Christopher Clemente

About Christopher Clemente

• Chairman and CEO of Comstock Holding Companies, Inc. (CHCI); founded the Company in 1985 and has served as Chairman and CEO since 1992. Age 65 as of the 2025 proxy .
• Core credentials: multi-decade operator and entrepreneur in residential and commercial real estate development; Board deems him non‑independent due to CEO role .
• Performance snapshot:
  • Total shareholder return (TSR) improved from $88 to $167 on a $100 base from FY2022 to FY2024, while net income rose from $7.35M to $14.56M over the same period .
  • See revenue and EBITDA trend below.

Values with asterisks were retrieved from S&P Global.

Past Roles

External Roles

Fixed Compensation

Performance Compensation

• Structure: CEO compensation comprised of salary and discretionary cash bonus; no equity grants outstanding as of 12/31/24 .

Note on broader plan design (non-CEO): Performance RSUs for other NEOs vest on cumulative Adjusted EBITDA over 3-year rolling periods with 60%–120% payout factor; time-based RSUs typically vest ratably over 4 years .

Equity Ownership & Alignment

• Beneficial ownership and control:
  • Class A: 2,826,936 shares (28.7% of Class A) .
  • Class B: 220,250 shares (100% of Class B); Class B shares carry 15 votes each and are convertible 1:1 into Class A .
  • Aggregate economic/voting power: 30.3% economic; 48.3% voting power .
  • Breakdown includes holdings via CP Real Estate Services LC (wholly owned), Clemente Investment Management LLC (owned with spouse), FR54 LLC (with spouse and trusts), Stonehenge Funding LC (wholly owned), spouse and children’s trusts .

Implications:

• High voting control via dual-class structure entrenches leadership and reduces vulnerability to activism; the Board acknowledges Clemente’s non‑independence status .
• No CEO equity outstanding reduces forced selling pressure from vesting but also lessens equity-at-risk alignment versus peers .

Employment Terms

Retention/Shareholder considerations:

• Severance magnitude (4 years salary + 2× target bonus construct) is materially above typical small-cap norms and is a strong retention mechanism but may be viewed as shareholder‑unfriendly by some governance frameworks .

Board Service, Roles, and Governance

• Board service: Director since at least 1992 (Chairman & CEO since 1992) .
• Independence: Not independent; all other directors are independent under Nasdaq/SEC rules .
• Board leadership: Combined Chairman/CEO; committees led by independent directors (Audit and Compensation) .
• Committees (membership summary): Clemente is not on Audit or Compensation; Audit chaired by James A. MacCutcheon (financial expert); Compensation chaired by David M. Guernsey .
• Meetings/attendance (FY2024): Board (4), Audit (4), Compensation (1); no director attended <75% of meetings; policy requires in‑person attendance at all Board meetings .
• Director compensation: Employee‑directors (Clemente) receive no additional Board pay .
• Nominating approach: No standing nominating committee; independent directors collectively recommend nominees; Board notes significant voting control by Clemente when discussing stockholder nominations .
• Dual‑role implications: Combined Chair/CEO centralizes authority; mitigated by independent committee leadership, but independence concerns persist given 48.3% voting control and lack of nominating committee .

Related Party Transactions (Governance Red Flags/Context)

• Master Asset Management Agreement (2022 AMA) between CHCI’s CAM subsidiary and CP (controlled by Clemente): CHCI manages CP’s “Anchor Portfolio” (Reston Station, Loudoun Station, etc.). Fees equal the greater of Cost‑Plus (including public company costs + $1.0M fixed) or Market Rate; plus supplemental fees. Term through Jan 1, 2035 with automatic annual renewals; CP can terminate without cause after 24 months with 180 days’ notice, owing a termination fee equal to 2× prior year’s fee. First Amendment (effective July 1, 2024) deferred certain incentive triggers and expanded fee definitions .
• Additional agreements with CP Entities: residential and commercial property/parking management, construction management, and lease procurement with fee structures tied to rents, costs, or percentages of lease payments .
• JV/Investments with CP and third parties (The Hartford; Rockville BLVD properties) describe shared ownership and VIE assessments (CHCI not primary beneficiary) .

These extensive related-party arrangements create potential conflicts that are mitigated by independent director review/approval protocols, but investors should monitor fee calculations, amendments, and termination protections closely .

Say‑on‑Pay and Shareholder Feedback

• 2025 agenda includes an advisory vote on 2024 NEO compensation and a separate frequency vote; Board recommends “1 year” frequency .
• Historical say‑on‑pay results not disclosed in this proxy.

Additional Governance/Capital Structure Items

• Dual‑class structure: As of April 14, 2025, Class B common represented ~48.3% of total voting power (held entirely by Clemente via entities) .
• NOL Rights Agreement (Section 382 plan) proposed to protect ~$111.1M NOLs; accompanying charter amendment would adjust Class B voting power to preserve pre‑trigger voting proportions if rights are exercised/exchanged .

Investment Implications

• Alignment and incentives: CEO pay is predominantly cash with discretionary bonuses and no outstanding equity—clear near‑term liquidity but less explicit long‑term at‑risk equity alignment than typical; performance RSUs used for other NEOs are tied to multi‑year Adjusted EBITDA, aligning team incentives to operating execution .
• Retention vs. governance risk: Severance package (4 years salary + 2× bonus, 48 months benefits) strongly deters turnover but may draw scrutiny; coupled with 48.3% voting control and absence of a nominating committee, governance risk is non‑trivial despite independent committee oversight .
• Trading signals:
  • Control structure and NOL plan reduce takeover optionality but signal focus on tax asset preservation; monitor any ownership changes near 4.95% threshold and any rights plan approvals/extensions .
  • Improving TSR and net income trend (2022–2024) supports discretionary cash awards; watch sustainability via revenue/EBITDA progression and cash flow conversion (see performance table) .
• Related‑party dynamics: Significant recurring revenues/fees with CP and affiliates introduce counterparty concentration and pricing optics risk; track amendments, incentive triggers/deferrals, and termination fee economics through 2035 .

Notes:
- Revenues and EBITDA marked with * are from S&P Global.