James McCormick
About James McCormick
James McCormick (age 66) is Chairman and Chief Executive Officer of Cloudastructure, Inc. (Nasdaq: CSAI). He has served as a director since November 2021 and was appointed CEO in June 2024; he holds a BBA from the University of Toledo and an MBA from the University of Michigan . Under his leadership in 2025, Cloudastructure reported 272% year-over-year revenue growth in Q3 to $1.45 million, with gross profit up 1,070% year-over-year, and $4.79 million in signed contracts year-to-date through Q3—more than triple full-year 2024—reflecting accelerating adoption of AI-driven surveillance and remote guarding solutions . The Board combines the CEO and Chair roles and currently has no Lead Independent Director; other directors are independent and meet regularly in executive session .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| LTA Research and Exploration | Chief Operating Officer | 2019–2022 | Built aerospace R&D operations for experimental and certified airships |
| Global Equipment Services (GES) | Chief Financial Officer | 2015–2019 | Oversaw sale of GES to Kimball Electronics (~$50 million) |
| Crossing Automation (sold to Brooks Automation) | Executive (CEO/CFO/COO roles across career) | Prior | Led business to strategic exit |
| Serious Energy; PodTech; iPrint Technologies (sold to Harland Clarke); Tandem Computers (sold to Hewlett Packard); UB Networks (sold to Alcatel) | Executive roles | Prior | Executed capital raises/M&A; cumulatively helped raise >$1 billion for companies involved |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Hydro Hash, Inc. | Director | Current | Governance role; company chaired by CSAI founder and significant stockholder Richard Bentley, implying potential network ties |
Fixed Compensation
| Component | 2023 | 2024 | Notes |
|---|---|---|---|
| Base Salary ($) | – | 43,333 | Wage Reduction Agreement cut salaries to $35,000 p.a. from Sept. 1, 2024, until equity raised; later restored upon Series 1 financing |
| Actual Bonus Paid ($) | – | 40,000 | Awarded March 2025, paid biweekly through Dec. 31, 2025 |
| Employment Agreement Base ($) | – | 160,000 initial; increases to 295,000 post Series 1 close (Jan 29, 2025) | At-will; eligible for annual performance bonus |
Performance Compensation
| Equity Award Detail | Value/Amount | Terms |
|---|---|---|
| Option Awards – Grant Date Fair Value ($) | 2,434,432 (2024) | Computed per ASC 718; amounts may differ from realized |
| Outstanding Options (Dec 31, 2024) | 78,299 exercisable; 1,790,969 unexercisable | Exercise prices $1.86–$2.70; stated expirations “January 2023 and June 2034” (as disclosed) |
| Equity Plan Structure | Min. vesting ≥1 year; options ≤10-year term; broad award types incl. RSUs, SARs; clawback policy applies | |
| Bonus Structure | Committee considers corporate and individual performance vs goals; retains discretion on payout | Specific metric weightings/targets not disclosed |
Note: Specific annual performance metric targets, weightings, and payouts for McCormick’s bonus were not disclosed; the committee historically considers corporate goal attainment and individual goals with discretion .
Equity Ownership & Alignment
| Category | Detail |
|---|---|
| Beneficial Ownership (Record Date: July 9, 2025) | 2,500 Class A shares; 113,716 Class B shares issuable upon options exercisable within 60 days |
| Options Status (Dec 31, 2024) | 78,299 exercisable; 1,790,969 unexercisable; $1.86–$2.70 strikes |
| Lock-Up | Lock-Up Agreement prohibited transfer/disposal of Class A and related securities until August 18, 2025 |
| Anti-Hedging & Anti-Pledging | Executives/directors restricted from hedging and pledging shares, including margin accounts |
| Ownership Guidelines | Not disclosed |
| Pledging of Shares | Prohibited by policy; no pledging disclosed |
Employment Terms
| Term | Detail |
|---|---|
| Role Start | CEO effective June 29, 2024; director since November 2021 |
| Contract Type | At-will; reimbursable business expenses; eligible for annual performance bonus and company benefits |
| Base Salary | $160,000 initially; increased to $295,000 after Series 1 financing closed Jan 29, 2025 |
| 2024 Wage Reduction | Reduced to $35,000 p.a. from Sept. 1, 2024, until equity raised; stay bonus mechanic if $4M raised |
| Severance/CoC | CEO severance terms not disclosed; plan-level change-in-control provisions provide accelerated vesting if awards not assumed/continued in a sale event |
| Clawback | Company clawback policy for incentive-based compensation in event of accounting restatement; recovery period covers last three completed fiscal years |
| Benefits/Perquisites | 401(k) available (no company match); $125 monthly cell phone stipend |
Board Governance and Committee Roles
- Board Independence: All directors except McCormick (CEO) are independent under Nasdaq rules .
