DEF 14A 1 nc10023368x1_def14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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Natus Medical Incorporated

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April 28, 2021

Dear Natus Shareholders:

The Natus Board of Directors, management team and more than 1,420 Natus employees in 13 countries invite you to attend our 2021 Annual Meeting of Shareholders (the “Annual Meeting”), which will be held via a virtual meeting on June 16, 2021 at 8:00 a.m. (PT).

Our Annual Meeting will be a virtual meeting of shareholders, which will be conducted via live webcast. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.viewproxy.com/natus/2021. You will also be able to vote your shares electronically at the Annual Meeting. We intend to resume our historical practice of holding an in-person meeting next year.

The attached Notice of 2021 Annual Meeting of Shareholders and Proxy Statement includes further details about the business that will be conducted at our Annual Meeting. Shareholders may also access these materials at the Investor Relations page on our website at www.natus.com. We are excited about our future opportunities and look forward to reporting our progress in the year ahead.

Whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the meeting. We urge you to promptly vote and submit your proxy via the Internet, by phone, or by signing, dating and returning the enclosed proxy card in the enclosed envelope. If you attend the Annual Meeting, you can vote even if you previously submitted your proxy.

Sincerely,

Jonathan A. Kennedy

President & Chief Executive Officer

April 28, 2021

Dear Natus Shareholders:

Thank you for your investment in Natus Medical. Our over 1,420 employees are proud to make important products and devices that enhance patient care and the quality of life for people around the world.

It is a privilege to serve as your Board Chairperson. My Board colleagues and I thank everyone at the company for finding safe, creative and reliable ways to navigate the historic COVID-19 pandemic. This hard work allowed us to continue throughout 2020 to produce and provide the Natus products and services on which doctors and patients rely. With the One Natus effort generally complete, we enter 2021 as a strong, focused, and efficient company. We will provide high-quality medical devices and deliver value for all stakeholders for many years to come.

Your Board of Directors remains committed to ongoing refreshment. As part of this commitment, the Board actively reviews the needs of the company and the skills of our directors to ensure that the Board’s decisions are enriched by a diversity of experiences and perspectives. This will remain a focus in 2021.

2021 has started with enormous societal, health and economic challenges posed by the COVID-19 virus. For as long as it takes to overcome this threat - and well into the future - we are committed to being a strong partner to our communities, employees and their families, and the clinicians and patients we serve.

On behalf of the Natus Medical Board of Directors, thank you for your continued support.

Sincerely,

Barbara R. Paul, M.D.

Chairperson of Board

NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS and notice regarding the availability of proxy materials

Date and Time:	*Place:**
June 16, 2021 8:00 a.m. PT	Virtual Meeting Site: www.viewproxy.com/natus/2021

* Due to the ongoing public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our directors, employees and shareholders, our Annual Meeting will be a virtual meeting of shareholders, which will be conducted via live webcast. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.viewproxy.com/natus/2021. You will also be able to vote your shares electronically at the Annual Meeting.

Proposals to be voted on at the 2021 Annual Meeting of Shareholders (the “Annual Meeting”):

Proposal 1.	Election of seven director nominees named in the attached Proxy Statement to serve until either the 2022 annual meeting or until their respective successors are duly elected and qualified.
Proposal 2.	Approval of the 2021 Equity Incentive Plan.
Proposal 3.	Approval, on an advisory basis, of the named executive officer compensation disclosed in the attached Proxy Statement.
Proposal 4.	Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

And any other business that properly comes before the meeting or any adjournment or postponement thereof by or at the direction of the Board of Directors.

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.

Record Date: Shareholders who owned shares of our common stock at the close of business on April 19, 2021, are entitled to virtually attend and vote at the Annual Meeting. A complete list of these shareholders will be available during normal business hours for ten days prior to the Annual Meeting. A shareholder may examine the list for any purpose germane to the Annual Meeting. To inspect the list, please email our Investor Relations department at InvestorRelations@Natus.com. The list will also be available for examination during the Annual Meeting at www.viewproxy.com/natus/2021.

