James Frakes
AETHLON MEDICALAbout James Frakes
James B. Frakes is Aethlon Medical’s Chief Executive Officer (since Nov 7, 2023) and Chief Financial Officer (since Sept 2010); he also serves on the Board and as Corporate Secretary, and is not independent under Nasdaq rules . He is 67 years old, holds an MBA from the University of Southern California and a B.A. with Honors from Stanford University . Company performance context under his leadership remains pre-commercial; cumulative TSR based on a $100 investment fell from $71.92 (FY2022) to $18.84 (FY2023) and $8.28 (FY2024), while net losses were $10.42M (FY2022), $12.03M (FY2023) and $12.21M (FY2024) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Aethlon Medical | Interim CEO; CFO; Director | CEO since 11/7/2023; CFO since 9/2010; Director since 11/7/2023 | Stabilized leadership transition; continued financing/governance processes . |
| Aethlon Medical | SVP, Finance | 1/2008–9/2010 | Built finance function prior to CFO role . |
| Left Behind Games Inc. | CFO | n/d | Start-up CFO experience (gaming) . |
| NTN Buzztime, Inc. | CFO | prior to 2006 | Public company CFO experience in interactive entertainment . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No public company directorships or external committee roles disclosed for Frakes . |
Fixed Compensation
| Item | FY2024 (year ended 3/31/2024) | Policy/Notes |
|---|---|---|
| Salary earned | $416,449 | As reported in Summary Compensation Table . |
| Current base rate | $500,000 (effective 11/7/2023) | Base increased upon appointment as Interim CEO; may be reduced if a new CEO is appointed . |
| Target bonus | Discretionary (no formal % disclosed) | Annual cash performance bonus at Board discretion versus goals; no FY2024 bonuses approved . |
| Other cash/benefits | Standard benefits; no FY2024 perquisites disclosed | Employment agreement provides standard benefits; no additional perqs disclosed . |
Performance Compensation
- No cash bonuses or equity awards were approved for named executive officers in FY2024 .
| Incentive Type | Metric(s) | Weighting | Target | Actual/Payout | Vesting |
|---|---|---|---|---|---|
| Annual cash bonus | Discretionary goals set annually | n/a | n/a | $0 paid for FY2024 | n/a . |
| Stock options | n/a FY2024 grants | — | — | No grants in FY2024 | Existing awards vest 25% at 1-year, then monthly over 36 months per grant . |
| RSUs/PSUs | n/a FY2024 grants | — | — | No grants in FY2024 | — . |
Equity Ownership & Alignment
| Date | Total Beneficial Ownership | Components | % Outstanding | Notes |
|---|---|---|---|---|
| 8/6/2024 | 22,264 shares | 2,370 common + 19,894 options exercisable within 60 days | <1% | As reported in DEF 14A 8/15/2024 . |
| 4/3/2025 | 22,429 shares | 238 common + 22,191 options exercisable within 60 days | <1% | As reported in DEF 14A 4/18/2025 . |
- Vested vs unvested (as of 3/31/2024): Options exercisable 18,975 (13,755 at $12.80; 5,220 at $14.10); unexercisable 5,093 (293 at $12.80; 4,800 at $14.10); one legacy 2014 grant (34 at $1,425) expired 6/6/2024 .
- Pledging/Hedging: Company prohibits short sales, options/hedging, and pledging/margining of company stock for all officers and directors (reduces alignment/forced-sale risk) .
- In-the-money status: As of 12/31/2023, all outstanding options had zero intrinsic value (stock $2.19 below exercise prices), lowering near-term monetization/selling pressure from option exercises .
Outstanding Equity Awards (Frakes) – Grant Detail
| Grant Date | Exercisable | Unexercisable | Exercise Price | Expiration | Vesting Terms |
|---|---|---|---|---|---|
| 4/3/2020 | 13,755 | 293 | $12.80 | 4/2/2030 | 25% after 1 year, then monthly over 36 months . |
| 2/10/2022 | 5,220 | 4,800 | $14.10 | 2/9/2032 | 25% after 1 year, then monthly over 36 months . |
| 6/7/2014 | 34 | — | $1,425.00 | 6/6/2024 | Legacy option; expired 6/6/2024 . |
Employment Terms
- Contract: Executive employment agreement dated 12/12/2018; amended Nov 2023 upon interim CEO appointment .
- Severance (non‑CIC): If terminated without cause or resigns for good reason, 12 months base salary continuation and 12 months COBRA premiums; discretionary bonus eligibility only, not guaranteed .
- Change-of-control: Individual multiples not disclosed; company’s Amended 2020 Equity Incentive Plan provides that awards may be assumed/substituted; if not, unvested awards for current service providers may accelerate before close; Board retains acceleration discretion in corporate transactions .
