Business Context and Reporting Period
This Form 8-K Current Report was filed by Natera, Inc. on May 10, 2021, covering events occurring on May 9, 2021. The filing details an amendment to the employment agreement with Matthew Rabinowitz, Ph.D., the Company's Executive Chairman and Co-Founder.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity metrics. The document focuses exclusively on executive compensation arrangements.
Material Changes
The primary material change is the amendment of Dr. Rabinowitz's employment terms effective May 9, 2021. Key changes include:
- Employment Term: Extended service as Executive Chairman through December 31, 2023.
- Base Salary: Set at $333,000 per year through fiscal 2023.
- Cash Bonus: Eligible for an annual bonus up to 50% of base salary based on performance goals.
- Equity Awards (Fiscal 2021):
- Time-based stock option for 28,621 shares (25% vesting Jan 22, 2022; remainder over 36 months).
- Performance-based stock option for 28,621 shares (contingent on revenue milestones).
- Performance-based stock option for 162,758 shares (contingent on market capitalization milestones).
- Future Equity (Fiscal 2022-2023): Entitled to the lesser of 220,000 shares or a value equal to 90% (2022) and 80% (2023) of the CEO's annual equity award value.
Outlook, Risks, and Contingencies
Continued Services Beyond 2023: The Board and Dr. Rabinowitz will mutually discuss his role beyond fiscal 2023. The filing outlines specific severance contingencies based on the outcome of these discussions:
- If roles transition to solely Chairman of the Board by mutual agreement, no severance is due.
- If an offer to serve as Chairman is extended but terms for Executive Chairman cannot be agreed upon, involuntary termination severance applies.
- If no offer to serve as Chairman is extended, enhanced severance applies, including 100% acceleration of unvested time- and performance-based equity awards.
Standard Severance Terms: In the event of termination without cause or resignation for good reason, Dr. Rabinowitz is eligible for:
- Lump-sum payment of 9 months' base salary (18 months if within 12 months of a change in control).
- COBRA premium payments for up to 12 months (18 months if within 12 months of a change in control).
- Accelerated vesting of unvested equity (greater of 50% or 12 months of service; full acceleration if within 12 months of a change in control).
Investor Verification Checklist
- Verify the specific revenue and market capitalization milestones required for the 2021 performance-based equity awards.
- Review the full text of the Amended Employment Agreement (Exhibit 10.2) for definitions of "cause," "good reason," and "change in control."
- Monitor future filings for the outcome of discussions regarding Dr. Rabinowitz's role post-2023.
- Confirm the impact of the equity grant on the Company's 2015 Equity Incentive Plan share reserve.