Tony Rodriguez
About Tony Rodriguez
Tony Rodriguez (age 56) is Executive Vice President and Chief Technology Officer of Digimarc (DMRC); he has served as CTO since April 29, 2019, after roles as CTO and VP of Engineering/R&D since June 2008, and first joined Digimarc in 1996. He holds a B.S. in electrical engineering from the University of Washington and completed the AeA/Stanford Executive Institute; prior roles include engineering positions at Intel Architecture Lab, Raytheon, JPL, and IBM . Company performance context: in FY2024, revenue grew 10% to $38.4M with subscription revenue up 18% to $22.4M; subscription and service gross margins rose to 87% and 59% respectively, while the 2022–2024 PRSU cycle vested at 90% of target, evidencing progress in growth and relative TSR metrics . Recent TSR indexing in pay-versus-performance indicates a $100 investment stood at $46.8 (2022), $91.5 (2023), and $94.9 (2024), and Say‑on‑Pay support was 92% in 2024 (97% in 2023), supporting the pay-for-performance framework .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Intel Architecture Lab | Senior software engineer | Not disclosed | Advanced computer science/image processing; foundational experience for large-scale identification/authentication systems |
| Raytheon | Software development/engineering | Not disclosed | Defense-grade software engineering; systems rigor applicable to secure watermarking |
| Jet Propulsion Laboratory (JPL) | Software development/engineering | Not disclosed | High-assurance systems; informs reliability/scalability considerations |
| IBM | Software development/engineering | Not disclosed | Enterprise-grade engineering discipline |
External Roles
- No external public-company directorships or committee roles disclosed for Rodriguez .
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base salary ($) | 325,000 | 310,000 | 325,000 |
| Target annual bonus ($) | 130,000 (implied by plan design for later years; see 2024 table below) | 124,000 (40% of salary for non-CEO NEOs) | 130,000 (plan table) |
| Actual bonus paid ($) | 24,375 | 248,000 (200% of target) | 124,800 (96% of target) |
Notes:
- 2023 STI paid at 200% of target based on overachievement of ARR growth and Q4 Adjusted Non‑GAAP Net Income plus strategic objectives .
- 2024 STI paid at 96% of target; see performance table below .
Performance Compensation
2024 Annual Incentive Plan (company-wide design applied to all executives)
| Category | Metric | Weight | Threshold | Target | Max | Actual | Payout |
|---|---|---|---|---|---|---|---|
| Financial | Gross New ARR Growth | 65% | 15% | 22.5% | 30% | 23% | 71.0% |
| Financial | Q4 Adjusted Non‑GAAP Net Income improvement | 35% | 10% | 15% | 25% | (8%) | 0.0% |
| Strategic | Communication/Collaboration (employee survey) | 12.5% | 70.0 | 77.0 | N/A | 77.0 | 12.5% |
| Strategic | Strategic Operating Objectives (score 1–5) | 12.5% | 2.75 | 3.75 | N/A | 4.07 | 12.5% |
| Total payout as % of target | 96.0% |
- Tony Rodriguez’s 2024 target bonus opportunity and actual payout: Target $130,000; Maximum $260,000; Paid $124,800 (96%) .
Long-Term Incentive (equity) – design and 2024 grants
- Structure: 50% PRSUs (3-year cliff-vest) tied 50% to Subscription Revenue CAGR (FY2026 vs FY2023) and 50% to rTSR vs S&P US Small Cap Software & Services Index; payout 0–200% of target. 50% RSUs vest quarterly over three years (CEO receives 100% PRSUs) .
- 2022–2024 PRSU cycle paid at 90% of target: Subscription Revenue CAGR actual 32.6% vs targets; rTSR at 51.7th percentile .
| Grant (2/15/2024 unless noted) | Type | Target shares | Max shares | Grant-date fair value ($) |
|---|---|---|---|---|
| Performance Unit Award (PRSUs) | Equity | 4,432 | 8,864 | 232,348 |
| Restricted Stock Units (RSUs) | Equity | 4,440 | N/A | 175,336 |
| Total 2024 stock awards | 407,683 |
Vesting mechanics:
- RSUs: quarterly over three years (2022 and later grants); pre‑2022 RSUs vest quarterly over four years .
- PRSUs: cliff‑vest after three years subject to performance goals; 0–200% payout .
Equity Ownership & Alignment
Beneficial ownership and guidelines
- Beneficial ownership (as of April 17, 2024): 41,259 shares for Tony Rodriguez; officers and directors as a group: 19.3% of shares outstanding, supporting insider alignment .
- Stock ownership guidelines (2025 update): CEO 6x base pay; CFO 3x; other NEOs 2x; directors 6x annual retainer; 50% net‑shares retention until compliant. As of Dec 31, 2024, the CEO and four other NEOs exceeded guidelines (CRO on track) .
- Anti‑hedging/anti‑pledging: Hedging and pledging prohibited for all officers/directors/employees .
- Clawback: SEC 10D‑1 compliant policy plus company policy extending to misconduct (including sexual harassment or conduct causing material financial/reputational harm) enabling reimbursement/cancellation/recovery of incentive compensation .
Vested vs unvested and performance equity detail (as of Dec 31, 2024)
| Award year | Unvested RSUs (#) | Market value ($) | Unearned PRSUs at target (#) | Market value ($) |
|---|---|---|---|---|
| 2024 | 3,330 | 124,709 | 4,432 | 165,978 |
| 2023 | 3,261 | 122,124 | 7,824 | 293,009 |
| 2022 | 548 | 20,523 | 2,812 | 105,309 |
| 2021 | 408 | 15,280 | — | — |
- Options: No options reported outstanding for Rodriguez; company‑wide options are de minimis and directors held no options at year‑end 2024 .
