Steven Chapman
NateraAbout Steven Chapman
Steven L. Chapman, 46, is Natera’s Chief Executive Officer, President, and a Class III director (director since 2019; CEO since January 2019). He holds a B.S. in Microbiology, Immunology and Molecular Genetics from UCLA . Under his leadership, 2024 total revenue reached $1,696.9 million (+56.7% YoY), gross margin improved to 60.3%, and the company achieved both positive cash flow (~$86 million) and positive operating cash flow ($135.7 million) for the year . Five-year TSR (2020–2024) was 369.87% .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Natera | Chief Operating Officer and other leadership roles prior to CEO | 2010–Jan 2019 | Built commercial and operating foundations; progression to CEO reflects execution depth . |
| Genzyme Genetics | Commercial/operating roles | Pre-2010 | Diagnostics domain experience leveraged in scaling Natera . |
| UCLA, Dept. of Human Genetics | Researcher | Pre-2010 | Scientific grounding relevant to cfDNA testing . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| American Clinical Laboratories Association | Director | Current | Policy and industry engagement channel . |
Fixed Compensation
Salary rates and annual incentive targets/payouts:
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Base salary rate ($) | 750,000 | 795,000 | 850,000 |
| Target bonus (% of salary) | — | 100% | 100% |
| Actual annual incentive payout ($) | 833,793 | 938,352 (paid in fully vested RSUs in Mar-2025) | — |
Additional mix and design: In 2024, ~94% of CEO target pay was variable/at-risk; 50% performance-based, primarily PSUs .
Performance Compensation
2024 Annual Incentive (STIP) – metrics, rigor, and outcomes
| Metric | Weight | Threshold | Target | Maximum | 2024 Actual | Payout vs target | Weighted payout |
|---|---|---|---|---|---|---|---|
| Revenue | 55% | $1,103.47m | $1,298.2m | $1,142.93m (120% payout cap) | $1,969.6m | 120.0% | 66.0% |
| Product Gross Margin | 35% | 41.0% | 51.3% | 61.6% (120% payout cap) | 60.3% | 117.5% | 41.1% |
| Cash Flow (operating CF proxy) | 10% | $(126.1)m | $(100.9)m | $(75.7)m (125% cap) | $86.5m | 120.0% | 12.0% |
| Total | 100% | — | — | — | — | — | 119.1% |
Notes: Management also disclosed 2024 positive cash flow (~$86m) in the CD&A overview, while operating cash flow was $135.7m; the STIP “cash flow” definition excludes financing cash flows .
2024 Long-Term Incentive (LTI) – design and grant
| Grant date (approved) | Vehicle | Performance/vesting | Threshold/Target/Max | Target shares | Grant value ($) |
|---|---|---|---|---|---|
| Jan 26, 2024 (approved Jan 24, 2024) | PSUs | 3-year cumulative revenue (FY2024–FY2026) | 95%/100%/105% → 50%/100%/200% payout | 86,220 | 5,500,000 |
| Jan 26, 2024 (approved Jan 24, 2024) | RSUs | Time-based: 4 years (25% at 12 months; quarterly thereafter) | n/a | 86,220 | 5,500,000 |
Performance-vesting milestones achieved/eligible under prior-cycle awards (CEO grants):
- 2021 market valuation milestone ($13B): 50% vested at certification on Jun 28, 2024; +25% vested Mar 28, 2025; remaining 25% was eligible to vest Sep 28, 2025 if market valuation remained ≥$13B (service required) . CEO tranches: 37,500 PSUs and 75,000 PSOs subject to this structure .
- 2022 annual revenue goal ($1.1B): Certified on Jan 16, 2025; CEO PSUs vested 54,175 shares .
- 2023 cumulative revenue: Two-year target $2.1357B achieved; 40% of CEO PSUs (50,906) vested Jan 16, 2025; remaining 60% tied to 3-year revenue by Dec 31, 2025 .
