Matthew K. Custer
About Matthew K. Custer
Matthew K. Custer, 42, is President and Chief Executive Officer of Cyanotech and has served on the Board since June 16, 2022. He joined the company in 2015 and rose through manufacturing leadership roles to President in May 2021 before becoming CEO and director in June 2022; he brings 20+ years of food and supplement industry experience, including seven years as Plant Manager at Hamakua Macadamia Nut Company . Under pay-versus-performance disclosures, Cyanotech generated net losses of $3.20M (FY25), $5.27M (FY24), and $3.44M (FY23), while cumulative TSR from the March 31, 2021 baseline measured $11 for FY25, $9 for FY24, and $27 for FY23 on a $100 hypothetical investment . Revenues were $23.18M (FY23), $23.07M (FY24), and $24.22M (FY25); EBITDA was negative across these years, reflecting challenging profitability despite modest revenue growth (see table) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cyanotech (CYAN) | Manufacturing Manager → Director of Manufacturing | 2015–2019 | Built and led microalgae production operations; foundation for later P&L leadership |
| Cyanotech (CYAN) | Vice President, General Manager | 2019–2021 | Oversight of operations prior to elevation to President |
| Cyanotech (CYAN) | President | May 2021–Jun 2022 | Transition to enterprise leadership before CEO appointment |
| Cyanotech (CYAN) | President & CEO; Director | Jun 16, 2022–present | CEO since Jun 16, 2022; appointed to Board concurrently |
| Hamakua Macadamia Nut Co. | Plant Manager | ~2007–2014 (7 years) | Scaled food manufacturing leadership; relevant to Cyanotech’s nutraceutical ops |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Natural Algae Astaxanthin Association | Chairman (company representative) | Prior service (dates not specified) | Industry leadership relevant to astaxanthin category |
| Big Island Chapter, Hawaii Food Manufacturers Association | Director | 2014–2017 | Local industry engagement and networking |
Fixed Compensation
| Item | FY 2024 | FY 2025 | Notes |
|---|---|---|---|
| Base Salary ($) | 195,000 | 195,000 | Per 2022 agreement; renewed in 2025 to $200,000 going forward |
| Signing Bonus ($) | — | 25,000 | Paid in FY25 pursuant to 2022 employment agreement |
| RSUs (grant-date fair value, $) | 6,915 | 6,515 | Annual equity under plan; accounting grant-date values |
| Option Awards (grant-date fair value, $) | 73,561 | 39,873 | Accounting grant-date values |
| Non-Equity Incentive Plan ($) | — | — | No FY25 bonuses accrued/paid |
| All Other ($) | — | — | — |
| Total ($) | 275,476 | 266,388 | Summary Compensation Table |
Additional 2025 employment agreement terms (effective Jun 16, 2025): salary increased to $200,000, plus $25,000 in RSUs vesting over three years, a $25,000 signing bonus, and 150,000 stock options vesting over three years .
Performance Compensation
Annual Incentive Plan (Cash + RSUs)
| Metric | Weighting | Target | Actual (FY25) | Payout Form | Vesting |
|---|---|---|---|---|---|
| Company profitability (profit before taxes) | Not disclosed | Plan funded as % of PBT | FY25: No bonuses accrued/paid | Two-thirds cash; one-third RSUs | RSUs vest ratably over 3 years |
Notes:
- Compensation Committee can exercise discretion; CEO evaluated on progress toward sustainable profitability and relative shareholder return vs similar-sized peers/market studies .
- Equity awards under the 2016 Plan; minimum vesting provisions were removed via amendment (governance note) .
Equity Awards – Grants and Vesting
| Grant Date | Type | Shares | Exercise/Strike | Expiration | Vesting Schedule |
|---|---|---|---|---|---|
| Jul 7, 2020 | Stock Options | 50,000 | $2.29 | Jul 7, 2030 | 12,500 each on Jul 7, 2021–2024 (fully vested) |
| May 20, 2021 | Stock Options | 50,000 | $2.96 | May 20, 2031 | 16,667 on May 20, 2022; 16,667 on May 20, 2023; 16,666 on May 20, 2024 (fully vested) |
| Jun 21, 2022 | Stock Options | 50,000 | $3.43 | Jun 21, 2032 | 16,666 on Jun 21, 2023; 16,667 on Jun 21, 2024; 16,667 on Jun 21, 2025 |
| Jun 16, 2025 | Stock Options | 150,000 | Closing price on grant | Not disclosed | Vests over three years (specific cadence not disclosed) |
| Jun 16, 2025 | RSUs (annual) | $25,000 value | — | — | Vests over three years |
Outstanding equity at FY25 year-end (Mar 31, 2025): 133,333 options exercisable; 16,667 unexercisable (the final tranche of the 2022 grant) .
Equity Ownership & Alignment
| Holder | Beneficial Ownership (Shares) | Approx. % of Outstanding | Notes |
|---|---|---|---|
| Matthew K. Custer | 154,679 | 2.1% | As of June 27, 2025; 7,232,217 shares outstanding |
- Options position at FY25 year-end: 133,333 exercisable vs 16,667 unexercisable .
- No explicit pledging/hedging prohibitions disclosed in proxy; company references an insider trading policy filed with the FY25 10-K .
- Directors who are Company employees receive no separate director compensation; Custer received no board fees .
