Exhibit 10.3

 

Natera, Inc.

Management Cash Incentive Plan

(As Adopted Effective November 11,  2015)

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

ARTICLE 1.

BACKGROUND AND PURPOSE

1 

1.1

Effective Date

1 

1.2

Purpose of the Plan

1 

 

 

 

ARTICLE 2.

DEFINITIONS

1 

 

 

 

ARTICLE 3.

SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS

3 

3.1

Selection of Participants

3 

3.2

Determination of Performance Goals

3 

3.3

Determination of Target Awards

3 

3.4

Determination of Payout Formula or Formulae

3 

3.5

Determination of Actual Awards

3 

3.6

Adjustments

4 

 

 

 

ARTICLE 4.

PAYMENT OF AWARDS

4 

4.1

Right to Receive Payment

4 

4.2

Timing of Payment

4 

4.3

Form of Payment

4 

4.4

Payment in the Event of Death

4 

 

 

 

ARTICLE 5.

ADMINISTRATION

4 

5.1

Committee Authority

4 

5.2

Decisions Binding

4 

5.3

Delegation by the Committee

5 

 

 

 

ARTICLE 6.

GENERAL PROVISIONS

5 

6.1

Tax Withholding

5 

6.2

No Effect on Employment

5 

6.3

No Effect on Other Benefits

5 

6.4

Successors

5 

6.5

Nontransferability of Awards

5 

 

 

 

ARTICLE 7.

DURATION, AMENDMENT AND TERMINATION

5 

7.1

Duration of the Plan

5 

7.2

Amendment, Suspension or Termination

5 

 

 

 

ARTICLE 8.

LEGAL CONSTRUCTION

6 

8.1

Severability

6 

8.2

Requirements of Law

6 

8.3

Governing Law

6 

8.4

Captions

6 

 

 

 

Appendix A  Performance Metrics

7 

 

 

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Natera, Inc.
Management Cash Incentive Plan

ARTICLE 1.    BACKGROUND AND PURPOSE 

1.1    Effective Date.  The Plan was adopted by the Committee on the date set
forth above, is effective immediately, and is not subject to approval by the
Company’s stockholders.

1.2    Purpose of the Plan.    The Plan is intended to motivate Participants to
achieve excellent short- and long-term financial performance for the Company and
its business units.  The Plan provides Participants with the opportunity to earn
cash incentive awards for the achievement of goals relating to the performance
of the Company.

ARTICLE 2.     DEFINITIONS 

The following words and phrases shall have the following meanings, unless a
different meaning is plainly required by the context:

2.1    “Actual Award” means, as to any Performance Period, the actual award (if
any) payable to a Participant for the Performance Period.  Each Actual Award is
determined by the Payout Formula for the Performance Period, subject to the
Committee’s authority under Section 3.5 to increase, eliminate or reduce the
award otherwise indicated by the Payout Formula.

2.2    “Affiliate” means any corporation or other entity (including, without
limitation, partnerships and joint ventures) controlled by the Company.

2.3    “Base Salary” means, as to any Performance Period, the Participant’s
earned salary during the Performance Period.  Base Salary shall be calculated
before both (a) deductions for taxes or benefits and (b) deferrals of
compensation pursuant to Company-sponsored plans or Affiliate-sponsored plans.  

2.4    “Board” means the Company’s Board of Directors.

2.5    “Committee” means the Compensation Committee of the Board.

2.6    “Company” means Natera, Inc., a Delaware corporation, or any successor
thereto.

2.7    “Disability” means a permanent disability, as determined for purposes of
the principal long-term disability insurance plan maintained by the Company for
the benefit of the Participant.  If there is no such plan, Disability shall be
determined in accordance with a policy established by the Committee.

 

 

 

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2.8    “Employee” means any employee of the Company or of an Affiliate, whether
such employee is so employed when the Plan is adopted or becomes so employed
after the adoption of the Plan.