Equity Ownership & Alignment
Beneficial ownership (as of March 15, 2025)
| Holder | Direct shares | Options/RSUs exercisable/vesting ≤60 days | Total beneficial | % of shares outstanding |
|---|---|---|---|---|
| Steven L. Chapman | 45,076 | 22,407 | 67,483 | 0.050% (67,483 / 135,539,896) |
Notes: Shares outstanding = 135,539,896 (March 15, 2025) .
Key outstanding CEO awards at FY2024-end (selected)
| Award type | Shares | Key condition(s) / vesting |
|---|---|---|
| Time-based RSUs (2024 grant) | 86,220 | 4-year vest; 25% at 12 months from 1/26/24; then quarterly . |
| Time-based RSUs (2023 grant) | 71,587 | 4-year schedule from 1/27/23 . |
| Time-based RSUs (2022 grant) | 16,930 | 4-year schedule from 1/20/22 . |
| Time-based RSUs (2021 grant) | 1,775 | 4-year schedule from 1/21/21 . |
| PSUs (2024 grant, target) | 86,220 | 3-year cumulative revenue (FY24–26) . |
| PSUs (2023 grant, target) | 76,359 | 3-year cumulative revenue (to 12/31/2025) . |
Vesting and realizations in 2024:
- Options exercised: 68,270 shares; value realized $6,111,530 .
- Stock vested: 128,330 shares; value realized $11,886,476 .
- 2024 bonuses for NEOs, including CEO, were paid as fully vested RSUs on Mar 12, 2025 (sized off Mar 11, 2025 close) .
Ownership policies and alignment:
- Stock ownership guidelines: CEO 3x salary (raised to 5x in Jan 2025); executives expected to comply within 5 years; all NEOs and directors in compliance for 2024 .
- Hedging and pledging: Prohibited under Insider Trading Policy .
- Clawback policy: Adopted to comply with SEC/Nasdaq rules (10D) .
Insider trading/filings:
- One late Section 16 filing disclosed for a 10b5-1 trading plan sale by the Chapman Family Trust on Mar 15, 2024 (reported Mar 29, 2024) .
Employment Terms
| Scenario | Cash severance | COBRA | Equity acceleration | Notes |
|---|---|---|---|---|
| Involuntary termination (no CIC) | 12 months’ base salary | Up to 12 months | Greater of 50% of then-unvested time-based equity or forward-vesting as if 18 months of service; performance awards pro-rated by the greater of 50% or time served +18 months, based on actual achievement at period end | Good reason/cause definitions apply; potential post-termination consulting considered . |
| Involuntary termination within 18 months post-CIC | 18 months’ base salary + 100% target incentive | Up to 18 months | 100% acceleration of unvested time-based and performance awards (subject to terms) if termination is not solely due to diminished authority/responsibility | Double-trigger structure (CIC + qualifying termination) . |
Estimated payout tables for NEOs at 12/31/2024 (including CEO) are disclosed in the proxy using $158.30 per share; see “Potential Severance Payments and Benefits” .
Board Governance (including dual-role context)
- Board service: Chapman is a Class III director since 2019; CEO & President; he is not listed as a committee member (committees fully independent) .
- Leadership structure: Roles of Executive Chairman (Dr. Matthew Rabinowitz) and CEO (Chapman) are separated; an empowered Lead Independent Director (Roelof Botha) is in place; guidelines state the next chair will be independent .
- Independence: 8 of 11 directors are independent; board committees (Audit, Human Capital, Nominating/Corporate Governance & Compliance) are fully independent .
- Meetings/attendance: Board met five times in 2024; all directors attended ≥75% of their board/committee meetings; all directors attended the 2024 annual meeting .
- Director compensation: Employee directors (including the CEO) do not receive additional director compensation .
Performance & Track Record (selected)
- 2024 growth and profitability metrics: Revenue $1,696.9m (+56.7% YoY), gross profit $1,023.2m; Q4’24 gross margin 63% (vs 51% Q4’23); company met cash flow breakeven goal and delivered positive cash flow (~$86m) and operating CF of $135.7m in 2024 .
