Michael Brophy
NateraAbout Michael Brophy
Michael B. Brophy, 45, has served as Natera’s Chief Financial Officer since February 2017 after roles leading Investor Relations, Finance, and Corporate Development; prior experience includes investment banking at Morgan Stanley focused on life science tools and diagnostics. He holds an MBA from UCLA and a BS in Economics from the U.S. Air Force Academy . During his tenure, Natera delivered 2024 revenue of $1,696.9 million (+56.7% YoY), gross profit of $1,023.2 million, and positive operating cash flow of $135.7 million; the company’s five‑year TSR is ~369.87% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Natera | VP, Corporate Development & Investor Relations | Sep 2015–Sep 2016 | Built IR and corporate development foundations supporting growth and capital markets access . |
| Natera | SVP, Finance & Investor Relations | Sep 2016–Feb 2017 | Led finance and IR through scale-up ahead of CFO appointment . |
| Morgan Stanley (Investment Banking) | VP (2011–2013), Executive Director (2014–2015) | 2011–2015 | Advised life science tools/diagnostics clients on financing and M&A, deep sector expertise . |
External Roles
- No public company board seats or external director roles disclosed for Brophy .
Fixed Compensation
| Component | 2023 | 2024 | 2025 |
|---|---|---|---|
| Base Salary (USD) | $465,293 | $489,610 | $559,200 |
| Target Bonus % (of base) | 50% | 50% | 55% |
| Actual Annual Incentive Paid (USD) | $252,598 (paid in RSUs) | $284,521 (paid in fully vested RSUs on 3/12/2025) | — |
Summary Compensation (Pay Mix and Trend)
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | $407,714 | $465,293 | $493,254 |
| Stock Awards (Grant-Date Fair Value) | $3,188,127 | $4,344,607 | $4,103,350 |
| Non-Equity Incentive Plan Compensation | $194,901 | $252,598 | $284,521 |
| All Other Compensation | $8,730 | $6,727 | $6,209 |
| Total | $3,799,472 | $5,069,225 | $4,887,334 |
Performance Compensation
| Metric | Weighting | Threshold | Target | Maximum | Actual 2024 | Payout vs Target | Notes |
|---|---|---|---|---|---|---|---|
| Revenue | 55% | $1,103.47M | $1,298.2M | $1,142.93M (payout cap reference) | $1,969.6M | 120.0% | Company achievement 151.7% of target . |
| Product Gross Margin | 35% | 41.0% | 51.3% | 61.6% | 60.3% | 117.5% | Margin expansion drove payout . |
| Operating Cash Flow | 10% | $(126.1)M | $(100.9)M | $(75.7)M | $86.5M | 120.0% | Significant improvement to positive OCF . |
| Weighted Company Payout | — | — | — | — | — | 119.1% | Applies to all NEOs . |
| Individual Performance Factor (Brophy) | 20% | — | — | — | — | 110% | CEO recommended; HCC approved . |
| Total Actual Award (Brophy) | — | — | — | — | — | $284,521 (117.31% of target) | Company: $231,162; Individual: $53,358 . |
2024 Long-Term Incentives (LTI) Structure
- 50% PSUs (three-year cumulative revenue, 2024–2026); 50% time-based RSUs vesting over 4 years .
- PSU payout curve: 50% vest at 95% of target, 100% at target, 200% at 105% of target .
