James L. Herman
About James L. Herman
James L. Herman, 70, serves as Vice President Trade and Distribution (and was a Named Executive Officer in 2024 as Executive Vice President National Accounts and Corporate Compliance Officer). He oversees national accounts sales (wholesalers, retail chains, managed care, federal accounts) and corporate compliance; he joined Cumberland in 2003 and has 30+ years of pharmaceutical industry experience. He holds a B.S. from Indiana University and an M.B.A. from Cardinal Stritch University . Company performance context during 2020–2024: Cumberland’s Total Shareholder Return ranged from 57.28 to 90.68 (index points), Adjusted Diluted EBITDA per share ranged from 0.01 to 0.48, and net loss ranged from $(3,339)K to $(6,480)K; TSR rose 32.3% in 2024 year-over-year while adjusted EBITDA per share fell 98.0% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Solvay Pharmaceuticals | Director of Managed Care; Director of Trade Affairs and Customer Service | — | Led managed care and trade/customer service functions, relevant to payer and distribution relationships |
| Schwarz Pharma | National sales leadership positions in National Accounts and Managed Care | — | Directed national accounts and managed care sales, strengthening commercial access and contracting |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | $292,000 | $310,000 | $310,000 |
| Annual Cash Bonus ($) | $60,000 | $60,000 | $30,000 |
| Stock Awards (Fair Value, $) | — | — | — |
| Option Awards (Fair Value, $) | $15,540 | $7,880 | $6,840 |
| Nonqualified Deferred Compensation Additions ($) | $20,000 | $20,000 | — |
| All Other Compensation ($) | $648 | $2,269 | $2,269 |
| Total ($) | $388,188 | $400,149 | $349,109 |
Performance Compensation
Annual Incentive Structure
- Program is discretionary, benchmarked to market via Radford Global Life Sciences Survey; payouts consider corporate and individual objectives rather than formulaic weightings or preset targets .
- Company prioritized financial measures in 2024 linking pay vs performance: Net Revenue, Cash Flow from Operations, EPS before EBITDA, Adjusted Earnings .
- 2024 cash bonus paid to Herman: $30,000 .
| Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Discretionary (corporate and individual objectives; market benchmarking) | Not disclosed | Not disclosed | See 2024 achievements (distribution continuity; improved Sancuso contracts; compliance serialization) | $30,000 (2024) | N/A |
Equity Incentives (Stock Options)
- Plan: 2007 Long‑Term Incentive Compensation Plan (ISOs; SARs; restricted stock; performance shares); change‑of‑control accelerates exercisability/restrictions; 2024 executive ISOs generally vest on the fourth anniversary of grant (company-level policy) .
- Herman’s outstanding and historical ISO grants:
| Grant Date | Type | Shares | Strike ($/sh) | Expiration | Vesting |
|---|---|---|---|---|---|
| 03/17/2021 | ISO | 3,000 | 3.22 | 03/17/2031 | 100% on 03/17/2025 |
| 03/16/2022 | ISO | 3,000 | 2.59 | 03/16/2032 | 100% on 03/16/2026 |
| 03/16/2022 | ISO | 3,000 | 2.59 | 03/16/2032 | 100% on 03/16/2026 |
| 03/24/2023 | ISO | 3,000 | 1.97 | 03/24/2033 | 100% on 03/24/2027 |
| 03/25/2024 | ISO | 4,000 | 1.71 | 03/25/2034 | 100% on 03/25/2029 |
Option exercises and stock vesting in 2024:
- Options exercised: none
- Shares vested: 2,814; value realized $5,093
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficial Ownership (Shares) | 41,255 |
| Ownership (% of outstanding) | 0.30% (based on 13,936,854 shares outstanding) |
| Rights to acquire shares (within beneficial ownership tally) | Includes 3,000 shares via incentive stock options upon vesting |
| Vested vs Unvested Breakdown | Not disclosed (option schedule provided; vest dates above) |
| Options Outstanding Detail | See Performance Compensation table (grants and expirations) |
| Shares Pledged as Collateral | None (for directors and NEOs) |
| Hedging Policy | Company currently does not prohibit hedging by executives/directors |
| Stock Ownership Guidelines | Not disclosed in proxy |
Employment Terms
| Provision | Terms |
|---|---|
| Agreement Type | Annual employment agreements; employees eligible for discretionary bonus programs approved by Board |
