
$3,489,689
|
Audit-Related Fees
|
5,285.09
|
3,441.00
|
Tax Fees
|
80,169.40
|
79,828.00
|
All Other Fees
|
3,560.00
|
0
|
52
|
Natus Medical Incorporated |
2020 Proxy Statement
|
• |
Reviewed and discussed the audited financial statements with management and the independent auditors;
|
• |
Discussed with the independent registered public accounting firm any matters required to be discussed by the applicable requirements of the Public Company
Accounting Oversight Board (United States) (“PCAOB”) and the SEC; and
|
• |
Received and discussed with the independent auditors the written disclosures and the letter from the independent auditors required by applicable requirements of
the SEC and the PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence; and
|
• |
Discussed with the independent auditors the firm’s independence.
|
Natus Medical Incorporated | 2020 Proxy Statement
|
53 |
54
|
Natus Medical Incorporated | 2020 Proxy Statement
|
Other
|
Natus Medical Incorporated | 2020 Proxy Statement
|
55 |
56
|
Natus Medical Incorporated | 2020 Proxy Statement
|