Your vote is important. Please submit your proxy or voting instructions as soon as possible to ensure that your shares will be represented at the Annual Meeting whether or not you expect to attend the Annual Meeting by live webcast.

By Order of the Board of Directors,

Barbara R. Paul, M.D.

Chairperson of the Board of Directors

April 28, 2021

Important notice regarding the availability of proxy materials for the

2021 Annual Meeting of Shareholders to be held on June 16, 2021:

Our Proxy Statement and 2020 Annual Report to shareholders are available on the Internet at www.proxyvote.com

Natus Medical Incorporated § 6701 Koll Center Parkway Suite 120, Pleasanton, CA 94566 § www.natus.com

PROXY SUMMARY	1
GENERAL MEETING AND VOTING INFORMATION	7
PROPOSAL 1 – ELECTION OF DIRECTORS	11
BIOGRAPHIES OF DIRECTOR NOMINEES	14
Corporate Governance Practices and Policies	22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	27
EXECUTIVE COMPENSATION AND OTHER INFORMATION	29
Executive Officers	29
Compensation Discussion And Analysis	30
Executive Summary	30
Our Compensation Philosophy and Objectives	30
Characteristics of our Executive Compensation Program	31
Our Compensation Setting Process	32
2020 Annual Meeting Say-on-Pay Vote	33
Factors Considered in Determining Compensation	33
Elements of Compensation	33
Base Salary	33
Annual Bonus	34
Long-Term Equity Awards	36
Other Elements of Compensation	37
Employee Stock Purchase Plan	37
Employee Benefits	37
Perquisites and Personal Benefits	38
Hedging	38
Change in Control and Severance Benefits	38
Other Executive Compensation Policies and Practices	38
Stock Ownership Guidelines	38
Clawback Policy	38
Compensation Risk Assessment	39
Tax and Accounting Considerations	39
Compensation Committee Report	39

PROPOSAL 2 - APPROVAL OF THE 2021 EQUITY INCENTIVE PLAN	51
PROPOSAL 3 – ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION	58
AUDIT MATTERS	59
PROPOSAL 4 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	59
Fees Paid to Principal Accountants	59
Pre-Approval of Services	60
AUDIT COMMITTEE REPORT	60
Deadline for Receipt of Shareholder Proposals and Director Nominations for the 2021 Annual Meeting	61

Directors and Officers Indemnification	61
Delinquent Section 16(a) Reports	61
Employee, Officer and Director Hedging	62
Related Persons Transactions	62
Additional Information	62
Annual Report on Form 10-K	62
Delivery of Proxy Materials	62
Attachment 1 – 2021 Equity Incentive Plan	63

Proposal		Board’s Voting Recommendation	Annual Meeting of Shareholders
Proposal 1:	Election of Directors	FOR ✓ each nominee	Date and Time: June 16, 2021 8 a.m. PT *Place: Virtual Meeting Site: http://viewproxy.com/natus/2021 Record Date:** April 19, 2021
Proposal 2: Proposal 3:	Approval of the 2021 Equity Incentive Plan Advisory Vote to Approve Named Executive Officer Compensation	✓ FOR ✓ FOR
Proposal 4:	Ratification of Appointment of Independent Registered Public Accounting Firm	✓ FOR

				Committee Membership
Directors	Year Appointed or Elected	Independent	Age	Audit Committee	Nominating & Governance Committee	Compensation Committee	Compliance & Quality Committee	Other Public Company Boards
Jonathan A. Kennedy President & Chief Executive Officer, Natus Medical Incorporated	2018	No	50					0
Alice D. Schroeder* Former Chair & Chief Executive Officer, WebTuner	2019	Yes	64	ü	ü^C		ü	1
Thomas J. Sullivan* President & Chief Executive Officer, Spectrum Plastics Group	2019	Yes	57	ü		ü^C		0

