Arnon Rosenthal
AlectorAbout Arnon Rosenthal
Arnon Rosenthal, Ph.D. (age 70), is Alector’s co-founder, Chief Executive Officer, and a director, roles he has held since 2013; he holds a Ph.D. in biology from the Hebrew University of Jerusalem . He previously worked at Genentech (1985–2001), co-founded Rinat Neuroscience (acquired by Pfizer; Ajovy target discovery) and Annexon Biosciences (acting CEO and later Chairman) . From a shareholder return lens, Alector’s pay-versus-performance table shows the value of a $100 initial investment in Alector’s stock at year-end 2024 was $11, highlighting significant stock underperformance over that horizon; 2024 net loss was $119 million . 2024 compensation outcomes reflected both progress and accountability: corporate goals tallied to 100% achievement (with downward discretion to 80% for executives due to AL002 miss), and Rosenthal requested his own bonus be further cut to 50% of target .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Genentech | Various roles culminating in Staff Scientist; permanent member, Research Review Committee | 1985–2001 | Team discovered the target for Erivedge; deep discovery/development leadership |
| Rinat Neuroscience (acquired by Pfizer) | Co-founder; President, CSO, and director | 2001–2006 | Discovered and developed the migraine drug Ajovy; successful exit to Pfizer |
| Annexon Biosciences | Co-founder; Acting CEO; Director and later Chairman | Acting CEO 2011–2014; Board/Chairman 2011–2017 | Built neurology platform and governance leadership during scale-up period |
External Roles
- No current public company board roles disclosed for Dr. Rosenthal outside Alector in the 2025 proxy statement .
Fixed Compensation
Multi-year summary for Dr. Rosenthal (NEO Summary Compensation Table):
| Metric ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 621,413 | 653,625 | 674,808 |
| Stock Awards (grant-date fair value) | 1,694,939 | 2,576,448 | 2,777,775 |
| Option Awards (grant-date fair value) | 800,515 | 614,323 | — |
| Non-Equity Incentive Plan Comp (Annual Bonus) | 389,340 | 400,000 | 203,430 |
| All Other Compensation | 9,191 | 10,611 | 10,328 |
| Total | 3,515,398 | 4,255,007 | 3,666,341 |
- 2025 base salary set at $678,100; target bonus 60% of base (confirmatory employment letter) .
Performance Compensation
Annual cash bonus design and 2024 outcome:
- Target bonus: 60% of base salary for CEO .
- Corporate objectives and weights (2024): Science 20%; Patients 45%; People 15%; Value 20% (stretch +20% pool) .
- Achievement and funding: Objectives totaled 100% achievement; Compensation Committee applied downward discretion to 80% for executives due to negative AL002 Phase 2 readout and cost initiatives; Rosenthal requested a further reduction to 50% of his target, leading to a $203,430 payout (30% of salary) .
Detailed plan features:
| Item | 2024 Design |
|---|---|
| CEO bonus dependency | 100% corporate performance (no individual modifier) |
| Funding band | 0%–150% of target based on corporate score |
| 2024 Results for CEO | Corporate earned 100% → reduced to 80% by discretion; CEO asked to cut to 50% of target; payout $203,430 |
Equity Ownership & Alignment
- Beneficial ownership (as of Mar 31, 2025): 7,750,153 shares (7.6% of outstanding) beneficially owned by Dr. Rosenthal; includes 2,255,380 shares from options exercisable within 60 days .
- Anti-hedging/pledging: Company policy prohibits hedging transactions and pledging/margining of Alector stock by employees and directors .
- Clawback: Compensation Recovery Policy adopted Sept 2023 provides non-discretionary recovery of excess incentive-based pay in event of accounting restatement (SEC/Nasdaq-compliant) .
- Stock ownership guidelines: Not disclosed for executives in 2025 proxy .
