Christopher Donaghey
About Christopher Donaghey
Christopher W. Donaghey is President & CEO (and principal financial officer) of Applied Energetics (AERG) since November 25, 2024; he joined AERG as CFO/COO on August 1, 2022 and was appointed to the Board on June 3, 2025 . He holds a B.S. in mechanical engineering from Texas Tech University, is a former U.S. Navy officer and Navy Reserve analyst, and previously served as SVP/Head of Corporate Development and SVP Finance at SAIC, VP Corporate Strategy & Development at KeyW, and a top-ranked defense equity research analyst at SunTrust Robinson Humphrey (Forbes/Starmine #1 defense 2005; WSJ Best on the Street 2005, 2008, 2009) . Company performance during his AERG tenure shows revenue rising from $1.31M (2022) to $2.63M (2023), then $2.43M (2024), while net losses widened to $9.17M in 2024; pay-versus-performance TSR disclosure shows a $100 investment valued at $705 (2021), $576 (2022) and $649 (2023) . AERG’s auditor raised substantial doubt about going-concern as of FY2024, underscoring execution and financing risk .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Science Applications International Corp. (SAIC) | SVP, Head of Corporate Development; earlier SVP Finance for SAIC’s operations | 2017–2022 | Led M&A and strategic ventures; senior finance leadership supporting strategy and operations |
| KeyW Corporation | VP, Corporate Strategy & Development | — | Guided overall corporate strategy, M&A, and capital markets activities |
| SunTrust Robinson Humphrey Capital Markets | Senior Research Analyst (Defense/Gov IT/Aerospace) | — | Forbes/Starmine #1 defense analyst 2005; WSJ Best on the Street 2005/2008/2009 |
| U.S. Navy / Navy Reserve (Defense Intelligence Agency support) | Officer; scientific/technical analysis (missile guidance, advanced electronics) | — | Technical domain expertise supporting missile and space intelligence missions |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Silicon Valley Defense Group (SVDG) | Co‑Founder and Chairman of the Board (earlier Executive Board member) | — | AERG contributed $25,000 to SVDG (Feb 20, 2025); related party as Donaghey serves as Executive Chairman at SVDG |
Fixed Compensation
| Year | Base Salary ($) | Bonus ($) | Notes |
|---|---|---|---|
| 2024 | 354,167 | — | CEO as of Nov 25, 2024; salary reflects $350k for 11 months and $400k for 1 month |
| 2023 | 350,000 | — | CFO/COO |
- Current CEO employment agreement sets base salary at $400,000 per annum, with eligibility for discretionary bonus within 60 days post year-end .
Performance Compensation
Reported Compensation Summary (NEO SCT)
| Year | Stock Awards ($) | Option Awards ($) | Total ($) |
|---|---|---|---|
| 2024 | — | 656,582 | 1,010,749 |
| 2023 | — | — | 350,000 |
| 2022 | 920,000 | 1,977,796 | 3,043,629 |
Equity Awards & Vesting Schedules
| Award | Grant Date | Quantity | Exercise/Price | Vesting / Performance Metric | Expiration |
|---|---|---|---|---|---|
| RSUs (sign-on) | 07/13/2022 | 400,000 | — | Time-based: 100k vest on 7/13/2023; 100k on 7/13/2024; 100k on 7/13/2025; 100k on 7/13/2026; 100% single-trigger vest on Change in Control | — |
| Stock Options (CFO/COO grant) | 07/13/2022 | 1,000,000 | $2.36 | Time-based: equal annual installments over 4 years commencing first anniversary of grant | 07/13/2032 |
| Stock Options (CEO grant) | 11/25/2024 | 1,000,000 | $0.78 | Performance-based vesting by Annual Gross Revenue target: 170k @ $10M; +330k @ $25M; +500k @ $50M (installments cumulative) | 11/26/2034 |
| Legacy Options | — | 150,000 | $0.35 | Exercisable | 04/29/2029 |
| Legacy Options | — | 200,000 | $0.61 | Exercisable | 05/12/2031 |
- Severance upon termination without cause or resignation for good reason: 90 days’ base salary; pro rata bonus and expenses due; CEO agreement term is 3 years with automatic one‑year renewals .
Equity Ownership & Alignment
Beneficial Ownership
| As of Date | Beneficially Owned Shares | % Outstanding |
|---|---|---|
| 09/06/2024 | 861,027 | <1% (213,760,472 shares outstanding) |
| 07/28/2025 | 2,293,592 | <1% (218,952,389 shares outstanding); footnote notes additional 1,000,000 options subject to vesting; excludes 250,000 options and 100,000 RSUs still time‑vesting |
Outstanding Equity (12/31/2024 snapshot)
| Instrument | Exercisable | Unexercisable | Exercise Price | Expiration | Notes |
|---|---|---|---|---|---|
| Options | 150,000 | — | $0.35 | 04/29/2029 | Exercisable |
| Options | 200,000 | — | $0.61 | 05/12/2031 | Exercisable |
| Options | 500,000 | 500,000 | $2.36 | 07/13/2032 | CFO/COO grant |
| Options | — | 1,000,000 | $0.78 | 11/26/2034 | CEO performance grant (revenue milestones) |
| RSUs | — | 200,000 | — | — | Time-vesting RSUs |
- Clawback: AERG’s 2025 Equity Incentive Plan includes a clawback provision allowing cancellation/recoupment in accordance with company policy and applicable law .
- Pledging/Hedging: No pledging disclosures identified in proxies; insider trading policy referenced in Code of Ethics but no explicit hedging policy details provided in cited materials .