Employment Terms
| Term | Key Detail |
|---|---|
| Start and Role | CEO and Director effective Jun 16, 2022; President since May 2021 |
| 2022 Agreement | 36-month term to Jun 16, 2025; auto-renews annually absent 45-day notice; base salary $195,000; $25,000 signing bonus; 50,000 options at $3.43 vesting over 3 years; eligible for bonuses per plan |
| 2025 Renewal | Effective Jun 16, 2025: $200,000 cash salary + $25,000 RSUs (3-year vest); $25,000 signing bonus; 150,000 options vesting over 3 years |
| Severance | If terminated without cause or resigns for “Good Reason” (includes within 60 days following a Change in Control), base salary for up to 12 months (or remaining term if shorter) plus benefits, subject to release; paid in installments; Section 409A compliant |
| Change-in-Control | Good Reason includes within 60 days after a Change in Control of the Company; severance per above (effectively double-trigger) |
| Non-Compete | 6 months post-term in the U.S. against substantially similar roles/activities |
| Non-Disparagement | 5-year non-disparagement covenant post-term |
| Arbitration | Mediation/arbitration in Honolulu; Hawaii governing law |
Board Governance
- Board Service and Roles: Custer has served as a director since June 16, 2022; he is CEO and an inside (non-independent) director. The Board maintains separate Chairman and CEO roles (Chairman: Michael A. Davis), which mitigates combined-power concerns .
- Committees and Independence: All standing committees consist of independent directors; Custer serves on none. FY25 committee composition: Audit (Mulder, Chair; Vied), Nominating & Corporate Governance (Davis, Chair; Vied), Compensation (Vied, Chair; Davis) .
- Attendance and Meetings: The Board met four times in FY25; all directors attended 100% of Board and committee meetings .
- Director Compensation: Employee-director (Custer) receives no director fees; non-employee director pay disclosed separately .
- Say on Pay Frequency: Board recommended triennial; stockholders voted for 3 years in Aug 2025 (3,953,481 for 3 years) .
Compensation Structure Analysis
- Mix and Risk: Cash compensation is modest vs peers by design (local market surveys), with equity as a core alignment lever. Annual incentives are explicitly tied to profitability (PBT), with RSUs making up one-third of any payout (3-year vest), but no FY25 bonuses were paid, consistent with losses .
- Equity Program Changes: The 2016 Plan was amended to remove minimum vesting provisions and ratify grants exceeding plan limits—this increases committee discretion and is a governance sensitivity for shareholders focused on dilution and time-based vesting .
- 2025 Agreement Shift: The addition of guaranteed $25,000 RSUs alongside a new 150,000 option grant increases equity exposure; vesting over three years supports retention but adds forward dilution .
Performance & Track Record
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Revenues ($) | 23,178,000 | 23,071,000 | 24,215,000 |
| Net Income ($) | (3,440,000) | (5,267,000) | (3,203,000) |
| EBITDA ($) | (1,135,000)* | (2,810,000)* | (892,000)* |
Values with asterisk retrieved from S&P Global.
TSR (value of a $100 investment): $27 (FY23), $9 (FY24), $11 (FY25), per Item 402(v) table .
- Commentary: Revenue grew modestly FY23→FY25, but net losses persisted; TSR performance was negative by FY25 relative to the FY21 baseline, reinforcing the committee’s decision to withhold annual bonuses for FY25 and to rely on longer-dated equity for alignment .
Equity Ownership Detail and Vesting Pressure
| Component | Amount | Timing / Terms |
|---|---|---|
| Options exercisable (FY25 YE) | 133,333 | Immediate liquidity if in-the-money; expirations 2030–2032 |
| Options unexercisable (FY25 YE) | 16,667 | Final tranche of 2022 grant vested Jun 21, 2025 |
| New options (2025 agreement) | 150,000 | 3-year vest from Jun 16, 2025; future vesting events can create periodic selling windows |
| Annual RSUs (2025 agreement) | $25,000 value | 3-year vest; promotes retention with staggered vesting |
- No disclosures of share pledging; insider trading policy referenced in the 10-K limits trading windows and governs insider transactions .
Employment Terms – Additional Notes
- Bonus Plan Structure: Funded as % of profit before taxes; officer tiers based on market studies; RSU portion vests ratably over three years .
- Clawback/Tax Gross-ups/Perquisites: No specific clawback or gross-up disclosures in the cited documents; benefits include health, disability, life insurance, PTO, and business travel reimbursement .
- Non-Compete/Non-Solicit: 6-month non-compete; confidentiality and return of materials provisions; arbitration and Hawaii law .
Investment Implications
- Alignment and Retention: The 2025 employment renewal adds multi-year RSUs and a sizable three-year option grant that strengthens retention but increases potential dilution; annual cash compensation remains modest, increasing reliance on equity to drive alignment .
- Pay for Performance: With no FY25 bonuses amid continued net losses, the program aligned with outcomes; however, the removal of minimum vesting in the plan and ratification of grants beyond prior limits is a governance flag that investors should monitor in future equity authorizations .
- Insider Selling Pressure: Near-term pressure is limited from legacy grants (2020/2021 fully vested; 2022 completed in 2025), but the 2025 option grant and annual RSUs establish recurring vesting events over the next three years that could add episodic liquidity windows; no pledging disclosures found .
- Governance and Oversight: Separate Chair/CEO structure and independent committees reduce dual-role concerns; Custer is not on committees. Board attendance was 100%, and the shareholder base supported triennial say-on-pay frequency in 2025 .
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