- Operating achievements: Expanded payer coverage for Signatera/Prospera; >250 peer-reviewed publications; oncology test volumes grew; announced oncology innovation roadmap; acquired Invitae reproductive health assets .
- Shareholder support: Say-on-Pay approval ~94.5% at 2024 meeting .
Compensation Program Design & Governance
- Metrics and weightings: STIP weighted to revenue (55%), product gross margin (35%), and operating cash flow (10%) with rigorous thresholds/targets .
- LTI structure: 50% PSUs (three-year revenue), 50% time-based RSUs; PSU payout curve 50–200% (95–105% of target performance) .
- Comparator/market positioning: Peer group maintained; philosophy targets approximately 75th percentile LTI value for CEO, with emphasis on at-risk equity .
- Independent oversight: Human Capital Committee (independent) met five times in 2024; used Aon as independent compensation consultant; no conflicts reported .
Director Service, Committees, and Dual-Role Implications
- Board service history: Director since 2019; executive management and director roles are separated from the chair role, mitigating CEO/Chair consolidation concerns .
- Committee roles: As an executive, Chapman does not serve on independent board committees (Audit, Human Capital, NCGCC) .
- Independence: Governance guidelines and current structure (Executive Chairman + Lead Independent Director + independent committees) address independence/oversight while the CEO serves as a director .
Equity Compensation: Detailed 2024 CEO Grants
| Vehicle | Grant date | Shares | Vesting | Notes |
|---|---|---|---|---|
| PSUs | Jan 26, 2024 | 86,220 | Payout based on FY24–26 cumulative revenue (95%/100%/105% → 50%/100%/200%) | Approved Jan 24, 2024 . |
| RSUs | Jan 26, 2024 | 86,220 | 4-year (25% at 12 months; remainder quarterly) | — |
Recent vesting/certifications:
- Market valuation milestone ($13B): Certified Jun 28, 2024 (50% vest), +25% vest Mar 28, 2025; final 25% was eligible Sep 28, 2025, subject to valuation and service .
- 2022 annual revenue goal: Certified Jan 16, 2025; CEO PSUs vested 54,175 .
- 2023 2-year cumulative revenue goal: Certified Jan 16, 2025; 40% of CEO PSUs (50,906) vested; remaining 60% tied to 3-year revenue by Dec 31, 2025 .
Employment Terms (Key Definitions)
- Good Reason/Cause/Change-in-Control definitions detailed for CEO; include protections against material diminutions, reporting changes, pay reductions, relocation >25 miles (Austin HQ), with cure periods and process .
Governance Policies, Controls, and Red Flags
- Clawback: Adopted per SEC/Nasdaq; applies to incentive pay .
- No hedging/pledging: Prohibited .
- No option repricings/buyouts without stockholder approval .
- Related parties: No Steven L. Chapman–specific related party transactions disclosed; related-party disclosures primarily concern MyOme and the Executive Chairman/co-founders .
- Section 16 compliance: One late filing noted for Chapman Family Trust under a 10b5-1 plan .
Investment Implications
- Pay-for-performance linkage and retention: High variable pay mix, three-year revenue PSUs, and ownership guidelines (raised to 5x in 2025) align CEO incentives with multi-year revenue growth and shareholder value; vesting cadence and 2025 certifications/vesting events may create episodic supply but also reinforce retention through staggered service conditions .
- Execution record: Strong 2024 operating execution (revenue growth, gross margin expansion, and positive operating cash flow) and robust 5-year TSR support incentive payouts and bolster confidence in strategy and capital allocation discipline .
- Governance risk mitigants: Separation of Executive Chair and CEO roles, Lead Independent Director, fully independent committees, and clawback/hedging/pledging prohibitions reduce governance and compensation risk despite CEO dual role as director .
- Change-in-control economics: Double-trigger treatment (100% acceleration with 18-month window and qualifying termination) is shareholder-standard; severance multiples (18 months post-CIC) are within typical ranges for growth biotech, balancing retention and potential transaction overhang concerns .