Kevin Waters
About Kevin Waters
Kevin Waters, age 47, is EVP and Chief Financial Officer of PROCEPT BioRobotics, serving as CFO since January 2022 (previously SVP, CFO from October 2018 to December 2021). He holds a B.S. in Business Administration (Accounting and Finance) from Cal Poly San Luis Obispo and previously served as CFO and SVP Finance at Accuray Incorporated. Under his finance leadership, PROCEPT delivered 2024 revenue of $224.5 million, up 65% year-over-year, while company TSR for 2024 reached 191.99 (indexed to $100), reflecting strong investor returns despite continued investment for growth .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| PROCEPT BioRobotics | EVP, Chief Financial Officer | Jan 2022–present | Senior financial leadership during scale-up and commercialization |
| PROCEPT BioRobotics | SVP, Chief Financial Officer | Oct 2018–Dec 2021 | Built finance function pre- and post-IPO |
| Accuray Incorporated | Chief Financial Officer | Sep 2015–Oct 2018 | Public-company CFO for radiation oncology innovator |
| Accuray Incorporated | SVP, Finance | Oct 2013–Aug 2015 | Led finance operations prior to CFO role |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $415,000 | $448,750 | $482,500 |
| Non-Equity Incentive Plan Compensation ($) | $329,100 | $225,360 | $275,600 |
| Stock Awards Grant-Date Fair Value ($) | $276,911 | $974,181 | $1,112,019 |
| Option Awards Grant-Date Fair Value ($) | $301,294 | $1,011,015 | $311,869 |
| All Other Compensation ($) | — | $6,000 | $6,000 |
| Total Compensation ($) | $1,322,305 | $2,665,306 | $2,187,988 |
- Target bonus opportunity: 60% of eligible base salary (unchanged vs. 2023) .
- 2024 bonus payout: 95.2% of target, yielding $275,600 based on $482,500 salary earned .
Performance Compensation
2024 Annual Bonus Plan — Corporate Metrics and Outcomes
| Metric | Weight | Target | Actual Achievement | Weighted Payout |
|---|---|---|---|---|
| Revenue ($) | 45% | $225.1M | 99.7% | 44.7% |
| U.S. Procedures (count) | 10% | 32,056 | 86.7% | 0.0% (threshold not met; saline shortage impact) |
| Adjusted EBITDA ($) | 10% | $(59.3)M | 97.1% | 9.0% |
| Gross Margin (%) | 15% | 60.4% | 101.2% | 16.5% |
| Product-Related Goal | 20% | If Achieved | 100.0% | 25.0% |
| Total | 100% | — | — | 95.2% overall payout |
Notes:
- Minimum potential payout: 50% of target; maximum: 180% of target .
- Adjusted EBITDA definition: EBIT plus D&A and stock-based compensation (non-GAAP) .
2024 Long-Term Incentive (LTI) Design — Mix and Vesting
| Component | Weight | Vesting | Performance Basis |
|---|---|---|---|
| RSUs | 50% | Annual over 4 years | Time-based |
| Stock Options | 25% | Monthly over 4 years; exercise price = grant date close | Stock price appreciation (FMV strike) |
| PSUs | 25% | 75% vests after 2 years; 25% after 3 years | 2-year cumulative revenue; 3-year relative TSR vs. Russell 2000 |
Relative TSR PSU scale:
| Achievement Factor | Relative TSR Percentile |
|---|---|
| 2.0 (Max) | >90th percentile |
| 1.5 | 75th percentile |
| 1.0 (Target) | 50th percentile |
| 0.5 (Threshold) | 25th percentile |
| 0.0 | <25th percentile |
- If TSR is negative over the period, factor capped at 1.0 .
- On Change in Control, PSU factor = greater of actual or 1.0; performance period ends at close .
2024 Grants (Kevin Waters)
| Grant Date | Award Type | Units / Structure | Exercise Price | Grant-Date Fair Value ($) |
|---|---|---|---|---|
| 3/6/2024 | PSUs (target) | 6,637; threshold 3,318; max 13,274 | — | Included in stock FV $939,249 |
| 3/6/2024 | RSUs | 19,912 units | — | Included in stock FV $939,249 |
| 3/6/2024 | Options | 11,563 options | $47.17 | $311,869 |
Equity Ownership & Alignment
Beneficial Ownership (as of April 11, 2025)
| Holder | Shares Beneficially Owned | % Outstanding | Breakdown |
|---|---|---|---|
| Kevin Waters | 284,546 | <1% | 66,607 common + 217,939 options exercisable within 60 days |
- Stock ownership policy: NEOs must hold shares equal to 1× base salary; all NEOs were in compliance as of December 31, 2024 .
