Paul E. Davis
About Paul E. Davis
Paul E. Davis, age 50, is Adeia’s Chief Executive Officer and a director since the October 2022 separation; he previously served as Chief Legal Officer and President of IP Licensing and, earlier, General Counsel at Xperi/Tessera, and practiced at Skadden, Arps in M&A and securities law. He holds a B.A. from UC San Diego and a J.D. from UC Hastings; the Board cites his legal, IP licensing, tech and strategic expertise for governance and oversight roles . Pay-versus-performance disclosures show 2024 cumulative TSR value of a $100 investment at $142 versus peer group at $143, with revenue of $376.0 million and net income of $64.6 million, linking CEO compensation to TSR and revenue as key measures . Mr. Davis is not deemed independent; all other directors are independent, and he has no committee assignments .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Adeia/Xperi/Tessera (Company pre- and post-separation) | Chief Executive Officer; Chief Legal Officer; President, IP Licensing; SVP, General Counsel & Corporate Secretary | 2011–present; CEO since 2022 | Led IP licensing business; post-separation CEO with legal/IP strategy capabilities |
| Skadden, Arps, Slate, Meagher & Flom LLP | Attorney (M&A, securities, governance) | Pre-2011 | Transactional expertise; corporate governance experience |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| None disclosed | — | — | — |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | $507,917 | $625,000 | $625,000 |
| Target Bonus % of Salary | — | — | 100% |
| Annual Bonus (Non-Equity Incentive Plan) ($) | $534,250 | $575,625 | $600,000 |
| One-time/Negotiated Bonus ($) | $500,000 (added responsibility) | — | — |
Performance Compensation
| Component | Weighting | Target | Actual | Payout/Achievement | Vesting |
|---|---|---|---|---|---|
| Annual Cash ICP – Revenue | 50% | $400m revenue (100% payout) | $376.0m; 70% achievement via interpolation | Capped at 100% corporate factor if revenue below target | Annual cash bonus |
| Annual Cash ICP – Non-GAAP OpEx ex-litigation | 30% | $137m (100%); $132m (200%) | $130.1m; 200% achievement | Capped at 100% corporate factor overall | Annual cash bonus |
| Annual Cash ICP – Strategic/Business Goals | 20% | Company strategic goals set by committee | Approved 100% achievement | Capped at 100% corporate factor overall | Annual cash bonus |
| Paul Davis Bonus Calculation | — | Corporate factor 100%; Individual factor 80% | — | Payout $600,000 | Annual cash bonus |
| 2024 PSUs (LTIP) | 60% of CEO equity mix | 3-year stock price hurdle and long-term revenue with relative TSR modifier; stock price hurdle thresholds: $13.55 (50%), $14.63 (100%), $18.43 (200%) | Earned at end of 3-year period if goals met | 0–200% of target; employment through vest date required | 3-year cliff vest |
| 2024 RSUs (LTIP) | 40% of CEO equity mix | Time-vest | Annual 25% over 4 years | Value varies with stock price | 4-year ratable vest |
2024 CEO equity grant sizing:
- Target value: $5,000,000; granted 184,500 RSUs and 276,750 PSUs at target .
- 2024 grant date fair value (total): $5,893,530 .
Equity Ownership & Alignment
| Ownership Item | Value |
|---|---|
| Total Beneficial Ownership (shares) | 544,809 |
| Ownership (% of outstanding) | 0.5% (108,444,911 shares outstanding) |
| Shares vesting within 60 days of record date | Includes ~78,217 PSUs |
| Hedging/Pledging | Prohibited (puts/calls/derivatives; hedging; margin/pledge bans) |
| Stock Ownership Guidelines | CEO 3x base salary; directors 3x retainer |
Outstanding equity awards at FY-end 2024 (unvested):
| Grant Date | Unvested RSUs (#) | Market Value ($) | Unvested PSUs (#) | Market/Payout Value ($) |
|---|---|---|---|---|
| 3/1/2021 | 7,118 | $99,510 | — | — |
| 4/29/2022 | 18,042 | $252,227 | 32,297 | $451,505 |
| 6/1/2022 | 207,009 | $2,893,986 | 207,010 | $2,893,993 |
| 3/1/2023 | 111,430 | $1,557,791 | 111,431 | $1,557,798 |
| 5/9/2024 | 184,500 | $2,579,310 | 138,375 | $1,934,483 |
| Note: Values based on 12/31/2024 closing price $13.98 and PSUs at 50% of target for tabular valuation . RSUs vest 25% annually over 4 years; PSUs are 3-year cliff based on stock price/revenue/relative TSR . |
Employment Terms
| Item | Key Terms |
|---|---|
| CEO Severance Agreement | Amended and restated on Feb 9, 2023; initial 3-year term with automatic one-year renewals, extended 12 months post-CIC if term would expire . |
| Severance – Non-CIC (termination without cause / good reason) | Lump sum 150% of base salary + target bonus (prorated), up to 18 months health benefits, and acceleration of equity scheduled to vest within 12 months (performance awards vest at target unless otherwise provided) . |
| Severance – CIC window (within 3 months prior/within 12 months after CIC) | Lump sum 200% of base salary + target bonus, up to 24 months health benefits, and acceleration of all outstanding equity (performance awards vest at target unless otherwise provided) . |
| Potential Payments (assumed 12/31/2024, stock price $13.98) | Non-CIC: Cash $1,875,000; Equity accel $10,615,233; Health $51,135; Total $12,541,368. CIC window: Cash $2,500,000; Equity accel $21,645,983; Health $68,180; Total $24,214,163 . |
| Definitions | “Cause,” “Good Reason,” and “Change in Control” defined; CIC includes certain mergers, asset sales, or >50% voting power acquisition . |
| Equity Plan CIC | If successor does not assume/substitute, all outstanding awards accelerate at CIC . |
| Clawback | Exchange Act Rule 10D-1-compliant clawback for erroneously awarded incentive compensation; additional plan-level clawback for competitive/malfeasance terminations . |
| Hedging/Pledging | Prohibited for executives and directors . |
| Tax Gross-Ups | None for excess parachute or benefits . |
| Single-Trigger Cash Severance | Not provided; cash severance requires termination (“double trigger”) . |
Board Governance
- Board size seven; Mr. Davis is CEO and a director; all other directors are independent under Nasdaq rules .