Employment Terms
| Topic | Key Terms |
|---|---|
| CEO Appointment & Term | CEO effective 11/25/2024; initial 3‑year term; automatic 1‑year renewals |
| Base Salary (CEO) | $400,000 per annum; discretionary annual bonus eligibility |
| Good Reason / Cause | Good Reason includes material breach, material duty change, title change, compensation reduction, insolvency/shell status, or change in control; Cause includes material breach, gross negligence/willful misconduct, reputational harm, or failure to perform |
| Severance | 90 days’ base salary upon termination without Cause or resignation for Good Reason; death/disability pays 90 days’ base to beneficiary/estate |
| Change in Control | CEO agreement: unvested equity granted prior to CIC vests in full immediately prior to termination following CIC; plan-level awards have double-trigger acceleration upon termination without Cause/for Good Reason within 18 months post‑CIC; Committee may cash‑out/cancel awards in CIC |
| Non‑Compete | 1 year post-termination |
| Non‑Solicitation | 2 years post-termination (customers, employees, contractors) |
| Duty Station | Arizona; average 7–10 days/month at Tucson HQ; secure NIST-compliant remote work |
| Post‑Termination Cooperation | $550/hour for substantial time if requested by Board (2012 agreement term carried in 2022 CFO/COO agreement) |
Board Governance (Director Service, Committees, Independence)
- Board appointment: Donaghey appointed director June 3, 2025 (Class II) while serving as CEO and principal accounting/financial officer, resulting in a dual role (executive + director) .
- Committees: As of 2025 proxy, the full Board fulfills functions typically assigned to committees; Board believes no committees are necessary at present; some directors are considered independent under OTCQB standards (Adamczyk, Schultz, Alber, Andrews) .
- Interlocks: No compensation committee interlocks/insider participation reported for FY2024 .
- Section 16 filings: Two Form 4s for Donaghey were filed late; one late for Dr. Quarles .
Performance & Track Record
Company Financials During Tenure
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenue ($) | 1,307,757 | 2,631,443 | 2,426,609 |
| Net Loss ($) | (5,771,642) | (7,350,435) | (9,174,958) |
Pay vs Performance TSR (Value of $100 Investment)
| Year | Value ($) |
|---|---|
| 2021 | 705 |
| 2022 | 576 |
| 2023 | 649 |
- Going concern: Auditor expressed substantial doubt about AERG’s ability to continue as a going concern for FY2024, citing recurring losses and reduced government contract activity; company raised ~$6M in Jan–Feb 2025 private placements .
Related Party Transactions
- On Feb 20, 2025, AERG contributed $25,000 to Silicon Valley Defense Group, a 501(c)(3) where Donaghey serves as Executive Chairman of the Board; Board policies require review/approval of related person transactions .
Compensation Structure Analysis (alignment, pressure points)
- Mix shift to equity: Significant equity awards in 2022 (RSUs and options) upon joining as CFO/COO; CEO performance option added in Nov 2024 ties vesting to revenue milestones ($10M/$25M/$50M), aligning upside with scale but also increasing vest-driven supply on milestone achievement .
- Vesting calendar: Time-based RSUs vest 100k on each July 13, 2025 and 2026; the 2022 option grant vests annually over four years from the July 13, 2023 first anniversary, creating recurring mid‑July vest events that can add selling pressure if shares are sold to cover taxes/liquidity .
- Severance economics: Cash severance is modest (90 days’ base), limiting golden‑parachute risk; equity acceleration applies under CIC circumstances (single-trigger for 2022 RSUs; plan-level double-trigger for new awards) .
- Clawback readiness: 2025 Equity Plan includes clawback provisions, improving recourse for misconduct or restatements .
Equity Ownership & Alignment Checks
- Beneficial ownership remains <1% despite awards; as of July 28, 2025, 2.29M beneficially owned shares with additional unvested/time‑based awards noted—alignment relies on future vesting/performance rather than large existing ownership stake .
- No disclosures of pledged shares; stock ownership guideline specifics not disclosed in proxies reviewed .
Employment Terms & Retention Risk
- Term/renewal structure and non‑compete/non‑solicit covenants support retention; severance is limited (90 days), implying higher at‑risk profile for the executive but also lower shareholder cost on transition .
- Dual roles (CEO, principal financial/accounting officer, and director) plus lack of standing board committees could concentrate authority and reduce independent oversight bandwidth .
Investment Implications
- Alignment: The CEO’s new 1,000,000‑share option vests only upon substantial annual gross revenue targets ($10M/$25M/$50M), directly tying upside to scale; time‑based RSUs and 2022 option tranches create predictable July vesting dates that can produce episodic insider selling pressure around mid‑July each year .
- Governance risk: Donaghey’s dual role (CEO and director and still principal financial officer) and the absence of board committees heighten governance and oversight risk; late Section 16 filings add minor process risk .
- Downside protection: Severance is minimal (90 days’ base); equity acceleration terms exist (single‑trigger for legacy RSUs; plan double‑trigger generally), limiting cash parachute exposure yet potentially accelerating equity overhang on CIC .
- Execution/financing: Going‑concern language, widening losses in 2024, and reliance on external capital (raised ~$6M in early 2025) underscore execution risk; the revenue‑milestone option design incentivizes scaling but may be challenging given recent revenue levels .
Net: Pay structure emphasizes equity performance with clear revenue triggers; watch mid‑July vest events and revenue milestone progress for trading signals, and monitor board governance evolution (committee establishment, CFO succession) to mitigate concentrated‑authority risk .