Phillip Chan
About Phillip Chan
Phillip P. Chan, MD, PhD, is Chief Executive Officer of CytoSorbents (CTSO) and a director since 2008; he has served as CEO since January 2009 (President from 2009 to April 2020). He holds an MD/PhD from Yale and completed Internal Medicine residency at Beth Israel Deaconess/Harvard; BS in Cell & Molecular Biology from Cornell . Age 54 (2025 proxy) . Under his leadership, CTSO emphasizes equity-based incentives and cost containment; cash bonuses are discretionary against operating plan milestones (revenue growth, clinical trial progress, BD, and cost control) with a voluntary 2024 salary reduction swapped into options .
Financial performance snapshot:
| Metric | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|
| Revenues ($) | $43,165,527* | $34,688,809* | $31,084,953* | $35,594,520* |
| EBITDA ($) | -$22,013,167* | -$30,003,258* | -$30,489,554* | -$15,215,835* |
| Net Income ($) | -$24,558,648* | -$32,812,583* | -$29,246,760* | -$20,718,957* |
| Values with an asterisk (*) retrieved from S&P Global. |
Pay vs Performance (TSR proxy disclosure):
- Value of initial fixed $100 investment (company TSR): $28.44 (2022), $20.37 (2023) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| CytoSorbents | President and CEO | 2009–Apr 2020 | Led commercialization and strategic execution; transitioned to CEO-only after President role moved to COO in 2020 . |
| NJTC Venture Fund | Partner (led healthcare/life sciences investments) | 2003–2008 | Brought investor/operator perspective to CTSO’s board and strategy . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Medality Medical, Inc. (fka Andrew Technologies) | Co‑founder; Vice Chairman, Board | n/a | Company with FDA 510(k) clearance for HydraSolve lipoplasty; pursuing clinical studies in visceral fat removal for T2D . |
Fixed Compensation
- Base salary and car allowance
- 2024 base salary (after voluntary 35% reduction Apr–Dec 2024): $359,352; car allowance $12,000 .
- Salary freeze in 2024 (third consecutive year) and voluntary reduction program for executives (CEO -35%) with compensatory option grants (details below) .
Multi-year summary (CEO):
| Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2021 | 482,851 | 172,619 | 647,280 | 475,846 | 12,000 | 1,790,596 |
| 2022 | 482,851 | 47,078 | 154,050 | 410,633 | 12,000 | 1,106,612 |
| 2023 | 482,851 | 156,927 | 307,110 | 374,514 | 12,000 | 1,333,402 |
| 2024 | 359,352 | 266,775 | 91,680 | 169,888 | 12,000 | 899,695 |
Notes:
- 2024 salary reduction program: CEO cut 35% (Apr 1–Dec 31, 2024); base restored Jan 1, 2025 .
Performance Compensation
Annual cash bonus framework and outcomes:
- Structure: Discretionary; evaluated vs. operating plan and performance targets spanning revenue growth, clinical milestones, business development, cost containment, and individual performance .
- Actions: 2023 bonuses approved but payout deferred until capital raise; subsequently paid in Jan 2025 after $6.25m rights offering. 2024 bonuses approved in Feb 2025 .
| Year | Metric(s) considered | Target (if disclosed) | Actual/Payout |
|---|---|---|---|
| 2022 | Operating plan (revenue, clinical, BD, cost; individual) | Not disclosed | $47,078 cash bonus . |
| 2023 | Operating plan (revenue, clinical, BD, cost; individual) | Not disclosed | $156,927 cash bonus; payout deferred, approved Jan 2025 post-rights offering . |
| 2024 | Operating plan (revenue, clinical, BD, cost; individual) | Not disclosed | $266,775 cash bonus approved Feb 2025 . |
Equity awards and vesting:
- RSUs (pre-2019): Awards vest only upon a Change in Control (CIC) under 2014 LTIP; value disclosed but not expected since CIC not probable .
- RSUs (Apr 12, 2021): Vest 1/3 grant-date, 1/3 first anniversary, 1/3 second anniversary .
- RSUs (Aug 10, 2022): Vest 1/3 grant-date, 1/3 first anniversary, 1/3 second anniversary .
- RSUs (Jul 7, 2023): Vest two-thirds on first anniversary and one-third on second anniversary .
- Options (Mar 29, 2024): Nonqualified options granted at $0.95 under the voluntary salary reduction; vest Jan 31, 2025 .
- Options (Apr 2, 2024): ISOs at $0.9550; vest 50% on first anniversary, then 25% on year 2 and 25% on year 3 .
- 2024 vesting realized: 84,334 shares vested from stock awards; value realized $80,367 (no option exercises) .
Selected outstanding awards (12/31/2024):
| Grant/Type | Shares/Options | Exercise | Vesting | Expiration |
|---|---|---|---|---|
| Options (various 2016–2020) | multiple tranches | $4.69–$8.07 | Legacy awards | 2025–2030 . |
| Options (Apr 12, 2021) | 79,500 ex / 26,500 unex | $1.95 | Time-based | 8/10/2032 . |
| Options (Jul 7, 2023) | 56,000 ex / 56,000 unex; 24,000 ex / 24,000 unex | $3.53 | Time-based | 7/07/2033 . |
| Options (Mar 29, 2024) | 129,998 unex | $0.95 | Vested 1/31/2025 | 3/29/2034 . |
| Options (Apr 2, 2024) | 124,000 unex | $0.955 | 50/25/25 annual | 4/2/2034 . |
| RSUs (CIC-vesting) | 341,000 unearned | n/a | Vest on CIC | n/a . |
Equity Ownership & Alignment
Beneficial ownership trend:
| As-of date | Shares beneficially owned | % of outstanding | Composition/notes |
|---|---|---|---|
| Apr 13, 2023 | 1,256,831 | 2.9% | Based on 43,954,198 shares o/s . |
| Apr 12–13, 2024 | 1,325,135 | 2.4% | Includes 739,370 common, 26,315 warrants, 559,450 options exercisable within 60 days . |
| Apr 17, 2025 | 1,936,569 | 3.1% | Includes 968,474 common, 117,147 Series B right warrants, 850,948 options exercisable within 60 days; 62,610,376 o/s . |
Policies and alignment:
- Hedging and pledging: Prohibited for all executives and directors .