- Standing committees: Audit (Chair: V. Sue Molina), Compensation (Chair: Tonia O’Connor; members include Daniel Moloney and Phyllis Turner‑Brim), Nominating & Corporate Governance; committees are fully independent .
- Board/Committee attendance: each director attended at least 75% of meetings in 2024; Board held ten meetings .
- Mr. Davis has no committee assignments (mitigates dual-role influence on committees); governance documents available on IR site .
Director Compensation, Peer Group, Say-on-Pay
- Pay-versus-performance peer group used for TSR comparisons: Russell 2000 Index; company highlights TSR and revenue as key pay-performance measures .
- Compensation Committee engages independent advisor Compensia and uses external market data including Radford McLagan survey; no option repricing; no dividends on unvested awards .
- Annual say-on-pay vote; Board recommends approval; frequency set to annual per shareholder preference .
Performance & Track Record
| Measure | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| TSR – Value of $100 Investment | $94 | $125 | $142 |
| Peer Group TSR – Value of $100 Investment | $110 | $128 | $143 |
| Revenue ($) | $438,933,000 | $388,788,000 | $376,024,000 |
| Net Income (Loss) ($) | $(295,880,000) | $67,372,000 | $64,623,000 |
Highlights and 2024 execution factors:
- Strategic/business goals approved at 100%: pipeline development, key deal closures, governance/process improvements, patent portfolio progress, and launching strategic litigation .
- Corporate factor capped at 100% despite weighted goal achievement of 115%, due to revenue missing the $400m target (actual $376.0m) .
Compensation Structure Analysis
- Mix shifts: Equity awards grant-date fair value decreased from an initial post-separation 2022 level ($10.12m) to $4.21m in 2023, then increased to $5.89m in 2024, with salary steady at $625k and cash bonus modestly higher in 2024 ($600k) vs 2023 ($575.6k) .
- Increased PSU weighting (60% of CEO equity awards) heightens pay-at-risk tied to multi-year stock price appreciation and revenue with a relative TSR modifier; RSUs remain a retention anchor with 4-year ratable vesting .
- Policies reduce governance risk: no single-trigger cash severance, no gross-ups, hedging/pledging prohibited, clawback in place .
Risk Indicators & Red Flags
- Potential insider selling pressure: significant scheduled RSU vests (e.g., large 2022–2024 grants) and PSUs with 3-year cliff could lead to periodic sales for tax/portfolio reasons; RSU vest cadence is annual 25% and PSUs cliff in year 3 .
- Pledging/hedging risks mitigated via explicit prohibitions .
- Change-in-control economics include full equity acceleration in CIC termination window (at target for performance awards), with notable potential payout magnitudes (up to $24.2m in the CIC scenario) .
- No tax gross-ups; no option repricing; independent committee and advisor usage reduce structural risk .
Equity Ownership & Alignment Details
| Item | Detail |
|---|---|
| Ownership concentration | Mr. Davis beneficially owns 544,809 shares (0.5% of outstanding), plus awards that vest within 60 days, including ~78,217 PSUs; total director/executive group 1.5% . |
| Alignment features | 3x salary ownership guideline; significant unvested PSU/RSU overhang aligns value with multi-year performance . |
| Trading constraints | Hedging/derivatives, margin accounts, pledging prohibited . |
Board Service History and Dual-Role Implications
- Director since 2022 (post-separation); no committee memberships; not independent under Nasdaq rules; other directors are independent and committee leadership remains independent, which mitigates CEO influence over compensation/audit governance .
- Board and committee attendance thresholds met; governance guidelines and charters publicly available; annual executive sessions not specifically disclosed in proxy excerpts .
Investment Implications
- Pay-for-performance design is robust: 60% PSU weighting with rigorous 3-year stock price hurdles and revenue/relative TSR metrics, plus a cap on corporate bonus achievement when revenue misses target, signals compensation discipline tied to value creation .
- Retention and overhang: Large unvested RSU/PSU grants across 2022–2024 strengthen retention but create scheduled vesting events that may drive periodic insider selling pressure; watch annual vest dates and 3-year PSU cliffs for supply effects .
- Change-in-control sensitivity: Material CIC payouts and full equity acceleration under double-trigger terms could influence strategic optionality; however, “no single-trigger cash” and clawback mitigate governance risk .
- Ownership alignment: Modest personal stake (0.5%) supplemented by substantial unvested equity and 3x salary guideline, plus hedging/pledging prohibitions, support alignment with TSR and revenue performance .