| Grant Type | Grant Date | Target Fair Value | Shares at Target | Vesting / Performance |
|---|---|---|---|---|
| PSUs | 01/26/2024 | $2,000,000 | 31,352 | Cumulative revenue through 12/31/2026 . |
| RSUs | 01/26/2024 | $2,000,000 | 31,352 | 25% after 12 months, then quarterly through 4 years . |
Equity Ownership & Alignment
| Ownership Item | Detail |
|---|---|
| Beneficial Ownership | 19,429 shares (<1%) as of 3/15/2025 . |
| Shares Issuable within 60 Days | 7,834 (options exercisable or RSUs vesting) . |
| Stock Ownership Guidelines | Executives: 1x base salary; all NEOs in compliance for 2024 . |
| Hedging / Pledging | Prohibited for employees and directors; no pledging permitted . |
| Clawback Policy | Adopted; applies to incentive compensation per SEC/Nasdaq rules . |
2024 Option Exercises and Stock Vested (Liquidity Indicators)
| Item | Shares | Value (USD) |
|---|---|---|
| Options Exercised (Brophy) | 34,029 | $2,383,129 |
| Shares Acquired on Vesting (Brophy) | 55,013 | $5,082,493 |
Selected Outstanding Equity (12/31/2024)
| Award | Shares | Key Condition |
|---|---|---|
| RSUs (Granted 1/26/2024) | 31,352 | 4-year vest, 25% after 12 months, quarterly thereafter . |
| PSUs (Granted 1/26/2024) | 31,352 (target) | 3-year cumulative revenue to 12/31/2026 . |
| PSUs (Granted 1/27/2023) | 29,798 (target) | 3-year cumulative revenue to 12/31/2025; 40% tranche vested for 2-year target achieved . |
| PSUs (Granted 1/28/2022) | 24,348 | $1.1B annual revenue goal achieved; vested 1/16/2025 . |
| PSUs (Granted 1/22/2021) | 12,500 | $13B market valuation milestone achieved 6/28/2024; tranche structure per milestone (50% vested; subsequent 25% tranches at 9 and 15 months if valuation maintained) . |
Employment Terms
| Provision | Brophy (Executive Severance Plan) |
|---|---|
| Severance (Non-CIC) | Lump-sum 6 months’ base salary . |
| Severance (CIC within 12 months) | Lump-sum 12 months’ base salary . |
| COBRA | Company-paid premiums up to 12 months . |
| Equity Acceleration (Non-CIC) | Time-based: greater of 50% of unvested or forward vesting equal to 12 months; Performance-based: pro‑rata factor (≥50% or portion including an additional 12 months) times actual achievement at measurement end . |
| Equity Acceleration (CIC) | 100% of time-based; performance awards: revenue-based per board‑approved forecast; market-cap awards per deal valuation; other milestones fully vest . |
| Good Reason (summary) | Material reduction in authority/responsibilities; salary reduction; relocation >30 miles without remote option; subject to notice/cure periods . |
| Cause (summary) | Unauthorized disclosure, material breach, policy noncompliance, felony/fraud, failure to perform, etc.; cure periods applicable . |
| Excise Tax Gross‑Ups | None provided . |
Performance & Track Record
- 2024 achievements: revenue $1,696.9M (+56.7% YoY), gross profit $1,023.2M, OCF $135.7M; expanded coverage for Signatera/Prospera, largest kidney transplant cfDNA study; oncology innovation roadmap .
- Say‑on‑Pay 2024 approval: ~94.5% “For” .
- Compensation program uses revenue, gross margin, and operating cash flow with rigorous targets; independent consultant (Aon) engaged; heavy variable pay and PSU use .
Compensation Structure Analysis
- Mix emphasizes equity and performance: 2024 stock awards $4.10M vs salary $0.49M; annual bonus $0.28M paid in RSUs to align with shareholders .
- LTI targeted at ~75th percentile of peer group; PSU weighting 50% with multi‑year revenue targets—strong pay‑for‑growth design .
- No hedging/pledging; clawback adopted; no excise tax gross‑ups—shareholder‑friendly policies .
Equity Compensation Detail (Grant Mechanics)
| Element | Design |
|---|---|
| PSU Performance Curve | 50% vest at 95% of target; 100% at target; 200% at 105% . |
| RSU Vesting | 25% at 12 months; remainder quarterly to 4 years . |
| Market Valuation Milestone Awards | $13B valuation achieved 6/28/2024; staggered vesting contingent on valuation at 9 and 15 months . |
Risk Indicators & Red Flags
- Hedging/pledging prohibited; clawback policy in place .
- Related party transactions primarily involve MyOme with other Natera executives/board; no Brophy‑specific RPT disclosed .
- Strong Say‑on‑Pay support (94.5%) reduces governance risk .
Compensation Peer Group (Benchmarking)
- Peer set includes Exact Sciences, Guardant Health, Bio‑Techne, Ionis, Ultragenyx, etc.; Natera positioned ~42nd percentile market cap and ~54th percentile revenue at time of approval; LTI targeting around 75th percentile underscores retention and performance emphasis .
Investment Implications
- Alignment: High variable equity, PSU weighting, RSU bonus delivery, stock ownership guidelines, and no hedging/pledging signal strong alignment with long‑term value creation .
- Retention risk: Significant unvested PSUs/RSUs and severance protection (including CIC acceleration) reduce attrition risk; market‑valuation PSU tranches add near‑term vesting events that could create incremental selling pressure around vest dates .
- Performance linkage: Annual incentives tied to revenue, margin, and OCF with above‑target payouts; multi‑year revenue PSUs drive sustained growth focus—beneficial for shareholders if execution persists .
- Governance: Strong Say‑on‑Pay, independent compensation oversight, clawback, and lack of tax gross‑ups support governance quality and mitigate compensation red flags .