David Morken
BandwidthAbout David Morken
David A. Morken is Bandwidth’s Co‑Founder, Chairman and CEO; he founded Bandwidth in 1999 and previously served as a Marine Corps Judge Advocate and Headquarters Company Commander. He holds a B.A. in Political Science (Oral Roberts University) and a J.D. from the University of Notre Dame Law School; age 55 as of April 15, 2025 and a director since 2001 . Bandwidth’s 2024 performance underpinning pay decisions: revenue +25% to $748M, Adjusted EBITDA $82M, free cash flow $59M, and corporate bonus achievement 106.2% (metrics: Adjusted EBITDA, Non‑GAAP gross margin, revenue) . In 2023, corporate achievement was 87.7% and revenue grew 5% to $601M .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| United States Marine Corps | Judge Advocate; Headquarters Company Commander | n/a | Military legal and command experience; leadership foundation |
| Bandwidth Inc. | Co‑Founder; CEO; Chairman | 1999–present | Founder-led vision; continuity of execution and strategy |
| Bandwidth Inc. | Director | 2001–present | Board leadership; dual CEO/Chair role |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Relay, Inc. | Co‑Founder; Chairman; former CEO | n/a | Ecosystem ties; related‑party sublease (facility monetization) |
| Durham Cares (non‑profit) | Co‑Founder | n/a | Community leadership; stakeholder relations |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 494,235 | 516,476 | 516,476 |
| Target Bonus ($) | 516,476 (100% of base) | 516,476 | 516,476 |
| All Other Comp ($) | 20,141 | 15,714 | 26,476 |
Notes:
- Annual incentive paid in stock: 2023 MBO bonus $418,524 paid as fully vested shares on Mar 1, 2024 (grant at 110% of earned) ; 2024 MBO bonus $548,498 paid as fully vested shares on Feb 28, 2025 .
Performance Compensation
| Plan Year | Metrics | Corporate Achievement (%) | Target Bonus ($) | Actual Payout ($) | Payout Form | Vesting |
|---|---|---|---|---|---|---|
| 2023 | Adjusted EBITDA; Non‑GAAP Gross Margin; Revenue | 87.7% | 516,476 | 418,524 | Fully vested Class A shares (issued 3/1/2024 at 110% of earned) | Immediate on issuance |
| 2024 | Adjusted EBITDA; Non‑GAAP Gross Margin; Revenue | 106.2% | 516,476 | 548,498 | Fully vested Class A shares (issued 2/28/2025) | Immediate on issuance |
Equity Grants (time‑based RSUs):
- 11/28/2024: 49,234 RSUs; vest 1/3 on 11/28/2025, remaining 2/3 quarterly through 11/28/2027 .
- 11/28/2023: 92,725 RSUs; vest 1/3 on 11/28/2024, remaining quarterly through 11/28/2026 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total Beneficial Ownership | 1,149,875 Class B shares; 0 Class A shares |
| Ownership % of Outstanding | 3.9% ownership; 58.7% voting power (Class B carries 10 votes/share) |
| Vested vs Unvested Equity | Significant unvested RSUs outstanding (see table below) |
| Hedging/Pledging | Company policy prohibits hedging and pledging of company stock |
| Director Pay vs Executive Pay | No additional director compensation for employee directors (Morken) |
Outstanding Equity Awards (as of 12/31/2024):
| Grant Date | Unvested Units (#) | Market Value ($) |
|---|---|---|
| 11/28/2024 | 49,234 | 837,963 (at $17.02 close) |
| 11/28/2023 | 61,817 | 1,052,125 |
| 11/28/2022 | 16,945 | 288,404 |
| 1/3/2022 | 10,972 | 186,743 |
| 1/3/2022 | 5,835 | 99,312 |
| 1/2/2021 | 2,536 | 43,163 |
| 1/2/2021 | 1,021 | 17,377 |
| Fully vested award (bonus shares issued 2/28/2025) | 34,345 | 584,552 |
Employment Terms
| Provision | Terms |
|---|---|
| Agreement | Employment agreement originally dated 1/1/2015; amended 3/9/2017 and 2/26/2024; auto‑renews annually |
| Target Bonus | 100% of base (set annually with comp committee) |
| Severance (Qualifying Termination) | 150% base + 150% target bonus, payable over 18 months; benefits stipend and term life insurance premium lump sum |
| Change‑in‑Control Severance | If within 12 months of a change in control (or any resignation within 12 months after an Unapproved Change in Control): 300% base + 300% target bonus, payable over 36 months; extended benefits and term life insurance premium |
| Equity Acceleration | Immediate vesting of outstanding unvested options/RSUs upon death, change in control, or qualifying termination; options exercisable for full original term |
| Restrictive Covenants | 12‑month non‑compete and non‑solicit; confidentiality obligations |
| 280G Cutback | Payments reduced to avoid 4999 excise tax if applicable |
Implications:
- Mix of single‑trigger equity acceleration (upon change in control) and double‑trigger severance; stronger retention economics post‑CIC .
