Hugh Davis

About Hugh Davis

Hugh Davis, Ph.D. (age 66) is Aclaris Therapeutics’ President and Chief Operating Officer and has served on the Board since November 18, 2024. He previously held senior roles at Biosion (COO; President, Biosion USA; Chief Business & Development Officer), Frontage Laboratories (Chief Business Officer), and Janssen R&D/Johnson & Johnson, with earlier leadership roles at GSK and Rhône-Poulenc Rorer; he earned his Ph.D. and M.S. in Biochemistry from Villanova University and a B.S. in Chemistry from Gannon University . As an employee director, he is not independent under Nasdaq rules .

Company performance context during his tenure:

*Values retrieved from S&P Global.

Past Roles

External Roles

Fixed Compensation

Performance Compensation

Annual bonus framework and outcomes for FY 2024:

Long-term incentives are primarily time-based equity used for attraction/retention and alignment, sized relative to market and shares outstanding; grants at hire and annually thereafter, with periodic special awards as needed .

Equity Ownership & Alignment

Beneficial ownership (as of February 10, 2025):

Outstanding equity awards (as of December 31, 2024):

Policies:

• Hedging/short sales/options/margin accounts/pledging prohibited for directors and officers (reduces misalignment risk) .
• No perquisites beyond standard benefits; NEOs participate in 401(k) with 4% company match .

Employment Terms

Severance and change-of-control (CoC) economics under employment agreements:

• Qualifying termination unrelated to CoC: 12 months base salary continuation; lump-sum payment of approved but unpaid bonuses; 12 months COBRA premium contribution by company .
• CoC-related termination (on or within 3 months prior to, or within 12 months post-CoC): 12 months base salary continuation for non-CEO NEOs; 100% of target bonus in lump sum; 12 months COBRA premium contribution .
• Equity acceleration: If termination occurs within 3 months prior to CoC, all unvested options and equity awards become fully vested at CoC; if termination occurs within 12 months post-CoC and awards are assumed/substituted, all unvested awards become fully vested at termination (double-trigger post-CoC; single-trigger vest on CoC if terminated just prior) .
• Clawbacks: Incentive Compensation Recoupment Policy adopted Nov 2023; recovery of incentive pay in event of accounting restatement per SEC/Nasdaq rules . Sarbanes-Oxley §304 reimbursement obligations apply to CEO/CFO for misconduct-related restatements; broader company insider recovery policy covers executive officers .
• Definitions of “Cause” and “Good Reason” detailed, including material pay decrease, duty changes, and relocation >50 miles, with notice/cure .

Board Governance

• Board service: Davis has served as a director since November 2024; not independent due to employment .
• Committee roles: Not listed as a member of Audit, Compensation, or Nominating & Corporate Governance committees; those committees are fully independent .
• Board meeting activity: Board met eight times in 2024; all current members attended ≥75% of applicable meetings; independent directors held executive sessions .
• Director compensation policy (for non-employee directors): Annual Board retainer $40,000; Chair +$30,000; Lead Independent Director +$25,000; committee member/chair retainers: Audit $7,500/$12,500; Compensation $7,500/$12,500; Nominating & Corporate Governance $4,500/$4,500; R&D $6,000/$8,000 (dissolved Dec 31, 2024) . Employee directors (e.g., Davis) do not receive non-employee director fees .
• Equity for directors: New director grant aggregate fair value up to $640,000 (70% options; 30% RSUs) with 36-month monthly vesting for options and three annual RSU installments; annual continuing director grant aggregate fair value up to $320,000 (70% options; 30% RSUs) with 12-month monthly option vesting and RSUs vesting at year one .

Compensation Structure Analysis

• Cash vs. equity mix: Davis’s 2024 compensation was predominantly equity at grant ($1.50M total; $1.50M includes $1.08M options and $0.42M RSUs), with modest cash due to partial-year service ($62.5k salary; $30.6k bonus) . Long-term incentives are time-based (RSUs/options), emphasizing retention over near-term TSR .
• Performance bonus despite stock volatility: Committee attributed lower 2024 say-on-pay support (64% vs. 98% in 2023) largely to stock price decline; maintained program structure and awarded above-target bonuses (Davis: 122.5%) based on corporate/individual goal attainment .
• Consultant and peer benchmarking: Compensation Committee engaged Pearl Meyer to recommend peer group, assess pay levels, and structure incentives; the consultant was vetted for independence .

Related Party Transactions and Red Flags

• Related-party transactions: None involving Davis were disclosed for period since Jan 1, 2023 (policy requires Audit Committee approval of any such transactions) .
• Hedging/pledging: Prohibited for directors/officers .
• Perquisites/tax gross-ups: No perquisites; no gross-ups disclosed; benefits include standard 401(k) match .
• Say-on-pay: 64% approval in 2024; committee outreach noted; no major program changes implemented .

Equity Ownership & Trading Pressure Outlook

• Near-term vesting overhang: Davis’s RSUs (26,750 per tranche) and options (93,750 per tranche at $3.96 strike) begin vesting on 12/2/2025 and annually through 12/2/2028, creating potential selling/option exercise windows around those dates .
• Beneficial ownership: No beneficial share ownership reported as of Feb 10, 2025 (pre-vesting) .
• Policy constraints: Hedging/pledging bans limit misalignment and forced selling via margin calls .

Company Financial Context

*Values retrieved from S&P Global.

Investment Implications

• Alignment and retention: Davis’s 2024 package is heavily equity-based with multi-year, time-based vesting, supporting retention and long-term alignment; hedging/pledging prohibitions reinforce alignment .
• Payouts vs. operating metrics: Above-target bonus (122.5%) tied to R&D/BD execution and individual objectives, not revenue/EBITDA, which declined/improved respectively in 2024; this reflects stage-of-company emphasis but may weaken near-term pay-for-performance optics relative to financials **[1557746_0001558370-25-005332_acrs-20250605xdef14a.htm:43][1557746_0001558370-23-013491_acrs-20230630x10q.htm:33]***.
• Change-of-control economics: Double-trigger acceleration post-CoC and single-trigger vesting at CoC if terminated just prior could incentivize retention through strategic outcomes while protecting the executive; base salary continuation (12 months) and 100% target bonus add to CoC cost .
• Trading signals: First vesting date (12/2/2025) is a key watch point for potential insider sales/exercises; monitoring Form 4 activity around vest dates is prudent .
• Governance: As a non-independent employee director without committee roles, independence concerns are mitigated by a majority-independent board and fully independent committees; say-on-pay softness (64%) warrants continued monitoring of investor sentiment and any subsequent program adjustments .