2.9    “Fiscal Quarter” means a fiscal quarter within a Fiscal Year of the
Company.

2.10    “Fiscal Year” means the fiscal year of the Company.

2.11    “Participant” means, as to any Performance Period, an Employee who has
been selected for participation in the Plan for that Performance Period pursuant
to Section 3.1.  

2.12    “Payout Formula” means, as to any Performance Period, the formula or
payout matrix established by the Committee pursuant to Section 3.4 in order to
determine the Actual Awards (if any) to be paid to Participants.  The formula or
matrix may differ from Participant to Participant.

2.13    “Performance Period” means a Fiscal Year, or any longer or shorter
period determined by the Committee.

2.14    “Performance Goals” means the goal(s) determined by the Committee to be
applicable to a Participant for a Target Award for a Performance Period.  As
determined by the Committee, the Performance Goal(s) may provide for a targeted
level or levels of achievement using the performance criteria specified by the
Committee.  Such criteria shall be based on one or more of the performance
metrics set forth in Appendix A attached to the Plan.

2.15    “Plan” means this Natera, Inc. Management Cash Incentive Plan, as set
forth in this instrument and as hereafter amended from time to time.

2.16    “Progress Payment” means a portion of the Target Award or Actual Award
determined in accordance with Section 3.5 that has been earned by the
Participant as of the end of the Progress Period, based on achievement of the
applicable Performance Goals, and that may be paid to the Participant during the
Performance Period.

2.17    “Progress Period” means a period shorter than and within the Performance
Period for which a Progress Payment may be made.

2.18    “Retirement” means, with respect to any Participant, a Termination of
Employment occurring in accordance with a policy or policies established by the
Committee from time to time.

2.19    “Target Award” means the target award payable under the Plan to a
Participant for the Performance Period or Progress Period, as applicable,
expressed as a percentage of his or her Base Salary or a specific dollar amount,
as determined by the Committee in accordance with Section 3.3.  

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2.20    “Termination of Employment” means a cessation of the employee-employer
relationship between an Employee and the Company or an Affiliate for any reason,
including (without limitation) a termination by resignation, discharge, death,
Disability, Retirement or the disaffiliation of an Affiliate, but excluding a
transfer from the Company to an Affiliate or between Affiliates.  

ARTICLE 3.  SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS 

3.1    Selection of Participants.  The Committee shall select the Employees who
shall be Participants for any Performance Period.  The Committee also may
designate as Participants one or more individuals (by name or position) who are
expected to become Employees during a Performance Period.  Participation in the
Plan is in the sole discretion of the Committee and shall be determined
Performance Period by Performance Period.  Accordingly, an Employee who is a
Participant for a given Performance Period is in no way assured of being
selected for participation in any subsequent Performance Period.

3.2    Determination of Performance Goals.  The Committee shall establish the
Performance Goals for each Participant for the Performance Period.  Such
Performance Goals shall be set forth in writing and shall be based on one or
more of the performance metrics set forth in Appendix A attached to the Plan.
 Any criteria used may be measured (a) in absolute terms, (b) in relative terms,
including (without limitation) the passage of time and/or against other
companies or metrics, (c) on a per-share basis, (d) against the performance of
the Company as a whole or against particular segments or products of the Company
and/or (e) on a pre-tax or after-tax basis.  Any Performance Goal may be
measured on a basis other than generally accepted accounting principles.

3.3    Determination of Target Awards.  The Committee shall establish a Target
Award for each Participant for each Performance Period.  Such Target Award shall
be set forth in writing.

3.4    Determination of Payout Formula or Formulae.  The Committee shall
establish a Payout Formula or Formulae for purposes of determining the Actual
Award (if any) payable to each Participant.  Each Payout Formula shall (a) be in
writing, (b) be based on a comparison of actual performance to the Performance
Goals, (c) provide for the payment of a Participant’s Target Award if the
Performance Goals for the Performance Period are achieved at the predetermined
level and (d) provide for the payment of an Actual Award greater than or less
than the Participant’s Target Award, depending upon the extent to which actual
performance exceeds or falls below the Performance Goals.

