John Gallagher

About John Gallagher

John E. Gallagher III (age 52) is Certara’s Senior Vice President and Chief Financial Officer, a role he has held since April 2023; prior roles include CFO of Cue Health and senior finance leadership positions at Becton Dickinson, NBCUniversal, GE and Ford . Under his tenure, 2024 revenue reached $385.1 million (+9% YoY) and Adjusted EBITDA was $122.0 million; the company emphasizes EBITDA margin in its pay programs and guided to low-30s adjusted EBITDA margin in 2025 commentary . Since 12/31/2020, Certara’s TSR translated an initial $100 investment to $27.97 by year-end 2024, and the company introduced a $100 million repurchase authorization (with $25 million executed in Q2 2025), while prioritizing R&D and new software launches including AI-enabled Certara IQ and cloud Phoenix .

Past Roles

Fixed Compensation

Performance Compensation

Annual Incentive (AIB Plan) – 2024 Design and Payout

• Metrics and weighting: Adjusted EBITDA (80%) and Revenue (20%), applied to corporate and divisional scorecards; CFO multiplier uses 20% company-wide + 80% blended division rate .
• Threshold: If company-wide adjusted EBITDA <90% of target, no payout (met in 2024) .
• 2024 Payout for Gallagher: 74% multiplier on $296,125 target = $219,132 .

Long-Term Incentives (LTI)

• Vehicle mix: 40% time-based RSUs; 60% PSUs (3-year performance) .
• 2024 grant (Apr 1, 2024): RSUs 45,571; Target PSUs 68,357; grant-date fair value $2,123,846 .
• PSU metrics and gates: Annual revenue (Tranche I) and adjusted EBITDA (Tranche II) over FY2024-2026; linear scale (50%-200%); forfeit if average EBITDA margin <20% over first two years; rTSR modifier ±20% vs peer group .
• 2023 outstanding: Target PSUs 56,848; RSUs 37,898 (3-year vest) and 29,326 (2-year) .

Equity Ownership & Alignment

Employment Terms

• Start date and role: Appointed SVP & CFO effective April 1, 2023 .
• Initial compensation on hire: Base salary $575,000; target bonus 50% of base; sign-on equity value $2.75 million (PSUs $1.26m; RSUs $0.84m vesting over 3 years; RSUs $0.65m vesting over 2 years) .
• Amended and Restated Employment Agreement (Nov 7, 2023): Company paid $235,750 for unpaid prior-employer bonus (reimbursable to Certara upon recovery) and agreed to reimburse legal fees related to that claim .
• Severance (no cause/good reason, no CIC): Six months’ base salary continuation; payment of full annual target bonus amount for current year; accrued obligations .
• Change-in-control (double-trigger): Six months’ base salary; full annual target bonus for current year; accelerated vesting value for unvested RSUs ($910,575 at 12/31/2024); estimated value for PSUs ($873,826; subject to performance determination) .
• Restrictive covenants: Perpetual confidentiality and non-disparagement; IP assignment; non-compete during employment and for one year thereafter; non-solicit of employees/customers during employment and for one year thereafter .
• Clawback: Company-adopted Dodd-Frank compliant clawback in 2023 covering incentive compensation tied to financial reporting measures .

Performance & Track Record

Compensation Structure Analysis

• Mix and leverage: High share of at-risk pay via AIB and PSUs aligns realized pay with revenue/EBITDA and relative TSR; AIB weighted 80% to Adjusted EBITDA encourages profitability discipline; revenue receives 20% weighting .
• Metric calibration and rigor: 2024 AIB required ≥90% of Adjusted EBITDA target to fund; 2024 multiplier for CFO was 74%, below target, indicating formulaic restraint; no discretionary upward adjustments were made to AIB outcomes .
• Equity design: 3-year PSUs with EBITDA and revenue tranches, 20% EBITDA margin gate and rTSR modifier strengthen pay-for-performance; time-based RSUs provide retention continuity .
• Governance safeguards: No excise tax gross-ups; robust clawback; hedging prohibited; pledging requires pre-clearance; stock ownership guidelines enforced, with NEOs in compliance as of 2/1/2025 .
• Shareholder sentiment: 2024 Say-on-Pay passed with 94.8% approval, supporting the program design .

Risk Indicators & Insider Selling Pressure

• Scheduled vesting cadence: Significant RSU tranches vest around April 1 each year (e.g., 2024 and 2023 grants), potentially creating periodic selling windows and supply; 2024 RSUs vest 4/1/2025–2027; 2023 RSUs vest through 4/1/2026 .
• Pledging/hedging: Policy restricts pledging (pre-clearance) and prohibits hedging, reducing misalignment risks; no individual pledging by Gallagher disclosed .
• Change-in-control economics: Double-trigger treatment with cash severance equal to 6 months salary plus full-year target bonus and equity acceleration provides retention but limits windfalls relative to CEO terms; estimated RSU and PSU values detailed in proxy .
• No option repricing/red flags: Company noted it is not granting options currently and does not disclose option repricing; no tax gross-ups; presence of clawback .

Equity Detail and Vesting Schedules

Employment Contracts, Severance, and Change of Control

Investment Implications

• Alignment and discipline: High at-risk mix, rigorous AIB guardrails (90% EBITDA threshold) and multi-year PSUs with rTSR and margin gate support pay-performance alignment and capital discipline .
• Retention vs. liquidity events: Meaningful RSU vests each April could create episodic supply; however, ownership guidelines and anti-hedging reduce misalignment; no pledging disclosed .
• Execution focus: CFO’s strategy emphasizes accelerating organic software growth via R&D and product launches (Certara IQ, cloud Phoenix), with balanced capital allocation (M&A screening, new $100m buyback; $25m executed), which can support LT growth and per-share metrics if sustained .
• Risk checks: No excise tax gross-ups, robust clawback, and no option repricing reduce governance risk; say-on-pay support (94.8% in 2024) indicates shareholder acceptance of program structure .