Board Governance
- Roles: CEO and Chairman; no Lead Independent Director; independent directors chair audit and compensation committees .
- Board independence: 4 of 6 directors are independent per Nasdaq rules; committees are fully independent .
- Committee memberships: Audit Committee chaired by Lukas Roush; members Roush, Bailey, Murdock, Suriano . Compensation Committee chaired by Douglas Suriano; members Suriano, Bailey, Murdock, Roush .
- Meetings: 8 board meetings in 2024; each director attended at least 75% of board/committee meetings; all directors attended the 2024 annual meeting .
- Compensation consultant: Meridian engaged; committee found no conflicts of interest .
Director Compensation
| Component | Amount |
|---|---|
| Annual Board Retainer (cash) | $50,000 |
| Committee Member Retainers | $10,000 (Audit); $7,500 (Compensation) |
| Committee Chair Retainers | $20,000 (Audit Chair); $15,000 (Compensation Chair) |
| Annual Equity (RSUs) | $175,000; vests quarterly during the service year |
| Employee Directors | No additional director pay (applies to Morken) |
Other Directorships & Interlocks; Related Party Transactions
- Relay, Inc. sublease: On Nov 19, 2024, Bandwidth subleased 60,000 sq ft to Relay (Morken is a significant owner); term through 12/31/2029; aggregate rent $10.9M; option to expand by up to 25,000 sq ft .
- Audit Committee reviews and approves related party transactions per policy .
Say‑on‑Pay & Shareholder Feedback
| Year | Approval % | Notes |
|---|---|---|
| 2023 | ~93% | No program changes in response |
| 2024 | ~80% | Continued annual advisory votes |
Pay‑Versus‑Performance (PEO perspective)
| Metric | 2023 | 2024 |
|---|---|---|
| PEO Total (SCT) ($) | 1,975,635 | 2,073,558 |
| Compensation Actually Paid ($) | 1,477,924 | 2,391,994 |
| Bandwidth TSR (Value of $100) | 22.59 | 26.57 |
| Peer Group TSR (Value of $100) | 210.85 | 286.10 |
| Net Income ($) | (16,343,000) | (6,524,000) |
| Adjusted EBITDA ($) | 48,170,000 | 82,061,000 |
Investment Implications
- Alignment and retention: Large ownership of Class B shares confers 58.7% voting power, aligning control with founder; policy bans hedging/pledging, and annual RSUs plus time‑based vesting support retention; corporate bonuses paid in stock further align interests .
- Governance risk: Combined CEO/Chair without a Lead Independent Director may constrain independent oversight; however, fully independent audit and compensation committees and executive sessions partially mitigate .
- Change‑in‑control terms: Single‑trigger equity acceleration plus 300% severance in CIC scenarios can create higher deal costs and potential overhang; retention is strong but may invite scrutiny from governance‑focused investors .
- Dilution watch: Third Amended & Restated 2017 Plan increased share reserve by 4.5M shares (to 10,916,789) with an annual evergreen up to 5% of shares outstanding starting 2026, raising prospective dilution; plan disallows discounted options and tax gross‑ups and caps director compensation .
- Performance trend: 2024 materially improved Adjusted EBITDA and FCF supporting above‑target bonus outcome; continued execution on growth and margin remains the key lever for pay‑for‑performance support .