				Committee Membership
Directors	Year Appointed or Elected	Independent	Age	Audit Committee	Nominating & Governance Committee	Compensation Committee	Compliance & Quality Committee	Other Public Company Boards
Barbara R. Paul, M.D. Former Chief Medical Officer, Community Health Systems, Inc.	2016	Yes	67				ü	0
Lisa Wipperman Heine President & Chief Executive Officer, Precardia, Inc.	2018	Yes	57			ü	ü^C	1
Joshua H. Levine President & Chief Executive Officer, Accuray Inc.	2018	Yes	62		ü ü			1
Ilan Daskal Executive Vice President & Chief Financial Officer, Bio-Rad Laboratories, Inc.	2020	Yes	55	ü ^C	ü			0

	WHAT WE DO
ü	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.
ü	Special shareholders meetings can be called by shareholders owning at least 25% of our outstanding voting shares.
ü	Independent Board with six of our seven current and nominated directors meeting independence requirements (all but our Chief Executive Officer).
ü	Regular executive sessions of independent directors.
ü	Senior management succession planning considered annually or as requested by the Board.
ü	Active shareholder engagement We regularly meet with shareholders throughout the year, and we annually invite major shareholders to meet independently with our Board Chair.
ü	Regular board refreshment with five of six of our current independent directors joining the Board in the past three years.
ü	Annual Board and committee self-assessments.
ü	“Clawback” policy for performance-based compensation.
ü	Achieved gender equality on our Board. An equal mix of men and women serve as independent directors on the Board.
ü	Established Stock Ownership Guidelines for Directors and Executives.
ü	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.
ü	Declassified board. We amended our Certificate of Incorporation in June 2019 to phase out the classified Board, and the Board is now fully declassified.
ü	No over boarding. Each of our independent directors serves on no more than one other public company boards and our CEO does not serve on any outside public company Boards.
ü	Strategic Plan Review and approval of the overall business strategy for the Company.

	WHAT WE DON’T DO
✗	No shareholder rights plan (“poison pill”).
✗	No supermajority voting provisions in the Company’s organizational documents.
✗	No Cumulative voting. We eliminated the ability of shareholders to exercise cumulative voting in 2019.

WHAT WE DO
✓	Link Pay to Performance. Annual cash bonus payouts are based on the achievement of challenging operating and financial performance goals. To further link executive compensation paid to performance attained, we include Market Stock Units (MSUs) and Performance Stock Units (PSUs) as part of our executive compensation program as described in further detail herein.
✓	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.
✓	Subject Incentive Compensation to our Clawback Policy. We maintain a clawback policy covering annual and long-term incentive compensation paid to our executive officers.
✓	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.
✗		Provide Pension Benefits. We do not maintain any defined benefit pension plans.
✗		Pay Excessive Compensation. We target the total direct compensation (base salary, target annual bonus and target long-term equity awards) for our NEOs at the 50^th 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.

Proposal		Our Board’s Recommendation
Proposal 1.	Election of Directors	✔ FOR each nominee
Proposal 2. Proposal 3.	Approval of the 2021 Equity Incentive Plan Advisory Vote to Approve Named Executive Officer Compensation	✔ FOR ✔ FOR
Proposal 4.	Ratification of Appointment of Independent Registered Public Accounting Firm	✔ FOR

By Internet	1. 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	2. If you received a printed copy of the Proxy Materials, follow the instructions on the proxy card.
By Mail	3. If you received a printed copy of the Proxy Materials, complete, sign, date, and mail your proxy card in the enclosed, postage-prepaid envelope.
Virtually	4. You may also vote electronically at the virtual Annual Meeting.

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)	Abstentions and broker non-votes not counted as votes cast (only “for” and “against” votes are counted)
Proposal 2.	*Approval of the 2021 Equity Incentive Plan*	Majority votes cast (“for” votes must exceed the number of “against” votes)	Abstentions and broker non-votes not counted as votes cast (only “for” and “against” votes are counted)
Proposal 3.	*Executive Compensation (Advisory)*	Majority votes cast (“for” votes must exceed the number of “against” votes)	Abstentions and broker non-votes not counted as votes cast (only “for” and “against” votes are counted)
Proposal 4.	*Ratification of Independent Registered Public Accounting Firm*	Majority of votes cast (“for” votes must exceed the number of “against” votes)	Abstentions and broker non-votes not counted as votes cast (only “for” and “against” votes are counted)

