Stephen Garchik

About Stephen J. Garchik

Stephen J. Garchik (age 71) is a long-time investor in authID and, as of the 2025 proxy, a director nominee. He has been associated with the company for ~10 years as a major investor and currently holds about 11.2% of outstanding common stock. Professionally, he is President of SJM Partners (since 1997), a real estate development, design, construction, leasing, and management firm. He holds a B.S. and an MBA from the Wharton School, University of Pennsylvania, and serves on several non-profit boards .

Past Roles

External Roles

Board Governance

• Current status: Director nominee for election at the June 26, 2025 Annual Meeting; no committee assignments indicated in the proxy for him; committee chairs remain Michael L. Koehneman (also Lead Independent Director) and Jacqueline L. White .
• Independence: The 2025 proxy does not designate his independence. He is a >10% stockholder and previously held board nomination rights through a financing agreement; those rights and the facility were terminated in May 2023. Given Nasdaq rules for committee independence, he is not flagged for Audit or Compensation Committees in the nominee slate, consistent with potential independence constraints .
• Attendance: 2024 board met nine times; each director attended all their meetings except one board meeting that one director missed. Garchik was not a director in 2024; no attendance data applies to him for 2024 .
• Board leadership: CEO and Chair roles are separated; CEO (Daguro) chairs meetings; Koehneman serves as Lead Independent Director. Board committees oversee risk within their remits .

Fixed Compensation

• Director pay policy (effective for non-employee directors from Aug 2024):
  • Cash retainer: $8,000 per year; $10,000 for committee chairs (paid quarterly).
  • Equity: annual option grant valued at approximately $117,000 following the Annual Meeting (subject to plan approval). If elected in 2025, new non-employee directors would be subject to this policy going forward .

Performance Compensation

• Directors are compensated primarily with time-vested stock options; no performance (metric-based) equity is disclosed for directors. 2024 grants to non-employee directors (e.g., Aug 13, 2024 grants of 15,627 options each) vest over 12 months; some director grants vest in thirds annually over three years. No director performance metrics (TSR, revenue, EBITDA) are tied to director awards .

Other Directorships & Interlocks

• Public company boards: None disclosed.
• Notable interlocks/conflicts: Prior financing ties to the company (credit facility; convertible notes exchange) and historical nomination rights (now terminated). No other interlocks with customers/suppliers disclosed .

Expertise & Qualifications

• Education: B.S. and MBA, Wharton School, University of Pennsylvania .
• Domain experience: 40+ years of management across real estate development and operations, with a broad business network; brings capital allocation and operational perspective to the board .
• Board qualifications: Business management, operations, and strategy; no designation as “audit committee financial expert” (that role designated to Audit Chair) .

Equity Ownership

• Beneficial ownership (as of May 5, 2025): 1,456,808 shares (11.2% of outstanding 13,070,680 shares). Includes:
  • 1,123,563 shares personally
  • 170,834 shares (Garchik 2019 Irrevocable Trust; trustee and beneficiary)
  • 4,367 shares (Garchik Universal Limited Partnership; jointly controlled with sister)
  • 147,627 shares (Marla Garchik 2020 Irrevocable Trust; beneficiary)
  • Warrant for 10,417 shares at $36.00 per share (2019 Trust)

• Pledging/hedging: No disclosure of pledging or hedging. Ownership guidelines for directors are not disclosed in the proxy (no specific ownership policy mentioned for directors).

Insider Activity (Form 4 and Related Transactions)

Note: Attempt to fetch Form 4 data programmatically for 2024–2025 via the insider-trades skill returned an authorization error; the proxy provides the above disclosed purchase and conversions .

Compensation Structure Analysis (as it pertains to directors)

• Shift in director pay structure (2024): Board moved from per‑meeting cash fees to a small fixed cash retainer with larger annual option awards (~$117k), increasing equity-at-risk alignment. Policy applies to non-employee directors post‑2024 Annual Meeting .
• Clawback: Company adopted a Nasdaq‑compliant clawback policy on Oct 6, 2023 for incentive compensation to covered executives (not typically applicable to director equity, but a governance positive) .

Related Party Transactions (Conflict Review)

• Credit Facility and Nomination Rights (2022–2023):
  • Original Facility (Mar 21, 2022): $10.0M unsecured standby line; included right to nominate one director; nomination right later replaced by a one-time right to nominate four designees (Daguro, Jisser, Thompson, Szoke appointed Mar 9, 2023) .
  • Amended & Restated (Mar 8, 2023): Reduced to $3.6M; $900k initial advance; subject to conditions .
  • Facility Termination (May 25, 2023): Initial note canceled; equity issued in satisfaction; A&R Facility Agreement terminated .
• Convertible Notes (Mar 21, 2022): Participated alongside insiders; exchanged into equity May 23, 2023 .
• Subsequent equity purchase: $1,000,000 open-market investment Nov 20, 2023 .

These ties are disclosed and largely resolved (facility terminated), but they create a history of material transactions with a significant stockholder that investors should monitor for potential future conflicts .

Governance Assessment

• Strengths/signals that support investor confidence

  • Significant “skin in the game”: ~11.2% ownership; recent $1,000,000 open-market purchase (Nov 2023) indicates confidence and alignment with shareholders .
  • Financing support during restructuring: Provided liquidity through facility and note participation, later converted to equity, reducing leverage and aligning incentives .
  • Board structure and policies: Separation of CEO and Chair; Lead Independent Director in place; adoption of Nasdaq-compliant clawback; clear director equity grant policy .

• Risk indicators/RED FLAGS to monitor

  • Independence concerns: As a >10% stockholder with prior nomination rights and financing ties, independence may be constrained. He is not slated for Audit/Compensation committees (no committee footnotes next to his name), consistent with Nasdaq committee independence expectations .
  • Related-party history: Prior facility and note transactions underscore potential for future related-party dealings; continued disclosure and board oversight will be important .
  • Sector expertise gap: Core background is in real estate rather than identity security; however, brings broad business/operational judgment and capital markets/owner perspective .

Overall: Garchik’s large, long-dated ownership and willingness to fund and later convert into equity are positive alignment signals. If elected, he should remain off key independent committees, and the board should continue robust related-party oversight to manage potential conflicts stemming from his significant holder status .