Michael Raab
ARDELYXAbout Michael Raab
Michael Raab is President and Chief Executive Officer of Ardelyx and has served as a director since 2008; he became CEO in March 2009. He is age 60 and holds a B.A. from DePauw University. Prior to Ardelyx, Raab was a partner at NEA (2002–2009) and held senior commercial and operating roles at Genzyme, Repligen, and Bristol-Myers. Under his leadership, Ardelyx’s total revenue rose from $52 million (2022) to $124 million (2023) and $334 million (2024); the company’s cumulative TSR tracked 17 (2021), 44 (2022), 96 (2023), and 78 (2024) on a $100 base, while net loss improved from $(158) million (2021) to $(39) million (2024) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| New Enterprise Associates (NEA) | Partner focusing on biotech/pharma | 2002–2009 | Investment and growth equity experience; sector specialization |
| Genzyme | SVP, Therapeutics; GM, Renal Division; diagnostic division roles | ~15 years prior to NEA | Led renal division; broad commercial/operational responsibilities |
| Repligen | Business development; sales/marketing | Prior to Genzyme | Commercial and BD exposure in life sciences |
| Bristol-Myers | Sales/marketing | Prior to Genzyme | Early commercial experience in pharma |
External Roles
| Organization | Role | Status |
|---|---|---|
| Amicus Therapeutics (Nasdaq: FOLD) | Lead Independent Director | Current |
| Tempest Therapeutics (Nasdaq: TPST) | Chairperson of the Board | Current |
| Biotechnology Innovation Organization (BIO) | Member, Emerging Companies Section Governing Board; Member, Health Section Governing Board | Current |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base salary ($) | $650,000 | $700,000 | $770,000 |
| Perquisites/Other comp ($) | — | $4,950 | $5,164 |
| 401(k) employer match | Plan provides match of 0.5% of first 3% of contributions (all employees) | Plan provides match of 0.5% of first 3% | Plan provides match of 0.5% of first 3% |
| Health & welfare benefits | Standard employee plans (medical/dental/vision, disability, life/AD&D) | Standard plans | Standard plans |
Performance Compensation
| Metric | Weighting | Target | Actual | Score | Payout | Vesting |
|---|---|---|---|---|---|---|
| Product Revenue (IBSRELA + XPHOZAH) | 55.0% | $258.7m budget total ($174.5m IBSRELA; $84.2m XPHOZAH) | $319.2m net product sales (IBSRELA $158.3m; XPHOZAH $160.9m) | 104.5% | Contributes to corporate funding score | — |
| Regulatory & Government Affairs | 15.0% | Multi-goal access initiatives | Partial achievement | 50.0% | Contributes to corporate funding score | — |
| Pipeline | 7.5% | Corporate dev hire; strategic evaluation | Partial achievement | 80.0% | Contributes to corporate funding score | — |
| Operational | 7.5% | Inventory, supply agreements, facility buildouts | Mixed; partial credit | 85.0% | Contributes to corporate funding score | — |
| Finance | 10.0% | Operating budget control; cash levels | OpEx $311m vs $326m budget; YE cash ~$251m; enhanced credit | 101.5% | Contributes to corporate funding score | — |
| People & Compliance | 5.0% | Talent, succession, training | Mostly achieved; partial credit | 90.0% | Contributes to corporate funding score | — |
| Corporate total | 100% | — | — | 92.0% | CEO cash bonus paid at 92% of target ($495,880) | — |
| Equity incentive detail (2024 grant) | Grant date | Award type | Quantity | Exercise price | Grant date fair value | Vesting |
|---|---|---|---|---|---|---|
| Michael Raab annual LTI | 1/16/2024 | Stock options | 605,904 | $8.78 | $4,164,621 | Monthly over 4 years |
| Michael Raab annual LTI | 1/16/2024 | RSUs | 475,000 | — | $4,170,500 | Quarterly over 4 years on Feb 19, May 19, Aug 19, Nov 19 |
| Cash incentive | 2022 | 2023 | 2024 |
|---|---|---|---|
| Target bonus (% of base) | — | — | 70% |
| Non-equity incentive paid ($) | $331,500 | — | $495,880 |
| Discretionary bonus ($) | $300,000 (retention) | $330,000 | — |
| Total compensation ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Stock awards | $148,500 | $687,500 | $4,170,500 |
| Option awards | $517,020 | $2,395,694 | $4,164,621 |
| Total | $1,947,020 | $4,118,144 | $9,606,165 |
Key design notes:
- 2024 LTI split 50% options and 50% RSUs (options:RSU ratio 1.28:1 for sizing); heavy variable pay emphasis; no repricing without stockholder approval; clawback compliant with SEC/Nasdaq .
- Compensation philosophy targets ~50th percentile vs a 20-company peer group; Pearl Meyer engaged as independent consultant, independence affirmed .