- Insider trading policy prohibits derivatives/hedging (puts, calls, collars, forwards) .
- Ownership guidelines: Not disclosed in proxies reviewed.
- Clawback: Company states it has not implemented a compensation recovery policy for restatements .
Vesting cadence and potential selling pressure:
- 2024–2025 cadence includes: (i) Jan 31, 2025 vest of Mar 29, 2024 options (salary-reduction conversion), and (ii) Apr 2, 2025 50% vest of 2024 ISOs, with remaining tranches in 2026–2027 .
- RSUs granted pre-2019 vest only upon a Change in Control, creating potential acceleration overhang in an M&A scenario .
Employment Terms
- Employment agreement: Amended and restated 7/30/2019; initial term effective 1/1/2019; expired 12/31/2021; automatically renews for successive one‑year terms unless 60‑day notice of non‑renewal .
- Severance and CIC:
- If terminated without cause or for good reason within 12 months post‑CIC: lump sum 18 months’ base salary; COBRA up to 12 months; pro‑rated bonus for year of termination; and equity awards vest upon CIC (single‑trigger equity; double‑trigger cash severance) .
- Illustrative payout table (2024 proxy, using 12/31/2023 price $1.11): Severance $724,277 (CIC termination) vs $482,851 (without cause); RSUs payout $365,561 (CIC) vs $125,801 (without cause/death/disability); total $1,089,838 (CIC termination) vs $608,652 (without cause/death/disability) .
- Perquisites: $12,000 annual car allowance .
Table – Potential Payments (from 2024 proxy assumptions):
| Payment Type | Termination following Change of Control | Termination Without Cause or Good Reason | Death or Disability |
|---|---|---|---|
| Severance payment | $724,277 | $482,851 | $482,851 |
| Restricted Stock Units | $365,561 | $125,801 | $125,801 |
| Health & Welfare, Excise, Options | — | — | — |
| TOTAL | $1,089,838 | $608,652 | $608,652 |
Board Governance
- Board role and independence: Chan is a management director (CEO) and therefore not independent; the Board determined the other directors (Bator, Sobel, Kim, Jones) are independent under Nasdaq rules .
- Board leadership: Chairman is Michael G. Bator (since June 2023); CEO and Chair roles are separated .
- Committees: Compensation Committee consists of Michael Bator (Chair) and Jiny Kim (both non‑executive); Chan does not serve on independent committees .
- Attendance: Board held 15 meetings in 2024; no director attended fewer than 75% of Board and committee meetings .
- Director compensation: Non‑employee directors receive retainers, committee fees, and annual equity; Chan, as an employee director, does not receive director fees .
Director fee schedule highlights:
- Chairman annual retainer $77,168; non‑employee director retainer $38,584; committee chairs +$26,458; members +$13,299; annual equity grant (2025 proxy; fee schedule originally approved effective Jan 1, 2023 in 2024 proxy ).
Additional Disclosures Relevant to Incentives
- Compensation consultant: Radford was engaged historically; the Compensation Committee deferred full compensation review analysis in 2023–2024 but used Radford on certain matters .
- Equity plan overhang (as of 12/31/2023): 13,254,735 securities to be issued upon exercise (options/warrants/rights); 967,337 remaining available for issuance .
- Policies: Related‑party transactions require Audit Committee review; annual D&O questionnaires administered .
Performance Track Record (select quarterly trend)
| Metric | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|---|---|---|---|
| Revenues ($) | 6,523,204* | 8,727,238* | 9,617,000* | 9,485,000* |
| Net Income ($) | -7,883,859* | -1,478,358* | 1,947,000* | -3,170,000* |
| Values with an asterisk (*) retrieved from S&P Global. |
Investment Implications
- Alignment and dilution: Chan’s beneficial ownership increased to 1.94 million shares (3.1%) by April 2025, including ~851k options and ~117k Series B right warrants, signaling high equity alignment but also potential dilution/overhang from sizable option inventory .
- Incentive design: Bonuses are discretionary vs. explicit formula weightings; equity mix includes time-based RSUs and options and legacy RSUs that vest on CIC, which creates single‑trigger equity acceleration risk in M&A scenarios .
- Governance: Hedging/pledging prohibitions are positive for alignment; however, the proxy states no clawback policy has been implemented, which may be a governance negative given market norms .
- Retention risk: Employment terms include 18 months’ salary cash severance on a double‑trigger around a CIC and immediate equity vesting on CIC, moderating retention risk but potentially incentivizing transaction outcomes .
- Operating trend: Revenues recovered in FY 2024 with improved EBITDA vs. FY 2023, and 2025 quarterly trajectories show sequential improvements with variability in net income; bonuses for 2023 were deferred until a capital raise closed in early 2025, underscoring capital discipline and liquidity sensitivity in cash compensation . Values with an asterisk (*) retrieved from S&P Global.