David Spence
About David Spence
David Spence, age 59, was appointed Chief Product Officer of Applied Energetics (AERG) effective October 3, 2025 . He holds a Ph.D. in Laser Physics from the University of St. Andrews and a B.Sc. in Physics (First Class Honors) from the University of Stirling . Spence brings 25+ years of advanced laser technology experience, including leadership roles at Spectra-Physics, Newport Corporation, and MKS Instruments; he is an Optica Fellow with over a dozen issued patents and numerous publications . His remit is end-to-end product strategy and execution to deliver mission-critical defense technologies, aligning product roadmaps with regulatory standards and customer needs while driving IP development and TRL maturation for DoD validation and commercial scaling .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Spectra-Physics | Leadership roles (laser technologies) | Not disclosed | Led teams developing next-gen ultrashort pulse laser systems and nonlinear optical solutions |
| Newport Corporation | Leadership roles (laser technologies) | Not disclosed | Drove advanced laser commercialization across industrial/scientific/defense markets |
| MKS Instruments | Senior Engineering Manager, Advanced Technology Development Group | Not disclosed | Directed cross-functional teams on USP laser systems, nonlinear optics, DPSS amplifiers |
External Roles
| Organization | Role | Years | Notes/Impact |
|---|---|---|---|
| Optica | Fellow | Not disclosed | Professional recognition; contributions to optical science community |
| Patents/Publications | Inventor/Author | Not disclosed | Over a dozen issued patents and numerous scientific publications |
Fixed Compensation
| Component | Terms |
|---|---|
| Base salary | $250,000 per annum, paid no less frequently than semi‑monthly |
| Annual bonus eligibility | Discretionary bonus within 60 days after year‑end; commencing in 2026, bonus (cash or stock) determined by Board, with Spence abstaining |
| Benefits | Standard company benefits; benefits equal or better to those provided as of agreement date; eligible expense reimbursement per policy |
| Relocation | Moving allowance as part of employment agreement |
Performance Compensation
| Incentive | Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|---|
| Annual bonus | Discretionary (Board‑determined) | Not disclosed | Not disclosed | Not disclosed | Cash or stock | N/A |
| Equity options | Time‑based; no performance metrics (four equal annual installments) | N/A | N/A | N/A | N/A | First vesting on 1‑year anniversary; then annually through year 4 |
Equity Ownership & Alignment
| Instrument | Grant Date | Quantity | Exercise Price | Vesting Schedule | Expiration | Plan/Agreement |
|---|---|---|---|---|---|---|
| Incentive Stock Options | Oct 3, 2025 | 500,000 | $1.71 per share | Four equal annual installments commencing on first anniversary of grant | 10‑year term (Oct 3, 2035, derived) | Company’s 2018 Stock Incentive Plan; standard ISO agreement |
- Direct/indirect share ownership: Not disclosed in filings to date for Spence as of appointment .
- RSUs/PSUs: None disclosed for Spence .
- Pledging/hedging: Not disclosed.
- Ownership guidelines: Not disclosed.
Employment Terms
| Term | Provision |
|---|---|
| Position | Chief Product Officer; duties set by Board/management consistent with role |
| Contract term | Initial 3 years; auto‑renews for successive 1‑year periods |
| Location | Principal place of employment: Tucson, Arizona; secure NIST‑compliant connection for offsite work; travel as required |
| Termination (no cause/good reason) | Either party may terminate without cause or good reason on 90 days’ prior written notice ; Good Reason includes material breach, material change to duties/title, reduction in comp/benefits (absent mutual agreement or broad management restructuring), or insolvency/shell status |
| Severance economics | Upon termination by Spence for Good Reason or by Company without cause: pay unpaid base compensation, pro rata unpaid bonus, and any unpaid expenses due as of termination |
| Confidentiality/IP | Confidential information protections and related IP provisions included |
| Equity plan | Options issued under the Company’s 2018 Incentive Stock Plan |
| Governance context | As of the latest proxy, the full Board fulfills committee functions; no standing compensation committee currently |
Compensation Structure Analysis
- Time‑based options with four annual tranches emphasize retention rather than near‑term performance linkage; absence of PSU/metric‑based vesting for Spence reduces immediate performance alignment but aligns with long‑dated product roadmaps typical in defense/USPL .
- Discretionary bonus structure (cash or stock) affords Board flexibility; no disclosed target bonus percentage or hard performance metrics for Spence .
- Severance terms are minimal (unpaid base comp and pro rata bonus/expenses), with Good Reason protections; no separate change‑of‑control multiples or acceleration terms disclosed for Spence .
Risk Indicators & Red Flags
- Committee structure: absence of a standing compensation committee could reduce formalized pay‑for‑performance oversight versus larger‑cap peers .
- Form 4 timing issues noted for other executives (Donaghey and Quarles) in 2024; no such disclosure for Spence to date .
- No disclosures of pledging/hedging, tax gross‑ups, or option repricings for Spence in the appointment 8‑K .
Investment Implications
- Retention and supply of future shares: Spence’s four annual vesting tranches starting Oct 3, 2026 create predictable potential future option exercises; while not immediate selling pressure, investors should monitor annual vesting dates for Form 4 activity and potential dilution at exercise price $1.71 .
- Alignment vs. performance: Time‑based ISOs at fair‑market exercise price support retention and long‑term value creation in multi‑year product cycles; however, lack of explicit performance metrics or PSU‑style awards may limit direct pay‑for‑performance alignment in the near term .
- Governance oversight: With committee functions handled by the full Board, the compensation framework is flexible but less formalized; as AERG scales, introduction of a compensation committee could strengthen metric‑driven incentive design and improve investor confidence .