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

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 Wipperman 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, Spectrum Plastics Group
DEMOGRAPHICS	Start Date	2016	2018	2020	2018	2018	2019	2019
	Age	67	50	55	57	62	64	57
	Gender	F	M	M	F	M	F	M
GENERAL	Concurrent fulltime position		ü	ü	ü	ü		ü
GENERAL	Other Public Co. Board Exp.	ü	ü	ü	ü	ü	ü	ü
BUSINESS	Public Co. CEO		ü			ü		ü
	Global		ü	ü	ü	ü	ü	ü
	Commercial Operations		ü	ü	ü	ü		ü
	Regulatory / Govt. Affairs	ü			ü		ü
FINANCE	Finance / Accounting		ü	ü			ü
	Public Co. CFO		ü	ü
	M&A		ü	ü	ü	ü		ü
	Risk			ü			ü	ü
	R&D			ü	ü			ü
HEATHCARE	Physician	ü
	Payor	ü
	Compliance	ü				ü	ü	ü
	Providers	ü	ü		ü	ü	ü	ü
TECHNOLOGY	High Tech		ü	ü			ü
	Medtech		ü	ü	ü	ü		ü
	Biotech


	Thomas J. Sullivan Age: 57 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 · Spectrum Plastics Group – President & Chief Executive Officer since December 2020 – Member of the Board of Directors since December 2020 · A&E Medical Corporation – President & Chief Executive Officer from July 2018 to December 2020 – Member of the Board of Directors from July 2018 to December 2020 · 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 global 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.


	Lisa Wipperman Heine Age: 57 Director Since: 2018 Natus Board Roles · Chair of the Compliance & Quality Committee · Compensation 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. Wipperman 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. Wipperman 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.

Principal Shareholder Name and Address	Total Shares Beneficially Owned	Percentage of Class
BlackRock, Inc.⁽¹⁾55 East 52nd Street New York, NY 10055	5,729,715	16.8%
The Vanguard Group⁽²⁾100 Vanguard Blvd. Malvern, PA 19355	2,789,002	8.2%
Victory Capital Management Inc.⁽³⁾ 4900 Tiedeman Rd. 4th Floor Brooklyn, OH 44144	2,009,623	5.9%

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⁾	191,321	37,062	228,383	*
Dr. Paul⁽²⁾	24,558	0	24,558	*
Ms. Wipperman Heine⁽²⁾	15,998	0	15,998	*
Mr. Levine⁽²⁾	27,098	0	27,098	*
Mr. Daskal⁽³⁾	11,148	7,588	18,736	*
Ms. Schroeder⁽²⁾	15,051	0	15,051	*
Mr. Sullivan⁽²⁾	15,051	0	15,051	*
Mr. Davies⁽⁴⁾	61,248	0	61,248	*
Mr. Noll⁽⁵⁾	120,965	0	120,965	*
Dr. Chung⁽⁶⁾	171,453	0	171,453	*
All directors, director nominees and executive officers as a group (10 persons)	653,891	44,650	698,541	2.0%

WHAT WE DO
ü			Link Pay to Performance. Annual bonus payouts are based on the achievement of operating and financial performance goals, with no discretionary adjustments for individual performance. To further link pay to performance, in 2020, we continued to grant PSUs and/or MSUs as part of our executive compensation program for annual long-term equity awards made to certain of our executive officers, as described in further detail herein.
ü			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.
ü			Subject Incentive Compensation to our Clawback Policy. We have a cl

REVIEW THE PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:

VIA THE INTERNET

Visit the website listed on your proxy
card or voting instruction form.

BY MAIL

Sign, date, and return the enclosed proxy card or voting instruction form.

BY TELEPHONE

Call the telephone number on your proxy card or voting instruction form.

VIRTUALLY

Attend the 2021 annual meeting by live webcast and vote by ballot.

SEC Form DEF 14A filed by Natus Medical Incorporated