Riley McCormack
About Riley McCormack
Riley McCormack, 49, is President & CEO of Digimarc and a director since October 2020; he was appointed CEO on April 12, 2021 after serving as Lead Director and chair/member across Audit, Compensation, and Governance committees . He graduated summa cum laude from The Wharton School (Benjamin Franklin Scholar, Joseph Wharton Scholar) and previously founded and ran Tracer Capital (a $1.5B TMT hedge fund) and was a Partner at Coatue Capital and a high‑yield analyst at Morgan Stanley . Pay-versus-performance TSR since 12/31/2021 shows indexed values of $94.9 for 2024, $91.5 for 2023, and $46.8 for 2022, alongside GAAP net losses of $39.0M, $46.0M, and $59.8M respectively . 2024 operational incentive metrics delivered $5.2M Gross New ARR, a 96% annual incentive payout, and PRSU vesting for the 2022–2024 LTI cycle at 90% (CAGR 32.6% vs target 40%; rTSR 51.7th percentile) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| McCormack Family Investments | Managing Member & CEO | 2015–present | Owner-operator investment platform; long-term shareholder perspective brought to DMRC board/management |
| TCM | Strategic Partners L.P. | Founder, Managing Member & CEO | 2015–present |
| Tracer Capital Management | Founder, CEO & PM | N/D | Managed $1.5B global TMT hedge fund; deep strategic/financial expertise |
| Coatue Capital | Partner | N/D | Institutional investing experience in growth tech equities |
| Morgan Stanley | High‑Yield Research Analyst | N/D | Coverage of media/telecom; credit/valuation rigor |
External Roles
| Organization | Role | Years | Relevance |
|---|---|---|---|
| CA Assembly Judiciary (AB 3211) | Testified on provenance/watermarking standards | 2024 | Policy advocacy for digital content authenticity; reinforces industry leadership |
| NIST AI Safety Consortium | Participant (company) | 2024 | AI governance and content authenticity; strengthens regulatory credibility |
| DataTrails Partnership | Advocate (company partnership) | 2024 | Combined watermarks + cryptographic proofs for content integrity |
Fixed Compensation
| Year | Base Salary ($) | Notes |
|---|---|---|
| 2022 | 1 | Reported salary in SCT; compensation heavily equity‑weighted that year |
| 2023 | 375,000 | Salary reduced in 2023 then re‑normalized in 2024 |
| 2024 | 415,000 | Return to 2022 level; continued focus on performance‑based pay |
| Element | Target | Actual | Max | Notes |
|---|---|---|---|---|
| 2024 Target Bonus ($) | 332,000 | 318,720 | 664,000 | Target ≈ 80% of salary (332k/415k) |
Performance Compensation
2024 Annual Incentive Plan (AIP) – Design and Outcome
| Metric | Weighting | Threshold | Target | Max | Actual | Payout |
|---|---|---|---|---|---|---|
| Gross New ARR Growth | 65% | 15% | 22.5% | 30% | 23% | 71.0% of comp component |
| Q4 Adjusted Non‑GAAP Net Income Improvement | 35% | 10% | 15% | 25% | (8%) | 0% of comp component |
| Strategic: Communication/Collaboration | 12.5% | 70.0 | 77.0 | N/A | 77.0 | 12.5% |
| Strategic: Operating Objectives | 12.5% | 2.75 | 3.75 | N/A | 4.07 | 12.5% |
| Total AIP Payout | — | — | — | — | — | 96.0% of target |
Additional 2024 facts:
- Gross New ARR delivered: $5.2M
- CEO actual AIP payout: $318,720
Long-Term Incentive (LTI) Structure and Results
| Cycle | Metrics | Threshold | Target | Max | Actual | Vesting Outcome |
|---|---|---|---|---|---|---|
| 2022–2024 | Subscription Revenue CAGR (50%); rTSR vs S&P US Small Cap Software & Services (50%) | 26% CAGR; 25th %ile rTSR | 40% CAGR; 50th %ile rTSR | 53% CAGR; 75th %ile rTSR | 32.6% CAGR; 51.7th %ile rTSR | 90% of target PRSUs vested |
| 2024–2026 | Subscription Revenue (CAGR vs FY2023) (50%); rTSR vs Index (50%) | 50% at threshold | 100% at target | 200% at max | N/A | Cliff‑vesting after 3 years |
CEO LTI grant structure:
- 2024 PRSUs: 26,590 target shares (max 53,180), grant date fair value $1,393,981; CEO elected 100% PRSUs (no RSUs) .
- Outstanding PRSUs at 12/31/2024: 2024 cycle 26,590, est. vest at 149% by 2027; 2023 cycle 46,938, est. 166% by 2026; 2022 cycle 39,040 (vested at 90% in 2025) .
| Vesting | 2024 Stock Vested (CEO) |
|---|---|
| Shares vested in 2024 | 0 |
Equity Ownership & Alignment
| Holder | Shares Beneficially Owned | % of Outstanding |
|---|---|---|
| Riley McCormack | 3,804,899 | 17.7% |
| TCM | Strategic Partners L.P. | 3,740,240 |
| Shares Outstanding (Record Date) | 21,548,263 | — |
Ownership policies and alignment:
- Stock ownership guideline: CEO required to hold ≥6x base pay; executives/directors must retain 50% of net vested until compliant; CEO exceeded guideline as of 12/31/2024 .
- Anti‑hedging and anti‑pledging: Hedging, pledging, short sales, options, margin purchases prohibited for officers/directors/employees .
- Clawbacks: Mandatory recoupment for restatements; discretionary recovery for fraud, sexual harassment, or detrimental conduct causing material financial/reputational harm .