3.5    Determination of Actual Awards.  After the end of each Performance Period
or, to the extent that Progress Payments will be made, after the end of each
Progress Period, the Committee shall certify the extent to which the Performance
Goals applicable to each Participant for the Performance Period or Progress
Period, as applicable, were achieved or exceeded, as determined by the
Committee.  The Actual Award for each Participant shall be determined by
applying the Payout Formula to the level of actual performance that has been
certified by the Committee.  Any contrary provision of the Plan notwithstanding,
the Committee

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may (a)  reduce or eliminate the Actual Award that otherwise would be payable
under the Payout Formula or (b) determine whether or not any Participant will
receive an Actual Award or Progress Payment in the event that the Participant
incurs a Termination of Employment before such Actual Award or Progress Payment
is to be paid pursuant to Section 4.2.  

3.6    Adjustments.    The Committee may adjust the results under any
Performance Goal to exclude any of the following events that occurs during a
Performance Period: (a) asset write-downs, (b) litigation, claims, judgments or
settlements, (c) the effect of changes in tax law, accounting principles or
other such laws or provisions affecting reported results, (d) accruals for
reorganization and restructuring programs, (e) mergers or acquisitions and
(f) any other extraordinary, unusual or non-recurring items.

ARTICLE 4.    PAYMENT OF AWARDS 

4.1    Right to Receive Payment.    Each Actual Award or Progress Payment that
may become payable under the Plan shall be paid solely from the general assets
of the Company or the Affiliate that employs the Participant (as the case may
be), as determined by the Company.  No amounts awarded or accrued under the Plan
shall be funded, set aside or otherwise segregated prior to payment.  The
obligation to pay Actual Awards or Progress Payments under the Plan shall at all
times be an unfunded and unsecured obligation of the Company.  Participants
shall have the status of general creditors of the Company or the Affiliate that
employs the Participant.

4.2    Timing of Payment.  Subject to Section 3.5, payment of each Actual Award
or Progress Payment shall be made as soon as administratively practicable, but
in no event later than two and one-half months after the end of the applicable
Performance Period or Progress Period, as the case may be.  

4.3    Form of Payment.    Each Actual Award or Progress Payment shall be paid
in cash (or its equivalent) in a single lump sum.

4.4    Payment in the Event of Death.   If a Participant dies before receiving
an Actual Award or Progress Payment (determined under Section 3.5) that was
scheduled to be paid before his or her death for a prior Performance Period or
Progress Period, then the Actual Award or Progress Payment shall be paid to the
Participant’s designated beneficiary or, if no beneficiary has been designated,
to the administrator or representative of his or her estate.  Any beneficiary
designation or revocation of a prior designation shall be effective only if it
is in writing, signed by the Participant and received by the Company prior to
the Participant’s death.

ARTICLE 5.    ADMINISTRATION 

5.1    Committee Authority.    The Plan shall be administered by the Committee,
subject to Section 5.3.  The Committee shall have all powers and discretion
necessary or appropriate to administer the Plan and to control its operation,
including (without limitation) the power to (a) determine which Employees shall
be granted awards, (b) prescribe the terms and conditions of the awards,
(c) interpret the Plan, (d) adopt such procedures and sub-plans as are necessary
or appropriate to permit participation in the Plan by Employees who are foreign
nationals or employed outside of the United States, (e) adopt rules for the
administration, interpretation and application of the Plan and (f) interpret,
amend or revoke any such rules.

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5.2    Decisions Binding.  All determinations and decisions made by the
Committee, the Board or any delegate of the Committee pursuant to the provisions
of the Plan shall be final, conclusive and binding on all persons and shall be
given the maximum deference permitted by law.