| At‑Will Employment | Yes; terminable by either party at any time, with or without notice or cause |
| Severance | No severance for termination for cause; no severance for death or permanent disability; agreements do not contain termination or change‑in‑control severance provisions |
| Non‑Compete | 1 year post‑employment; release possible upon disclosure and Company approval |
| Non‑Solicit (Business) | 1 year post‑employment (customers, partners, prospects) |
| Non‑Solicit (Employees) | Prohibits soliciting Company employees post‑employment |
| Confidentiality/IP | Confidentiality obligations; Company ownership of discoveries/improvements |
| Change‑of‑Control (Equity) | Under 2007 Plan, upon change‑of‑control: options become fully exercisable; restrictions/conditions on other incentives deemed terminated/satisfied |
| Clawback | Not disclosed |
| Perquisites | Generally none |
| Insider Trading Policy | Policy exists; prohibits trading on material nonpublic information; filed as Exhibit 19.1 to 2024 Form 10‑K |
| Deferred Compensation | Non‑qualified defined contribution SERP (Summit Program); vesting occurs at earlier of 60 months & age 65 or 120 months; Herman 2024 executive contributions $30,961; aggregate balance $616,380 |
Company Performance Context (Recent Five Years)
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| Cumberland TSR (index points) | 57.28 | 90.68 | 43.69 | 34.79 | 46.02 |
| Peer Group TSR (index points) | 69.83 | 72.08 | 49.26 | 43.06 | 61.52 |
| Net Income (Loss) ($000s) | (3,339) | (3,508) | (5,517) | (6,279) | (6,480) |
| Adjusted Diluted EBITDA per Share ($) | 0.40 | 0.45 | 0.24 | 0.48 | 0.01 |
Notes: 2024 TSR +32.3% YoY; adjusted EBITDA/share −98.0% YoY; company cites measures linking pay to performance and provides narrative on pay-versus-performance relationships .
Additional Governance and Compensation Context
- 2024 NEOs: A.J. Kazimi (CEO), James L. Herman (Executive Vice President National Accounts & Corporate Compliance Officer), Todd M. Anthony, Christopher T. Bitterman, John M. Hamm (CFO) .
- Compensation Committee (independent): Joseph C. Galante (Chair), Caroline R. Young, Gordon R. Bernard; uses Radford survey data; designs programs to mitigate excessive risk .
- Say‑on‑Pay: Shareholders approved NEO compensation at 2023 annual meeting; triennial advisory vote cadence, next scheduled for 2026 .
- Compensation/TSR Peer Group for pay-versus-performance: Avadel Pharmaceuticals plc, Harrow Health, Eagle Pharmaceuticals, Assertio Holdings, HLS Therapeutics, EyePoint Pharmaceuticals, Eton Pharmaceuticals, Theratechnologies, Talphera; Acorda Therapeutics removed after bankruptcy/delisting .
Investment Implications
- Alignment: Herman’s direct ownership is modest at 0.30% with no pledged shares; hedging by executives is currently not prohibited by policy, which can dilute alignment versus shareholders .
- Retention and selling pressure: Option grants are relatively small and have long-dated expirations with single date vesting; 2024 grant vests fully in 2029, creating retention hooks but also potential future selling pressure at vest points; he realized $5,093 on 2,814 shares vesting in 2024 and did not exercise options, suggesting limited near-term liquidity events .
- Contract risk: At‑will employment with no severance or change‑in‑control severance reduces golden‑parachute risk; however, equity accelerates on change‑of‑control under the 2007 Plan, which can create deal‑related realizations; standard one‑year non‑compete/non‑solicit provisions support post‑termination protection .
- Performance linkage: Bonuses are discretionary and benchmarked, tied to corporate/individual results without formulaic metrics/weights; company identifies financial measures (Net Revenue, CFO, EPS before EBITDA, Adjusted Earnings) but 2024 adjusted EBITDA per share fell sharply, limiting tight pay-for-performance linkage; Herman’s 2024 bonus was reduced to $30K vs $60K prior years, consistent with mixed performance .
Overall, Herman’s incentives combine modest cash bonuses and small ISOs with long vesting; limited ownership and permissive hedging modestly weaken alignment, while at‑will agreements with no severance and equity acceleration on change‑of‑control shape deal incentives and retention dynamics .