Kathleen Waters
DAVITAAbout Kathleen Waters
Kathleen A. Waters, 57, serves as DaVita’s Chief Legal and Public Affairs Officer; she became Chief Legal Officer in May 2016 and added federal government affairs in February 2021 and state government affairs in September 2024, overseeing legal, regulatory, and public policy functions for the enterprise . 2024 company performance exceeded incentive targets, with Adjusted Operating Income of $2,053 million vs. $1,902 million target and Adjusted Free Cash Flow of $1,220 million vs. $1,021 million target, contributing to a 183% total eligible STI payout for Waters and most NEOs . Longer-term, performance PSUs granted in 2021 and 2022 that measured 2024 outcomes vested at 90% and 89% of target, respectively, driven by Relative TSR achievement of 136% and 149% of target, indicating stock outperformance vs. the S&P Health Care Services Select Industry Index constituents during the relevant windows .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| DaVita Inc. | Chief Legal Officer; later Chief Legal & Public Affairs Officer | 2016–present | Enterprise leadership over legal/regulatory; expanded remit to federal (2021) and state government affairs (2024) |
| Health Net, Inc. | SVP, General Counsel and Secretary | 2015–2016 | Led legal function at a publicly traded managed care organization |
| Morgan, Lewis & Bockius LLP | Partner, co-chair of healthcare group | 2003–2015 | Co-led healthcare litigation practice; advised on healthcare regulatory issues |
| Various law firms | Attorney (private practice) | 1994–2003 | Litigation and advisory roles prior to Morgan Lewis |
External Roles
No public company directorships or external board roles for Waters are disclosed in the proxy’s executive officer biographies .
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary Earned ($) | $650,000 | $684,615 | $734,616 |
| Year-end Base Salary ($) | $700,000 | $700,000 | $750,000 (7% increase) |
| Target Bonus ($) | $— (not disclosed) | $— (not disclosed) | $700,000 |
| Target Bonus % of Salary | — | — | 93% |
| Actual STI Payout ($) | $423,874 | $1,215,663 | $1,281,193 |
| Stock Awards Grant-Date Fair Value ($) | $1,896,006 | $3,703,459 | $2,631,744 |
| Option/SSAR Awards Grant-Date Fair Value ($) | $558,922 | $— | $— |
| All Other Compensation ($) | $3,840 | $3,840 | $3,840 |
| Perquisites Detail | Life insurance $240; 401(k) $3,600 | Life insurance $240; 401(k) $3,600 | Life insurance $240; 401(k) $3,600 |
Performance Compensation
2024 Short-Term Incentive (STI) Metrics and Outcomes
| Metric | Weight | Criteria Range / Target | Actual Performance | Eligible Payout Achieved |
|---|---|---|---|---|
| Adjusted Operating Income | 50.0% | $1,790–$2,052mm; Target $1,902mm | $2,053mm | 200.0% |
| Adjusted Free Cash Flow | 20.0% | $908–$1,171mm; Target $1,021mm | $1,220mm | 200.0% |
| Home modalities penetration (Q4 2024) | 7.5% | 15.40%–16.75%; Target 15.75% | 15.63% | 76.0% |
| CKCC patient contact composite | 7.5% | 40.0%–65.0%; Target 60.0% | 63.10% | 162.0% |
| Teammate engagement (avg. 2024 surveys) | 3.0% | 76.0%–84.0%; Target 80.0% | 83.97% | 199.3% |
| Water savings projects | 3.0% | 50–100mm gallons; Target 75mm | 75mm | 100.0% |
| Custom objectives (CLO & Public Affairs) | 9.0% | Varies by NEO | Legal/public affairs initiatives; technology/resource enhancements | 180.0% (Waters) |
| Total Weighted Eligible Payout Achieved | — | — | — | 183.0% (Waters) |
Key STI design features: 70% financial metrics; 30% strategic objectives; payouts 0–200% of target; adjustments pre-established to normalize for unforeseen items to maintain rigor and consistency .
2024 Long-Term Incentive (LTI) Program Structure
- Mix: 60% PSUs, 40% RSUs .
- PSU performance criteria: 75% Adjusted EPS, 25% Relative TSR vs. S&P Health Care Services Select Industry Index constituents; multi-year performance period; payout 0–200% .
- RSU vesting (March 2024 NEO grants): 50% on each of the third and fourth anniversaries of grant date .
- PSU vesting (2024 cohort): 100% on March 15, 2027, subject to performance; amounts shown at maximum under SEC rules where applicable .