Employment Terms
| Provision | Terms |
|---|---|
| Executive Retention Agreements (effective for terminations after Jan 1, 2025) | CEO: 18 months’ salary; others: 12 months’ salary; up to 18 months COBRA premiums . If termination within 3 months before or 12 months after change‑in‑control: pro‑rata target bonus and equity vesting . |
| 2018 Incentive Plan Change‑in‑Control mechanics | Service‑based awards accelerate if not assumed/replaced; performance awards may be deemed earned at target; Committee discretion on cash‑out; double‑trigger applies when awards are assumed . |
Potential payments (illustrative, assuming event at FY-end):
| Scenario | Components | Amount ($) |
|---|---|---|
| After CIC termination without cause/for good reason | Performance stock accel; salary; non‑equity incentive; benefits | 4,966,747 (4,215,672; 415,000; 318,720; 17,355) |
| Death or Disability | Performance stock accel | 4,215,672 |
| CIC if awards not assumed | Performance stock accel | 4,215,672 |
Other compensation practices:
- No excise tax gross‑ups; no perquisites; strong pay‑for‑performance emphasis .
Board Governance
- Board leadership: Independent Chair (Katie Kool); CEO serves as director but not Chair; independent executive sessions led by Chair .
- Independence: All directors except the CEO are independent under Nasdaq rules; all committee members are independent .
- Committees (2024/2025): Audit (Mcilwain Chair), Compensation & Talent (Anderson‑Williams Chair), Governance/Nominating/Sustainability (Cheston Chair) .
- McCormack’s board service: Elected Oct 2020; previously Lead Director and Audit/Comp/Governance member; later Compensation Chair; resigned from committees upon becoming CEO (April 2021). TCM|Strategic’s Sept 29, 2020 subscription agreement entitles a board seat and committee memberships, filled by McCormack .
- Meetings/attendance: Seven formal board meetings in 2024; all current directors >75% attendance; five directors attended 2024 AGM .
Dual‑role implications:
- CEO + director, but independent Chair mitigates concentration of power; robust independence, executive sessions, and committee oversight reduce governance risk .
Director Compensation (as relevant to dual roles)
- Employee directors receive no separate director compensation; only non‑employee directors are paid (cash retainer $50k; Chair $40k; committee chairs $15k; annual restricted stock ≈$100k; optional equity in lieu of cash) .
Compensation Peer Group and Advisor
- Independent advisor: Farient Advisors retained by Compensation Committee; program benchmarked vs peer group and Radford survey .
- 2024 peer group: Aware, CEVA, eGain, Identiv, Immersion, Intellicheck, Logility (American Software), Mitek Systems, NVE, PDF Solutions, Rekor Systems, ReposiTrak .
- Say‑on‑pay: 92% approval at 2024 shareholder meeting .
Risk Indicators & Red Flags
- Positive: No hedging/pledging; robust clawbacks; independent Chair; no excise tax gross‑ups; strong stock ownership guidelines with CEO in compliance .
- Potential overhang: Proposal to add 950,000 shares to 2018 Plan; burn rate averaged 2.23% over last three years; company using equity heavily to conserve cash and align incentives (including partial salaries in equity for some employees) .
- Litigation mention: Company disclosed a lawsuit update press release in 2025 (context not specific to CEO) .
Performance Compensation – Detailed Instruments
| Award | Grant Date | Type | Target Shares/Units | Max Shares/Units | Grant-Date Fair Value ($) |
|---|---|---|---|---|---|
| CEO 2024 LTI | 2/15/2024 | PRSUs (100% of LTI) | 26,590 | 53,180 | 1,393,981 |
| Outstanding CEO PRSUs (12/31/2024) | Shares | Est. Attainment |
|---|---|---|
| 2024 cycle (vest 2027) | 26,590 | 149% |
| 2023 cycle (vest 2026) | 46,938 | 166% |
| 2022 cycle (vested 2025) | 39,040 | 90% (actual) |
Equity Compensation Plan Information (context)
| Category | To be issued (options/RSUs/PRSUs) | Wtd. Avg. Exercise Price ($) | Remaining available |
|---|---|---|---|
| Approved plans | 621,577 (incl. 708 options; 406,225 RSUs; 214,664 PRSUs at target) | 22.31 (options only) | 1,273,556 |
Investment Implications
- Alignment: CEO holds 17.7% beneficial ownership and exceeds 6x salary ownership guideline; prohibitions on hedging/pledging and 50% hold‑to‑comply rule reduce near‑term selling pressure even as PRSUs cliff‑vest (first vest year 2025 for 2022 cycle, upcoming 2026–2027 for later cycles) .
- Pay-for-performance: AIP uses ARR growth and normalized profitability; 2024 payout at 96% reflects ARR traction despite lower adjusted non‑GAAP net income; LTI paid 90% for 2022–2024 cycle, with strong interim estimates on 2023/2024 cycles (subject to 3‑year cliff) .
- Retention/CIC: Executive retention agreements provide 18 months’ salary for CEO and double‑trigger equity vesting around CIC, aligning continuity with shareholder outcomes; modeled CIC termination total for CEO ≈$5.0M (largely performance equity acceleration) suggests meaningful equity-driven incentives vs cash severance .
- Governance: Independent Chair and fully independent committees mitigate CEO/director dual‑role risks; continued board refresh and skills matrix support oversight of AI, cybersecurity, finance, and sustainability .
- Overhang/comp: Expanded share authorization and equity usage to conserve cash warrants monitoring of dilution; stock-based comp intensity is high versus peers by design, but committee oversight and clawbacks are robust .