Equity Ownership & Alignment
| Ownership metric | Value |
|---|---|
| Total beneficial ownership | 4,708,913 shares (544,794 outstanding; 4,164,119 exercisable/releasable within 60 days) |
| Ownership as % of shares outstanding | 1.9% |
| Options (12/31/2024) | 138,853 exercisable; 467,051 unexercisable at $8.78; plus legacy grants across multiple tranches/exercise prices |
| RSUs unvested (12/31/2024) | 356,248 units; market value $1,806,177 at $5.07 |
| Insider trading activity (2024) | Exercised 180,000 options; realized $897,400; 247,526 RSUs vested; realized $1,709,789 |
| Hedging/pledging | Prohibited by policy; applies to directors/officers/employees |
| Ownership guidelines | Not disclosed in proxy (no executive ownership multiple provided). |
Alignment observations:
- Strong equity exposure via large option overhang and unvested RSUs; quarterly RSU vest dates may create predictable vesting cadence. Hedging/pledging bans support alignment; late Form 4 in Oct 2024 noted (administrative delay) .
Employment Terms
| Provision | Pre-2025 Agreement | 2025 Second Amended Agreement |
|---|---|---|
| Severance (non-CoC) | 12 months base salary; 12 months healthcare; 12 months equity vest accel; options exercisable up to 12 months | 18 months base salary; 18 months healthcare; 18 months equity vest accel; options exercisable up to 12 months |
| Severance (CoC window: 3 months before to 12 months after) | 1.5x (base + target bonus); 18 months healthcare; full equity accel; options exercisable up to 12 months | 2.0x (base + target bonus); 24 months healthcare; full equity accel; options exercisable up to 12 months |
| Definitions of Cause/Good Reason | Detailed definitions (dishonesty, willful misconduct, etc.); material diminution, pay cuts, relocation >50 miles, breach |
Change-in-control economics illustrate enhanced protection in 2025, increasing multiples and health coverage duration versus prior agreement .
Board Governance
- Board structure: Classified board; eight directors. Raab is CEO and inside director; David Mott is independent Chair; all directors other than Raab are independent per Nasdaq standards .
- Committees: Raab does not serve on committees; Audit & Compliance (Rodgers-chair, Bertrand, Mott), Compensation (Mott-chair, Bazemore, Rodgers, Bhanji), Nominating & Governance (Bertrand-chair, Cadoret-Manier, Parsey) .
- Attendance: Board met 9 times in 2024; each director attended at least 75% of meetings of the board/committees served .
- Dual-role assessment: CEO + director (not Chair) mitigated by independent Chair, regular executive sessions of independent directors, and fully independent key committees .
Director Compensation (for non-employee directors; Raab is employee director)
- Program includes cash retainers and equity grants; annual option grant; 2025 amendments add RSUs and adjust values; caps and anti-repricing provisions apply. Employee directors (like Raab) do not receive director fees under the program .
Compensation Peer Group & Say-on-Pay
- Peer group (20 companies) includes Akebia, Catalyst, Coherus, Collegium, Deciphera, Eagle, Enanta, EyePoint, Heron, Intercept, Ironwood, Karyopharm, MannKind, Mirum, Ocular, Rigel, Travere, Vericel, Xencor, Xeris; target compensation generally at 50th percentile .
- Say-on-Pay: 2024 approval approximately 94%; committee considers feedback for subsequent decisions .
Risk Indicators & Red Flags
- Regulatory/government affairs objectives scored 50%, indicating external access/payer dynamics as execution risk .
- Equity plan amendment adds 10,000,000 shares to reserve; overhang expectations disclosed (approx. 24.0%; 15.9% when considering only in-the-money options) affecting dilution calculus .
- Late Section 16 filing in 2024 for Raab (administrative delay) noted; otherwise compliance with filings .
- Clawback policy compliant; anti-hedging/-pledging; no excise tax gross-ups; no option repricing without stockholder approval .
Performance & Track Record (Selected KPIs)
| Metric | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Total revenue ($mm) | $10 | $52 | $124 | $334 |
| Net income (loss) ($mm) | $(158) | $(67) | $(66) | $(39) |
| Cumulative TSR (Value of $100) | 17 | 44 | 96 | 78 |
Vesting Schedules and Insider Selling Pressure
- Options: Monthly vesting over 4 years; multiple legacy tranches outstanding; recent options at $8.78 strike (1/16/2024) .
- RSUs: Quarterly vesting on company-designated dates Feb 19, May 19, Aug 19, Nov 19; sizeable unvested balance (356,248 units at YE 2024) suggests recurring vesting events; value at $5.07 close was ~$1.81m .
- 2024 realized liquidity events: 180,000 options exercised ($897k value realized); RSU vesting 247,526 shares ($1.71m value realized) .
Related Party Transactions & Governance Practices
- Indemnification agreements with directors/executives; robust insider trading and code of conduct policies; audit/comp governance charters public .
Investment Implications
- Pay-for-performance alignment is evident: CEO cash bonus funded at 92% driven by revenue outperformance, with heavy equity mix (balanced RSU/options) that ties outcomes to stock performance and retention; clawback and anti-hedging/-pledging strengthen alignment .
- Retention and CoC economics: 2025 enhancements to severance (2.0x CoC; 18–24 months benefits/vesting acceleration) improve retention but increase sale-of-company payout sensitivity; monitor this in M&A scenarios .
- Trading signals: Quarterly RSU vest dates and a meaningful unvested RSU balance may contribute to predictable vest-related flows; 2024 option exercises indicate willingness to monetize; continued product revenue traction vs government affairs/regulatory access (50% score) remains a key execution lever for valuation .
- Dilution watch: Equity plan amendment and disclosed overhang could pressure EPS/ownership; however, broad-based equity is positioned as critical for talent retention amid commercial scale-up .