Ernest Toth
About Ernest Toth
A. Ernest Toth, Jr. is Chief Financial Officer of Aquestive Therapeutics; he joined as Interim CFO in December 2020 and was appointed CFO in June 2021 . He is 66 years old (2025 proxy) and 65 years old (2024 proxy), holds an MBA from Pace University, a BS in Accounting from Shippensburg University, and is a registered CPA in New York . Prior roles include CFO posts at EHE Health (2018–2020), ArisGlobal (2016), Synowledge (2015), and senior finance roles at JHP Pharmaceuticals, Valeritas, Pharmaceutical Formulations, World Power Technologies, and MacAndrews & Forbes; he also served on the board of Eska, a Canadian beverage company . Company pay-versus-performance disclosures show cumulative TSR values of $23.19 (2022), $51.93 (2023), and $91.52 (2024) and net losses of $54.4M (2022), $7.9M (2023), and $44.1M (2024) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| EHE Health | Chief Financial Officer | Sep 2018 – Feb 2020 | Led finance for preventive health/telehealth network owned by Summit Partners/DW Healthcare Partners |
| ArisGlobal | Global Chief Financial Officer | Jan 2016 – Dec 2016 | Finance leadership in life sciences software |
| Synowledge | Global Chief Financial Officer | Jan 2015 – Dec 2015 | Finance leadership in pharmacovigilance/IT services |
| Danforth Advisors | Consultant | Nov 2020 (start) | Provided finance support/strategic consulting to life sciences |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Eska (Canada) | Board Director | Not disclosed | Beverage company owned by Morgan Stanley Private Investments |
Fixed Compensation
| Metric | 2023 |
|---|---|
| Base Salary ($) | $407,880 |
| Target Bonus (%) | 50% of base salary |
| Actual Bonus Paid ($) | $234,531 |
| Stock Awards – Grant Date Fair Value ($) | $448,700 |
| Option Awards – Grant Date Fair Value ($) | $0 |
| All Other Compensation ($) | $24,776 |
| Total Compensation ($) | $1,115,887 |
Performance Compensation
Annual Incentive Plan
| Item | Detail |
|---|---|
| Target bonus opportunity | 50% of base salary; max payout 200% of target |
| 2023 payout | $234,531 cash, paid in early 2024 |
| Determination basis | Compensation Committee assessment vs annual financial, strategic, operational objectives |
2023 PSU Retention Awards (Market-Condition RSUs)
| Tranche | Grant Date | Units at Target (#) | Performance Period End | Metric | Payout Curve |
|---|---|---|---|---|---|
| Tranche #1 | May 5, 2023 | 70,000 | May 5, 2026 | 30-day average stock price (“Performance Price”) | $1.75 → 50%; $2.50 → 100%; $3.25 → 150% (straight-line between thresholds; cap 150%) |
| Tranche #2 | Aug 9, 2023 | 70,000 | May 5, 2026 (aligned to Tranche #1 period) | Same as above | Same as above |
Notes:
- Employment generally required through performance period end; qualifying termination/CIC measures performance at termination date with defined treatment .
2023 Service-Based RSUs
| Grant Date | Unvested Units (#) at 12/31/2023 | Vesting Schedule |
|---|---|---|
| Mar 9, 2023 | 140,000 | 25% on first anniversary, 25% on second, 50% on third anniversary of grant date |
Stock Options Outstanding (as of 12/31/2023)
| Grant Date | Exercisable (#) | Unexercisable (#) | Strike ($) | Expiration |
|---|---|---|---|---|
| Mar 11, 2021 | 1,250 | 1,250 | $5.30 | 3/11/2031 |
| Jun 15, 2021 | 60,000 | 60,000 | $4.04 | 6/15/2031 |
| Mar 10, 2022 | 17,500 | 52,500 | $2.55 | 3/10/2032 |
| Nov 4, 2022 | 10,000 | 30,000 | $0.88 | 11/4/2032 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership (3/22/2024) | 495,795 shares; less than 1% of outstanding |
| Pledged shares | None (company disclosure indicates no shares pledged; policy prohibits pledging) |
| Hedging/short sales | Prohibited by insider trading policy |
| Unvested RSUs (service-based) | 140,000 units (market value $113,400 at 12/31/2023) |
| Unvested PSUs (market-condition) | 70,000 units – Tranche #1 ($164,500 market/payout value); 70,000 units – Tranche #2 ($170,800 market/payout value) at 12/31/2023 |
| Options (exercisable/unexercisable) | See option table above |
| Ownership guidelines | Not disclosed in proxies reviewed |
Employment Terms
| Term | Detail |
|---|---|
| Employment start | Interim CFO Dec 2020; CFO since June 2021 |
| Contract status | At-will employment under 2021 agreement |
| Target bonus | Minimum 50% of base salary |
| Severance (without Cause / Good Reason, non-CIC) | Accrued pay; pro-rata target bonus; 12 months “Severance Period” monthly payments = 1/12 of base + target bonus; 12 months health/life coverage; immediate vesting of unvested equity; performance awards deemed at target |
| Change-in-Control severance | Lump sum = 1.0x base + target bonus; 12 months health/life coverage; immediate vesting; performance awards deemed at target; Code 280G “best-of” full payment vs cutback to avoid excise tax; additional cash payment if health benefits trigger taxable income to deliver net after-tax equivalence |
| Restrictive covenants | Non-compete and non-solicit apply during employment and for the Severance Period; IP assignment obligations |
| Severance Period definition | Generally 12 months |
Performance & Track Record (Company-Level)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| TSR – Value of $100 Investment | $23.19 | $51.93 | $91.52 |
| Net Income ($ thousands) | $(54,410) | $(7,870) | $(44,137) |
Compensation Structure Analysis
- Shift from options to RSUs in 2023 increased retention value for executives; the committee explicitly changed annual LTI awards to time-based RSUs for NEOs and broader participants .
- PSU retention awards were introduced in 2023 because many outstanding options were “significantly underwater”; PSUs vest based on stock price hurdles through May 2026, enhancing alignment and retention but creating potential payout sensitivity to share price levels .
- Compensation philosophy emphasizes pay-for-performance with base, annual bonus, and annual equity; Aon serves as independent consultant; committee composition independent and includes significant stockholder perspective .
Risk Indicators & Red Flags
- Hedging and pledging prohibited; none of Toth’s shares are pledged, reducing misalignment risk .
- 2023 introduction of PSU retention awards due to underwater options indicates prior equity was out-of-the-money; while not a repricing, it is a compensatory response to retention risk and may increase equity payout sensitivity to market conditions .
- CIC terms include immediate vesting and 1.0x cash multiple; health benefit tax equalization payments are provided, which are shareholder-unfriendly in some views but limited in scope; the 280G “best-of” provision avoids gross-up by offering cutback alternative .
Investment Implications
- Alignment: Toth’s equity exposure includes substantial unvested RSUs and market-conditioned PSUs tied to stock price targets through May 2026, aligning incentives with shareholder returns and supporting retention through the performance period .
- Retention and potential selling pressure: Service RSUs vest on the first, second, and third anniversaries of March 9, 2023, creating potential liquidity events in March 2025 and March 2026; options span 2021–2022 grants with expirations in 2031–2032 .
- Downside protection and CIC: Non-CIC severance and CIC acceleration provide meaningful safety nets (12-month severance, immediate vesting; 1.0x multiple at CIC), which reduce personal downside risk and may modestly dilute the strength of pure performance orientation .
- Governance: Prohibitions on hedging/pledging and lack of disclosed pledges improve alignment; pay program aligns with market practice and is overseen by an independent committee with external consultant support .