5.3    Delegation by the Committee.    The Committee, on such terms and
conditions as it may provide, may delegate all or part of its authority and
powers under the Plan to one or more directors and/or employees of the Company.

ARTICLE 6.    GENERAL PROVISIONS 

6.1    Tax Withholding.    The Company or an Affiliate, as applicable, shall
withhold all required taxes from an Actual Award or Progress Payment, including
any federal, state, local or other taxes.

6.2    No Effect on Employment.  Nothing in the Plan shall interfere with or
limit in any way the right of the Company or an Affiliate, as applicable, to
terminate any Participant’s employment or service at any time, with or without
cause.  Employment with the Company and its Affiliates is on an at-will basis
only.  The Company expressly reserves the right, which may be exercised at any
time and without regard to when during or after a Performance Period such
exercise occurs, to terminate any individual’s employment with or without cause,
and to treat him or her without regard to the effect that such treatment might
have upon him or her as a Participant.

6.3    No Effect on Other Benefits.    Except as expressly set forth in a
Participant’s employment agreement with the Company, any Actual Awards or
Progress Payments under the Plan shall not be considered for the purpose of
calculating any other benefits to which such Participant may be entitled,
including (a) any termination, severance, redundancy or end-of-service payments,
(b) other bonuses or long-service awards, (c) overtime premiums, (d) pension or
retirement benefits or (e) future Base Pay or any other payment to be made by
the Company to such Participant.

6.4    Successors.  All obligations of the Company and any Affiliate under the
Plan, with respect to awards granted hereunder, shall be binding on any
successor to the Company and/or such Affiliate, whether the existence of such
successor is the result of a merger, consolidation, direct or indirect purchase
of all or substantially all of the business or assets of the Company or such
Affiliate, or any similar transaction.  

6.5    Nontransferability of Awards.    No award granted under the Plan shall be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will, by the laws of descent and distribution or to the limited
extent provided in Section 4.4.  All rights with respect to an award granted to
a Participant shall be available during his or her lifetime only to the
Participant.

ARTICLE 7.    DURATION, AMENDMENT AND TERMINATION 

7.1    Duration of the Plan.  The Plan shall commence on the date specified
herein and shall remain in effect thereafter until terminated pursuant to
Section 7.2.  

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7.2    Amendment, Suspension or Termination.  The Board or the Committee may
amend, suspend or terminate the Plan, or any part thereof, at any time and for
any reason.  No award may be granted during any period of suspension or after
termination of the Plan.

ARTICLE 8.    LEGAL CONSTRUCTION 

8.1    Severability.  In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

8.2    Requirements of Law.  The granting of awards under the Plan shall be
subject to all applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities markets as may be required.

8.3    Governing Law.  The Plan and all awards shall be construed in accordance
with and governed by the laws of the State of California, without regard to
their conflict-of-law provisions.

8.4    Captions.  Captions are provided herein for convenience only and shall
not serve as a basis for interpretation or construction of the Plan.

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Appendix A

Performance Metrics

The Committee may establish Performance Goals derived from the following
metrics:

Bookings (including annual or total contract value bookings)

Cash

Cash and short-term investments

Cash flow return on investment

Comparisons with various stock market indices

Customer satisfaction

Deferred revenue

Earnings or earnings per share (including earnings before taxes, earnings
before interest and taxes or earnings before interest, taxes, depreciation and
amortization)

Expenses or expense reductions

Free cash flow or free cash flow per share

Gross profits

Headcount

Implementation, completion or attainment of measurable objectives with respect
to research, development, products, projects or recruiting and maintaining
personnel

Market share

Net income (before or after taxes)

Operating margin or cash margin

Operating profit/loss (on a GAAP or non-GAAP basis)

Pre- or after-tax income (before or after allocation of corporate overhead and
bonus)

Reductions in costs

Return on equity

Revenue

Stock price

Total expenses

Total stockholder return

Working capital

Development and launch of new products

Regulatory approvals

Employee survey results

Increases or growth in any of the foregoing

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