- Anti-hedging/anti-pledging: Company prohibits short sales, options, hedging, pledging, margin accounts; limited exchange fund contributions may be permitted with approval .
- Clawback: Incentive compensation subject to recovery upon required accounting restatement per SEC/Nasdaq rules .
Outstanding Equity Awards (12/31/2024 snapshot)
RSUs and PSUs (unvested):
| Grant | Units Unvested | Market Value at $80.52 |
|---|---|---|
| RSUs (3/6/2024) | 13,275 | $1,068,903 |
| RSUs (3/5/2023) | 19,737 | $1,589,223 |
| RSUs (3/15/2022) | 3,957 | $318,618 |
| PSUs (3/6/2024, target) | 6,637 | $534,411 |
Options (selected grants; exercisable/unexercisable and strike):
| Vesting Commencement | Exercisable | Unexercisable | Exercise Price | Expiration |
|---|---|---|---|---|
| 3/6/2024 | 2,168 | 9,395 | $47.17 | 3/6/2034 |
| 3/5/2023 | 20,882 | 26,850 | $37.02 | 2/15/2033 |
| 3/15/2022 | 11,013 | 5,007 | $34.99 | 3/30/2032 |
| 6/22/2021 | 75,527 | 10,788 | $7.27 | 6/22/2031 |
| 8/10/2020 | 70,219 | — | $5.18 | 8/9/2030 |
| 12/12/2019 | 19,160 | — | $4.56 | 12/11/2029 |
| 3/25/2019 | 119,450 | — | $4.56 | 4/4/2029 |
Insider activity (2024):
- Options exercised: 172,997 shares; value realized $9,031,511 (spread at exercise) .
- RSUs vested: 8,557 shares; value realized $399,268 .
Employment Terms
| Provision | Non-Change-of-Control Termination | Change-of-Control Termination (within 3 months prior to or 12 months after CoC) |
|---|---|---|
| Severance (cash) | 6 months base salary | 18 months base salary + 150% of target annual bonus |
| Equity | No acceleration | 100% acceleration of unvested equity; options exercisable up to 12 months post-separation (or original expiry) |
| COBRA | Up to 6 months | Up to 18 months |
| At-will employment | Yes (explicit) | — |
Indicative value of CoC package at 12/31/2024 (assumes awards are assumed by acquirer; acceleration value uses $80.52 reference price):
| Scenario | Cash Severance ($) | Stock Option Accel ($) | RSU/PSU Accel ($) | COBRA ($) | Total ($) |
|---|---|---|---|---|---|
| CoC Termination | $1,176,000 | $2,499,488 | $3,511,155 | $74,328 | $7,260,971 |
| Non-CoC Termination | $245,000 | — | — | $24,776 | $269,776 |
Compensation Structure Analysis
- Pay mix evolution: 2024 introduced PSUs (25% of LTI) alongside RSUs (50%) and options (25%), increasing performance linkage to cumulative revenue and relative TSR and reducing reliance on pure time-based equity .
- Annual incentive calibration: Weighted toward revenue and gross margin with an operational/non-financial product goal; U.S. procedures shortfall (saline shortage) zeroed that component, moderating total payout to 95.2% of target .
- Governance safeguards: Robust clawback, anti-hedging/pledging, director and NEO ownership policies; no tax gross-ups or excessive perquisites, aligning with shareholder-friendly standards .
- Peer benchmarking: Committee targets median market levels; peer group refreshed with Alpine Rewards in 2024–2025 to reflect stage/sector comparables .
Investment Implications
- Alignment and incentives: Waters’ package ties a significant portion to stock performance (options) and multi-year operational outcomes (PSUs), supporting value creation alignment; compliance with ownership guidelines and prohibitions on hedging/pledging reduce misalignment risk .
- Retention risk and CoC economics: Double-trigger CoC benefits (18 months salary + 1.5× bonus + full acceleration) are competitive; outside CoC, 6-month severance is modest—retention leans on ongoing equity vesting and PSU outcomes .
- Trading signals: Significant 2024 option exercises ($9.0M value) and sizable unvested equity (RSUs/PSUs) suggest periodic sell pressure near vest/exercise dates; monitor Form 4s around quarterly windows and PSU determination dates .
- Performance backdrop: 2024 revenue growth (+65% YoY) and strong TSR support the pay-for-performance construct; annual bonus moderation (95.2%) evidences discipline when operational headwinds (procedure delays) arise .