- Leadership Structure: McCormick serves as both CEO and Chair; no Lead Independent Director; Board conducts executive sessions without management .
- Committees:
- Audit: Kirby (Chair), Johnson, Qashu; Kirby deemed “financial expert” .
- Compensation: Qashu (Chair), Johnson, Kirby; approves executive equity awards and recommends CEO comp .
- Nominating & Governance: Johnson (Chair), Kirby, Qashu .
- Attendance: Board held 12 meetings in 2024; each director attended ≥75% of meetings .
Director Compensation (for context)
| Item | 2023 | 2024 |
|---|---|---|
| McCormick – Non-employee Director Fees ($) | 55,250; Option Awards $6,500; Total $61,750 | 7,000; Total $7,000 (prior to CEO appointment) |
| Standard Non-employee Director Retainer ($) | — | $12,000 annually (policy) |
Performance & Track Record
- Growth: Q3 2025 revenue rose 272% YoY to $1.45 million; gross profit up 1,070% YoY; strong contract momentum ($4.79 million signed YTD through Q3) .
- Strategic Actions: Adoption of customer financing partnerships to remove upfront costs; portfolio-wide deployments; technology advances including compression reducing bandwidth by up to 50% .
- Capital Allocation: Board authorized share repurchase program, signaling confidence in strategy and long-term value creation .
- Financing Structure Risks: Streeterville preferred financing includes triggers that can reduce conversion price and may be highly dilutive; Board sought and obtained shareholder approval at Sept. 5, 2025 Annual Meeting to issue above Nasdaq 20% rule cap .
Related Party and Policies
- Anti-Hedging/Anti-Pledging: Formal prohibitions for executives/directors .
- Code of Conduct: Comprehensive ethics, conflicts, insider trading policies; violations subject to disciplinary action .
- Clawback Policy: Recovery of incentive compensation upon restatements; multiple recovery methods permitted .
Risk Indicators & Red Flags
- Dual Role: CEO also Chair; absence of Lead Independent Director elevates governance risk in oversight and independence .
- Dilution Risk: Streeterville Series 2 preferred conversions at discounted prices under trigger events could be “highly dilutive,” likely pressuring EPS and potentially the stock price; shareholder approval removed issuance cap .
- Capital Dependence: Company emphasized liquidity needs, repeated access to equity financing; Board views ability to issue additional Series 2 shares as important for flexibility .
- Lock-Up Expiry: McCormick’s lock-up expired August 18, 2025, potentially increasing near-term insider sale capacity, although anti-hedging/pledging constraints apply .
Compensation Structure Analysis
- Mix Shift toward Equity: 2024 option grant fair value ($2.43 million) dominated total compensation vs cash salary/bonus, aligning incentives with long-term equity value .
- Discretionary Bonus Mechanics: Committee retains discretion and does not disclose formal metric targets or weights; reduces transparency of pay-for-performance linkage .
- Equity Plan Enhancements: 2025 Amended and Restated Equity Incentive Plan expanded instruments (RSUs, SARs), added minimum vesting and embedded clawback policy coverage .
Say-on-Pay & Shareholder Votes (2025 Annual Meeting)
| Proposal | For | Against | Abstain | Broker Non-votes |
|---|---|---|---|---|
| Equity Financings with Streeterville (above 20% cap) | 4,623,364 | 238,822 | 59,615 | 3,243,435 |
| Amended & Restated 2024 Equity Incentive Plan | 4,585,130 | 281,658 | 55,013 | 3,243,435 |
Investment Implications
- Alignment: McCormick’s compensation is heavily equity-based with sizeable unvested options and anti-hedging/pledging limits, supporting long-term alignment; clawback policy adds accountability .
- Near-term Supply Risk: Lock-up expiration in August 2025 increases potential insider sale capacity; consider monitoring Form 4 activity, especially given large option overhang and Streeterville conversions .
- Governance: Combined CEO/Chair and no Lead Independent Director heighten independence concerns; however, all committees are independent and active, partially mitigating oversight risk .
- Execution: Strong 2025 operational momentum under McCormick (revenue/gross profit growth, portfolio deployments, financing program); yet financing structure (Streeterville) introduces dilution and stock-pressure risks if trigger pricing applies .
- Watch Items: Continued contract growth conversion to revenue/FCF; dilution trajectory from preferred conversions; Board repurchase activity; disclosure of future bonus metrics to assess pay-for-performance rigor .