Insider selling pressure view:
- RSUs vest ratably each quarter (steady supply), while PRSUs cliff‑vest after 3 years; mandatory retention until ownership guidelines met mitigates near‑term selling and pledging is prohibited .
Employment Terms
Current severance and change‑in‑control (effective for terminations after Jan 1, 2025)
- Executive Retention Agreements: If terminated without cause or for good reason, base salary continuation of 12 months (Rodriguez) and up to 18 months of health‑benefit premiums; if termination occurs within three months before or 12 months after a change of control, also includes pro‑rata target bonus and equity vesting (double trigger) .
- 2018 Incentive Plan CoC mechanics: Service‑based awards fully vest if not assumed/replaced; if assumed, they vest upon qualifying termination within one year; PRSUs follow plan/award terms; death/disability generally accelerates RSUs, and RSUs also vest upon termination without cause .
Potential payments (illustrative, assuming triggering event on last business day of FY2024)
| Scenario | Restricted stock acceleration ($) | Performance stock acceleration ($) | Salary continuation ($) | Bonus ($) | Benefits ($) | Total ($) |
|---|---|---|---|---|---|---|
| After CoC termination w/o cause or for good reason | 282,635 | 564,297 | 325,000 | 124,800 | 17,355 | 1,314,087 |
| Death or disability | 282,635 | 564,297 | — | — | — | 846,932 |
| Termination without cause (no CoC) | 15,280 | — | — | — | — | 15,280 |
| CoC (awards not assumed) | 282,635 | 564,297 | — | — | — | 846,932 |
Contract terms prior to 2025:
- 2024 Change‑in‑Control Retention Agreements (through Dec 31, 2024): double trigger; 12 months’ salary + up to 18 months’ health premiums; no general severance outside CoC (at‑will employment) .
Performance & Track Record
| Indicator | 2022 | 2023 | 2024 |
|---|---|---|---|
| Total revenue ($M) | — | 34.9 | 38.4 |
| Subscription revenue ($M) | — | 19.0 | 22.4 |
| Subscription gross margin (%) | — | 84 | 87 |
| Service gross margin (%) | — | 54 | 59 |
| TSR index (initial $100) | 46.8 | 91.5 | 94.9 |
Selected strategic/technology milestones under Rodriguez’s purview:
- 2024 launches and enhancements across product suite: Digimarc Engage (consumer engagement), Automate (automated product inspection), Recycle sortation software (cutting compliant hardware cost ~50%), Validate mobile authentication app; next‑gen digital watermarks and first watermark implementation for C2PA v2.1 .
- Longstanding central bank engagement and IP leadership (~820 patents pending/granted as of Dec 31, 2024) providing durable competitive moat in digital watermarking .
Execution risks (relevant to CTO scope):
- Adoption risk in commercial markets, customer concentration (e.g., Central Banks 41% of revenue in 2024), and near‑term subscription headwinds from contract expirations; government service revenue expected lower in 2025; workforce reorganization (up to 90 employees) to reduce cash expenses may create retention and delivery risks if not managed well .
Board Governance, Say‑on‑Pay, and Peer Group (context for incentives)
- Say‑on‑Pay approval: 2024 >92% approval; 2023 97% approval, reflecting shareholder support for pay program changes .
- Compensation peer group: 2025 peers include Aware, CEVA, eGain, Identiv, Immersion, Intellicheck, Logility Supply Chain Solutions, Mitek Systems, NVE, PDF Solutions, Rekor Systems, ReposiTrak .
- Pay practices: no perquisites, no excise tax gross‑ups, robust stock ownership/retention, anti‑hedging/pledging, and clawback policies .
Investment Implications
- Alignment: High proportion of at‑risk pay via PRSUs (company‑wide performance metrics: subscription revenue CAGR and rTSR) and RSUs with rigorous ownership/retention rules and explicit anti‑pledging reduce misalignment and forced selling risk; 2022–2024 PRSU payout at 90% indicates improving execution against long‑term metrics without windfall overpayment .
- Vesting supply and trading signals: Quarterly RSU vesting across multiple grant years (2021–2024) creates a steady trickle of vest‑related supply, but retention and ownership guidelines temper net selling; no options exposure limits leverage‑driven selling pressure .
- Retention and execution risk: 2025 reorganization savings target (~$16.5M cash opex reduction) supports path to profitability but introduces near‑term organizational risk; CTO continuity and product cadence (Automate/Recycle/Validate/Engage) are key levers for ARR growth amid contract churn and partner adoption uncertainty—an area to monitor for delivery milestones and ARR trends .
- Governance and shareholder feedback: Strong Say‑on‑Pay support and disciplined incentive design (no perqs, no tax gross‑ups, double‑trigger CoC) lower governance risk premium, while clawback expansion to reputational harms adds downside protection .
Key watch items: (1) ARR additions and subscription revenue trajectory vs. PRSU targets; (2) commercial adoption milestones and partner wins; (3) retention and delivery through the 2025 reorg; (4) TSR relative to the small-cap software/services cohort feeding into PRSU rTSR outcomes.
Appendix: Tony Rodriguez 2024 Compensation Summary
| Component | Amount ($) |
|---|---|
| Salary | 325,000 |
| Non‑Equity Incentive (AIP) | 124,800 |
| Stock Awards (RSUs + PRSUs, grant‑date value) | 407,683 |
| All Other Compensation | 14,211 |
| Total | 871,694 |