- Clawback: Plan includes Clawback/Recovery provision (governance tool to recoup awards) .
- Non-compete/solicit: Not specifically disclosed for Frakes in current proxy text; standard confidentiality and policy compliance apply .
- Anti-hedging/pledging: Prohibited for officers/directors .
Board Governance
| Attribute | Detail |
|---|---|
| Board role | Director since 11/7/2023; not independent (executive officer) . |
| Chair/CEO structure | Independent Chairman (Edward G. Broenniman); CEO is separate; no Lead Independent Director designated . |
| Committees | Audit, Compensation, Nominating & Governance exist; Frakes not listed as a committee member; independent directors chair each committee . |
| Attendance | In FY2024 the Board held 8 meetings; each director attended ≥75% of board and committee meetings; Frakes required to attend the annual meeting . |
Compensation Structure Analysis
- Mix and pay-for-performance: FY2024 compensation for Frakes was predominantly base salary; no annual bonus paid and no equity awards granted, indicating limited pay-at-risk in the year of leadership transition .
- Consultant/benchmarking: Compensation Committee used Anderson Pay Advisors; policy goal to target ~50th percentile; indicates external benchmarking discipline and moderate pay positioning .
- Equity program capacity: Shareholders approved a 3,000,000-share increase to the 2020 Equity Incentive Plan in 2024 (total plan capacity up to 3,364,256 shares), raising potential future equity overhang despite no FY2024 NEO grants .
- Option repricing flexibility: Plan allows repricing/cancellation-and-regrant with participant consent; no such actions disclosed for Frakes .
Vesting Schedules and Insider Selling Pressure
- Existing options vest 25% after one year then monthly over 36 months; with the stock below option strikes at 12/31/2023, options had no intrinsic value, reducing incentive for near-term exercise/sales .
- No FY2024 RSU grants to NEOs reduce tax-related sell pressure tied to RSU vesting .
Equity Ownership & Alignment Considerations
- Skin-in-the-game: Beneficial ownership remains de minimis (<1%); however, policy-level alignment is supported by strict anti-hedging/pledging prohibitions .
- Ownership guidelines: None disclosed for executives; compliance status not provided .
Performance & Track Record
| Metric | FY2022 | FY2023 | FY2024 |
|---|---|---|---|
| Value of $100 Investment (TSR) | $71.92 | $18.84 | $8.28 |
| Net Income (Loss) | $(10.42)M | $(12.03)M | $(12.21)M |
- Narrative: As a pre-commercial company, Aethlon notes limited operating revenues (primarily grants/contracts) and does not use net income as a compensation performance measure; this context helps explain the heavy use of discretionary structures and limited variable payouts in FY2024 .
Related Party Transactions and Governance Controls
- No related party transactions involving Frakes disclosed; company maintains Audit Committee approval policy for any such transactions .
- Indemnification agreements in place for directors and officers .
Board Service History, Committees, and Dual-Role Implications
- Frakes holds multiple executive roles (CEO, CFO, Secretary) while serving as a director, which concentrates operational and financial authority; the Board mitigates with an independent Chairman and independent committee chairs; Frakes is not independent and not on key committees .
- Independence safeguards include committee compositions, anti-hedging/pledging policies, and clawback provisions under the equity plan .
Employment Transitions and Severance/COC Economics
- Appointment: Interim CEO effective Nov 7, 2023; base raised to $500,000; amended employment agreement contemplated future changes if a new CEO is appointed .
- Severance: 12 months base and 12 months COBRA for termination without cause/good reason; no explicit CIC multiple disclosed; equity awards subject to plan-level acceleration rules in transactions (assumption vs acceleration) .
Investment Implications
- Alignment and retention: The absence of FY2024 variable pay and modest personal stock ownership indicate lower pay-for-performance sensitivity at the CEO/CFO level; however, strict anti-hedging/pledging and clawback provisions support governance standards .
- Selling pressure: With options largely out-of-the-money at 12/31/2023 and no FY2024 RSUs, near-term insider selling pressure driven by vest events appears limited .
- Dilution/overhang: 2024 shareholder-approved expansion of the equity plan increases capacity for future grants; investors should monitor subsequent awards and any repricing actions (permitted with consent) for potential dilution and signal value .
- Governance checks around dual roles: Frakes’s combined CEO/CFO/Secretary roles pose concentration risk, partially offset by an independent Chair and independent audit/compensation/nominating committees; continued focus on independent oversight remains key .
Key documents: DEF 14A 8/15/2024 (executive/board comp, policies, ownership), DEF 14A 4/18/2025 (updated ownership), 8‑K 11/13/2023 (CEO/CFO appointment terms), 10‑Q 2/14/2024 (options intrinsic value), and the Amended 2020 Equity Incentive Plan (Appendix) for plan mechanics and clawback.