Key outstanding/vesting equity (select grants at 12/31/2024):
| Award | Quantity | Grant date | Vesting | Notes |
|---|---|---|---|---|
| RSU | 610,500 | 10/1/2024 | 1/12 per quarter from 12/1/2024, service-contingent | |
| RSU | 231,934 | 10/1/2023 | 1/12 per quarter from 12/1/2023 | |
| PSU | 150,000 | 5/7/2021 | Earned in two tranches if 40-day avg stock price ≥ $30 and ≥ $40; then vests in four quarterly installments per tranche | |
| Options (various strikes) | Multiple lots (e.g., 520,[email protected]; 457,[email protected]; 330,293+86,[email protected]; etc.) | 2019–2023 | Typically 1/48 monthly vest (service-based) | Snapshot detail in Outstanding Equity table |
Vesting cadence and potential selling pressure:
- RSUs vest quarterly across overlapping 12-quarter schedules beginning 12/1/2023 and 12/1/2024, creating regular settlement windows that may contribute to periodic trading/supply if shares are sold upon vesting .
Employment Terms
- Employment: At-will; 2025 base salary $678,100; target bonus 60% .
- Change-in-control (CIC) and severance (double-trigger equity acceleration):
- Outside CIC: 12 months base + up to 12 months COBRA for CEO; lump-sum; equity acceleration of a portion per table .
- Within 12 months post-CIC (qualifying termination): 18 months base + 150% of target bonus; up to 18 months COBRA; 100% acceleration of all equity (performance awards assumed at target unless otherwise specified) .
Estimated payouts if event occurred on Dec 31, 2024:
| Scenario | Severance Payments ($) | COBRA ($) | Equity Acceleration ($) |
|---|---|---|---|
| Termination without cause / good reason (no CIC) | 678,100 | 19,338 | 1,892,429 |
| Termination without cause / good reason (within CIC period) | 1,627,440 | 29,007 | 100% of all equity; value not tabulated in this column; see policy |
- No excise tax gross-ups; “best‑net” cutback applies if 280G excise tax would otherwise apply .
Board Governance
- Role: CEO and director (Class I); nominee/elected in 2025 to serve until 2028 .
- Committees: Dr. Rosenthal does not serve on board committees; committee memberships are comprised of independent directors .
- Independence and leadership: Independent Chairperson (Louis Lavigne, Jr.); Board believes separate independent chair enhances objectivity; no Lead Independent Director given independent chair .
- Executive sessions: Independent directors hold executive sessions typically after each regular board meeting, led by the Chair .
- Attendance: In 2024, all directors attended ≥75% of board and applicable committee meetings .
Board committee composition (for governance context):
- Audit: De Souza; Lavigne; Wehner (chair until 2025 meeting); Altmeyer to chair post-meeting .
- People, Culture, and Compensation (Compensation): Garofalo (chair); Hammond; De Souza; Lavigne .
- Corporate Governance and Nominating: Yaffe (chair); Hammond; Altmeyer .
Employee director pay:
- Employee directors receive no additional compensation for board service (Rosenthal was the only employee director in 2024) .
Say‑on‑Pay & Compensation Peer Group
- Say‑on‑Pay support:
- 2024 meeting: “over 98%” of votes cast supported NEO compensation .
- 2025 meeting results: Votes For 68,738,538; Against 1,141,227; Abstentions 136,670; Broker Non-Votes 19,513,598 .
- Peer group and design:
- 2024 peer group (19 companies) included Denali, IDEAYA, Arvinas, Nurix, Prothena, RAPT, Stoke, Xenon, and others; recalibrated for stage, size, and neurology/oncology focus .
- Company targets “at or near” a market benchmark percentile (not specified) considering role, performance, and internal equity .
Performance & Track Record
- 2024 highlights included: FDA Breakthrough Therapy Designation (BTD) for latozinemab; progress on AL101 Phase 2 enrollment; execution of $50M Hercules credit facility; AL002 Phase 2 did not meet its primary endpoint .
- Pay-versus-performance (context): Value of $100 invested in Alector at year-end 2024 was $11; average peer group TSR reference index (Nasdaq Biotechnology Index) value was $114; net loss reported was $119 million (2024) .