2024 Grants to Waters
| Grant Type | Grant Date | Target/Units | Threshold | Maximum | Grant-Date Fair Value ($) |
|---|---|---|---|---|---|
| PSUs | 3/15/2024 | 10,537 | 2,635 | 21,074 | $1,671,778 |
| RSUs | 3/15/2024 | 7,025 | — | — | $959,966 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 71,511 shares; <1% of outstanding |
| Ownership Guidelines | 3x base salary; Waters compliant as of 12/31/2024 |
| Hedging/Pledging | Prohibited for executive officers under Insider Trading Policy |
| 2024 Exercises/Vesting | 39,212 shares acquired on option/SSAR exercise; $5,378,118 realized; 15,936 shares vested from stock awards; $2,170,748 value |
| Deferred Compensation | 2024 contribution $114,231; earnings $150,997; withdrawals ($219,144); year-end balance $1,775,280; prior deferrals $281,003 (2023), $127,162 (2022) |
Outstanding Equity Awards as of 12/31/2024 (Waters)
| Type | Grant Date | Units/Options | Exercise/Base Price | Expiration | Market Value at $149.55 |
|---|---|---|---|---|---|
| SSARs (Unexercisable) | 3/15/2021 | 8,079 | $108.93 | 3/15/2026 | — |
| SSARs (Unexercisable) | 3/15/2022 | 15,908 | $110.63 | 3/15/2027 | — |
| RSUs (Unvested) | 3/15/2021 | 2,020 | — | — | $302,091 |
| RSUs (Unvested) | 3/15/2021 | 3,370 | — | — | $503,984 |
| PSUs (Unearned) | 3/15/2021 | 3,028 | — | — | $452,837 |
| RSUs (Unvested) | 3/15/2022 | 3,977 | — | — | $594,760 |
| RSUs (Unvested) | 3/15/2022 | 5,296 | — | — | $792,017 |
| PSUs (Unearned) | 3/15/2022 | 5,965 | — | — | $892,066 |
| RSUs (Unvested) | 3/15/2023 | 18,411 | — | — | $2,753,365 |
| PSUs (Unearned) | 3/15/2023 | 55,234 | — | — | $8,260,245 |
| RSUs (Unvested) | 3/15/2024 | 7,025 | — | — | $1,050,589 |
| PSUs (Unearned) | 3/15/2024 | 21,074 | — | — | $3,151,617 |
Notes:
- SSARs vest 50% on the third and 50% on the fourth anniversary of grant; remain exercisable through expiration .
- As of 12/31/2024, Waters is retirement-eligible under “Rule of 65,” which allows continued vesting post-retirement per original schedules (SSARs/RSUs) and performance-based settlement for PSUs .
Employment Terms
| Provision | Key Terms |
|---|---|
| Severance (Without Cause) | Base salary continuation for one year under Severance Plan (reduced by compensation from new employment during severance period) |
| Resignation for Good Cause | Base salary continuation (no less than one year) under Severance Plan; if termination after April, lump sum equal to prior year’s bonus pro-rated |
| Change of Control (Equity) | Double-trigger vesting: automatic vesting if awards not assumed; or vesting upon termination within 24 months post-CoC; PSUs with incomplete periods convert to Relative TSR and settle per clause |
| Non-Solicitation | Two years post-termination; confidentiality obligations continue until information becomes public |
| Clawbacks | Dodd-Frank/NYSE-compliant recoupment for restatements (3-year lookback) and separate misconduct policy covering up to three years of annual incentive comp including time-based equity |
| Hedging/Pledging | Prohibited for executive officers; quarterly trading blackouts and pre-clearance requirements apply |
| Tax Gross-ups | No change-of-control tax gross-ups; CEO has cut-back/best-net provision; company states no tax gross-ups in employment agreements |
| Life Insurance | $500,000 coverage amount for Waters as of 12/31/2024 |
Estimated Payments by Termination Scenario (Assumed event 12/31/2024)
| Scenario | Salary | Bonus | Value of SSARs | Value of Stock Awards | Total |
|---|---|---|---|---|---|
| Death/Disability/Qualified Retirement | $— | $— | $947,308 | $12,821,221 | $13,768,529 |
| Involuntary Termination Without Cause | $750,000 | $— | $947,308 | $12,821,221 | $14,518,529 |
| Resignation for Good Reason | $750,000 | $1,215,663 | $947,308 | $12,821,221 | $15,734,192 |
| Good Reason or Company Without Cause post-CoC | $— | $— | $947,308 | $17,244,162 | $18,191,470 |
Investment Implications
- Strong pay-for-performance alignment: Waters’ 2024 STI payout at 183% reflects above-target financial execution and strategic metrics; LTI design emphasizes cumulative Adjusted EPS and Relative TSR with historical vesting outcomes near target, signaling disciplined performance hurdles .
- Equity alignment and retention: Significant unvested RSUs and PSUs with back-loaded vesting, plus Rule-of-65 retirement eligibility allowing continued vesting, reduce near-term selling pressure risk and incentivize sustained execution; hedging/pledging prohibitions further align interests .
- Trading signals: 2024 option/SSAR exercises (39,212 shares; $5.38mm value realized) and stock vesting activity indicate ongoing monetization but within structured windows and policies; ownership remains compliant with a 3x salary guideline and beneficial ownership of 71,511 shares .
- Downside and change-of-control risk: Severance for Waters is modest relative to CEO (one-year salary) but equity acceleration under double-trigger CoC could be meaningful ($17.24mm stock award value in CoC scenario), suggesting potential incentives around deal outcomes; no tax gross-ups and robust clawbacks mitigate governance risk .