Derek Xu
About Derek Xu
Derek Xu (age 68) is co-founder of Airship AI Holdings, Inc. and serves as Chief Operating Officer (COO) and Director (board member since December 2023; director at the operating company since 2003). He holds a Ph.D. in Geophysics from the University of Washington and previously served as Chief Technology Officer and as Secretary & Treasurer (roles transitioned to the CFO on January 1, 2025) . Under his operating tenure, FY2024 net revenues increased 87.4% to $23.05M from $12.30M in FY2023, while operating loss improved to $(3.51)M from $(6.64)M; the FY2024 net loss of $(57.47)M was driven largely by non-cash fair value changes in warrant and earnout liabilities .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Airship AI (operating company) | COO | Mar 2022–present | Scaled operations; oversaw growth with $16M+ of FY2024 federal agency purchase orders shipped (supporting revenue expansion) . |
| Airship AI (operating company) | CTO | Apr 2007–prior to Mar 2022 | Led product and technology development for multiple web/video analytics offerings . |
| Airship AI (HoldCo) | COO, Director; Secretary & Treasurer | Dec 2023–present; Secretary & Treasurer through 12/31/2024 | Executive leadership and board service at the public holdco; Secretary & Treasurer functions transitioned to CFO effective Jan 1, 2025 . |
| Pre-Airship | Co-founded and sold a web services company; earlier tech leadership roles | Pre-2003 | Launched web-based products for financial institutions; entrepreneurial exit . |
External Roles
- None disclosed in company filings; no other public company directorships for Xu were listed .
Fixed Compensation
| Metric | FY2023 | FY2024 |
|---|---|---|
| Base salary (USD) | $388,000 | $388,000 |
| Cash bonus (USD) | $0 | $0 |
| Other compensation (USD) | $0 | $328 |
Performance Compensation
Annual Cash Incentive
| Year | Metric design | Target | Actual payout (USD) | Notes |
|---|---|---|---|---|
| 2023 | Not disclosed | Not disclosed | $1,068,058 | Reported as “Non-Equity Incentive Plan Compensation”; specific performance metrics/weightings not disclosed. |
| 2024 | Not disclosed | Not disclosed | $0 | No bonus paid. |
Equity Awards Granted (as reported in NEO table)
| Year | Instrument | Grant date | Shares/units | Grant-date fair value (USD) | Vesting terms |
|---|---|---|---|---|---|
| 2024 | Stock options | Not specified | Not specified | $49,464 | Vesting schedule not disclosed in NEO table. |
| 2023 | — | — | — | $0 | No equity grant reported in NEO table. |
Additional equity context: On May 8, 2023, the company issued fully vested founder warrants to purchase 1,344,951 shares to each of Victor Huang and Derek Xu at a $1.77 exercise price; they were valued using a five‑year term and recognized as stock‑based compensation at the company level (SG&A) .
Outstanding and Exercisable Equity (as of 12/31/2024 and latest proxy)
| Instrument | Status | Key terms | Source/date |
|---|---|---|---|
| Stock options | 12,500 exercisable; 87,500 unexercisable | $2.86 strike; expires 8/16/2034 | DEF 14A (2025) and 10-K (2024). |
| Founders warrants | Fully vested | 1,344,951 warrants; $1.77 exercise price; valued with a five-year term | DEF 14A (2024). |
- Option exercises: Xu reported no stock option exercises in 2024 (Paul Allen exercised; Huang and Xu did not) .
Equity Ownership & Alignment
| Snapshot date | Beneficial ownership (shares) | % of outstanding | Included derivatives | Pledged/hedged |
|---|---|---|---|---|
| Oct 16, 2025 | 8,665,538 | 24.4% of 34,175,563 shares | Includes 1,344,951 warrants and 34,375 options exercisable within 60 days | No pledging disclosed; company policy restricts hedging and caps pledged/margin shares to ≤25% of holdings . |
| Dec 31, 2024 | 9,796,356 | 30.7% of 30,588,413 shares | Includes 1,344,951 warrants and 12,500 options exercisable within 60 days | No pledging disclosed; hedging/pledging restrictions apply . |
- Alignment: Co-founders (Huang and Xu) collectively controlled ~49.5% voting power including derivatives as of the 2024 10-K risk factor, enabling substantial influence over strategic outcomes .
Employment Terms
- Employment agreement/severance: The company states it has no executive compensation, change-in-control, or similar agreements beyond annual compensation and incentive programs (no specific employment agreement for Xu disclosed) .