- 2025 corporate election results: Rosenthal re-elected as Class I director (Votes For 69,140,255; Withheld 876,180) .
Compensation Structure Analysis
- Shift to RSUs: All 2024 executive annual equity awards were granted entirely as RSUs to manage dilution and align with peers; performance-vested equity continues to be evaluated but requires meaningful multi‑year financial goals .
- Pay-for-performance: Committee used downward discretion on 2024 funding due to AL002 trial outcome; CEO further reduced his own payout to 50% of target .
- Hedging/pledging prohibited; clawback policy adopted .
Risk Indicators & Red Flags
- Program risk: AL002 Phase 2 trial did not meet its primary endpoint in 2024; this influenced bonus discretion and indicates modality/program risk management .
- Leadership transitions: 2025 departures—CMO resignation effective April 25, 2025 ; CFO resignation effective June 20, 2025, with Interim CFO appointed .
- Governance mitigants: Separate independent Chair; strong board committee independence; high Say‑on‑Pay support; no tax gross‑ups; no single‑trigger CIC cash severance .
Director Service Details and Dual‑Role Implications
- Board service: Director since 2013; re-elected in 2025 for term ending 2028 .
- Committees: None; independent directors populate key committees, mitigating independence concerns .
- Dual-role implications: CEO + Director, but not Chair; presence of independent Chair and regular executive sessions mitigates concentration of power and supports independent oversight .
Tables: Additional Executive-Specific Data
- 2024 CEO Annual Incentive Computation
| Item | Value |
|---|---|
| Base salary (2024) | $678,100 |
| Target bonus % | 60% |
| Corporate achievement | 100% (then reduced to 80% by Committee) |
| CEO self-elected reduction | To 50% of target |
| Actual bonus | $203,430 |
- 2024 CEO Equity Grants and Vesting
| Grant | Shares | Grant Date | Vesting Terms |
|---|---|---|---|
| RSU | 610,500 | 10/1/2024 | 1/12 per quarter starting 12/1/2024 |
| Prior RSU | 231,934 | 10/1/2023 | 1/12 per quarter starting 12/1/2023 |
| PSU (price hurdles) | 150,000 | 5/7/2021 | Earn 50% at $30, 50% at $40 (40-day avg), then 4 quarterly vests each tranche |
- Beneficial Ownership (as of 3/31/2025)
| Holder | Shares Beneficially Owned | % Outstanding |
|---|---|---|
| Arnon Rosenthal, Ph.D. | 7,750,153 | 7.6% |
- CIC and Severance: Estimated CEO Economics (Dec 31, 2024)
| Scenario | Severance ($) | COBRA ($) | Equity Acceleration |
|---|---|---|---|
| No‑CIC Qualifying Termination | 678,100 | 19,338 | $1,892,429 estimated |
| CIC Period Qualifying Termination | 1,627,440 | 29,007 | 100% acceleration (performance at target unless specified) |
Investment Implications
- Alignment: High insider ownership (≈7.6%) plus anti‑hedging/pledging policy and an active clawback framework favor alignment with long‑term shareholders . The CEO’s voluntary bonus reduction (to 50% of target) underscores accountability .
- Vesting‑led supply: Overlapping RSU schedules (1/12 quarterly) from 2023 and 2024 grants create predictable quarterly vesting events, potentially adding periodic selling pressure as awards settle .
- Retention/CIC dynamics: Double‑trigger equity acceleration and 18‑month/150% bonus CIC cash protections could stabilize leadership through potential strategic events but also concentrate realized value on exit outcomes .
- Governance quality: Independent Chair and high Say‑on‑Pay support (>98% in 2024; strong 2025 vote counts) reduce governance discount risk .
- Execution risk: Prior AL002 miss, plus 2025 CMO/CFO turnover, elevate execution and continuity risk into late‑2025 INFRONT‑3 readout; expect event‑driven volatility around clinical catalysts .