- Equity plan and change-of-control: The Amended & Restated 2023 Equity Incentive Plan defines Change of Control; committee discretion may allow accelerated vesting if provided in award agreements .
- Clawback: Awards are subject to the company’s clawback policy and applicable exchange/SEC rules; Compensation Committee oversees clawback policy administration .
- Insider trading/hedging/pledging: Strict insider trading policy with blackout windows and 10b5‑1 preclearance; hedging transactions prohibited; margin/pledging limited to ≤25% of shares owned .
- Non-compete/non-solicit/garden leave: Not disclosed.
Board Service & Governance (Director)
- Board service: Director nominee and elected director; five-member board includes CEO/Chair (Huang), COO (Xu), and three independent directors (Ranjan, Lebedin, Mital) .
- Committee roles: Independent directors compose the Audit (Chair: Mital), Compensation (Chair: Ranjan), and Nominating & Corporate Governance committees; executives (including Xu) do not serve on committees .
- Attendance: Each director attended at least 75% of board and applicable committee meetings in the last fiscal year .
- Independence/controlled company: In 2024, Huang and Xu’s combined voting power rendered AISP a “controlled company” under Nasdaq rules, allowing certain governance exemptions; the board nevertheless constituted fully independent committees with charters (updated July 31, 2025) .
- Director compensation: Xu received no additional fees for board service; total disclosed compensation is captured in the NEO Summary Compensation Table .
Related Party Transactions and Other Flags
- Founders’ prior borrowings from Airship (operating company): In 2020, founders (Huang and Xu) borrowed $3.0M; $1.1M remained due as of 12/31/2022; 5% interest; recorded as a long-term asset due to uncertainty in timing of repayment .
- Founders’ advances to the company: 2022–2024 advances and repayments disclosed; in 2024 the company also entered into a Master Loan with Huang for up to $1.5M at 6% and issued 220,000 five‑year warrants at $2.36 to Huang; no outstanding balance at 12/31/2024 .
- Founder warrants: 5/8/2023 issuance of 1,344,951 warrants to each of Huang and Xu at $1.77, fully vested; recognized as stock-based compensation .
Compensation Committee Analysis
- Composition/independence: Compensation Committee comprises independent directors; oversees executive pay, plan administration, risk management of compensation, clawback policy, and director compensation recommendations .
- Charters: Audit, Compensation, and Nominating/Governance charters adopted Jan 2, 2024 and updated July 31, 2025; available on company website .
Performance & Track Record (Company context under Xu’s operating leadership)
| Metric | FY2023 | FY2024 | YoY |
|---|---|---|---|
| Net revenues (USD) | $12.30M | $23.05M | +87.4% |
| Operating loss (USD) | $(6.64)M | $(3.51)M | Improved by $3.14M |
| Net (loss) income (USD) | $16.37M | $(57.47)M | Swing to loss due to fair value changes |
- Demand indicators: $16M+ of FY2024 federal purchase orders shipped boosted product revenues (hardware/software bundled systems) .
- Margin mix: Management warns larger hardware turnkey solutions can pressure margins vs. software .
Investment Implications
- Alignment and control: Very high founder ownership (Xu at 24–31% across 2024–2025 snapshots) strongly aligns incentives but, combined with the CEO’s stake, confers substantial control—potentially deterring change-of-control scenarios and impacting governance optics (controlled company status in 2024) .
- Pay-for-performance: Xu’s cash comp is modest (flat $388k salary) with large 2023 non-equity incentive but no 2024 bonus; equity exposure via sizable vested warrants and options aligns with shareholder value creation but could enable liquidity if trading windows and 10b5‑1 plans are used .
- Selling pressure/overhang: Founder warrants (fully vested) and options constitute potential supply; however, Xu reported no option exercises in 2024, and insider trading policies (blackouts; anti‑hedging; pledge limits ≤25%) help mitigate governance risk .
- Retention and severance: No disclosed employment or severance agreement for Xu; retention leans on equity value rather than guaranteed severance—good for alignment but potentially higher retention risk in adverse markets .
- Related-party risk: Founder loans/advances and founder-linked warrant grants are governance red flags to monitor for potential conflicts; robust audit/comp committee independence and charters partially offset this risk .
Overall, Xu’s large, long-duration equity stake and absence of guaranteed severance align incentives with long-term value creation, but concentrated control, founder-related transactions, and the presence of vested founder warrants warrant continued monitoring of insider trading activity, committee oversight, and capital structure evolution .