Keith Smith
About Keith Smith
Keith W. Smith is Co‑Founder, President and Director of Direct Digital Holdings, Inc. (DRCT). He became President on August 23, 2021 and has served as a director since 2021; he is age 56 and holds a B.A. in Economics (UT Austin), J.D. (SMU), and MBA (Washington University Olin) . His background spans private credit and structured finance with prior roles at Parkview Capital Credit (President/CEO), Capital Point Partners (Managing Director), Rabobank International (VP/Portfolio Manager), and Standard & Poor’s (Associate Director), bringing financial, investment, and management expertise to DRCT’s board . Performance metrics like TSR, revenue growth, and EBITDA growth tied to his tenure were not disclosed in proxy materials and are therefore omitted.
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Direct Digital Holdings LLC | Managing Partner | 2018–Aug 22, 2021 | Co‑founder; brings financial, investment, and management experience to board . |
| Parkview Capital Credit, Inc. | President & CEO | Nov 2014–Apr 2020 | Invested/managed >$75M for small/mid‑size businesses to fund acquisition and growth . |
| Capital Point Partners | Managing Director | Not disclosed | Invested/managed >$150M across direct lending/mezzanine and minority equity . |
| Rabobank International | Vice President & Portfolio Manager | 2006–2009 | Managed >$2B in direct lending/structured credit; originations and client management . |
| Standard & Poor’s | Associate Director, Structured Finance | 2003–2006 | Analyzed/rated transactions across diverse asset types . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Various portfolio companies | Board member | Not disclosed | Served on boards of numerous portfolio companies . |
Fixed Compensation
Multi‑year summary compensation (values per proxy; “All other compensation” reflects cash stipends in 2024):
| Metric ($USD) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary | 518,750 | 530,200 | 500,000 |
| Non‑Equity Incentive Plan Compensation | 375,000 | 380,335 | — |
| Stock Awards (Grant‑date FV) | 98,658 | 276,844 | — |
| Option Awards (Grant‑date FV) | 59,388 | 71,759 | — |
| All Other Compensation | — | — | 25,000 |
| Total | 1,051,796 | 1,259,138 | 525,000 |
Performance Compensation
Annual incentive program design and outcomes:
| Item | FY 2023 | FY 2024 |
|---|---|---|
| Target Bonus (% of Salary) | 75% of salary | 75% of salary |
| Metrics | Company revenue and EBITDA | Company revenue and EBITDA |
| Payout Range | 0–150% of target | 0–150% of target |
| Actual Payout (% of Target) | 85% of target, paid in 2024 | 0% (no payout) |
| Payout Form/Vesting | Unrestricted shares issued in 2024 (no vesting) | None |
Notes:
- No metric weightings, specific targets, or threshold/maximum levels were disclosed.
Equity Ownership & Alignment
Beneficial ownership and voting control; DDM structure indicates concentrated control shared by Smith and Walker:
| Date (Determination) | Class A Shares Beneficially Owned (No., %) | Class B Shares Beneficially Owned (No., %) | Options Exer./vesting within 60 days | Total Voting Power (%) |
|---|---|---|---|---|
| Oct 16, 2024 | 192,657; 5.1% | 5,379,000; 49.5% (via DDM) | Not disclosed | 38.0% |
| Mar 31, 2025 | 111,554; 1.6% | 5,379,000; 49.8% (via DDM) | 60,540 | 30.7% |
| Aug 31, 2025 | 175,510; 1.4% | 5,194,000; 49.7% (via DDM) | 80,840 | 22.9% |
Key alignment/policy items:
- DDM (Direct Digital Management, LLC) holds all Class B; Smith and CEO Mark Walker each indirectly hold ~50% economic/voting interests (through SKW Financial LLC and AJN Energy & Transport Ventures, LLC); spouses share voting/dispositive power for their respective entities .
- Insider Trading Policy prohibits speculative trading, short sales, options trading, trading on margin, and pledging or hedging transactions by directors/executives/employees (reduces misalignment risk from hedging/pledging) .
Vested vs. unvested/award structure (as of Dec 31, 2024):
- Options and RSUs vest in equal annual installments over three years post grant (service‑based) .
- Stock Options outstanding (Keith Smith, as of 12/31/2024):
- Grant 6/10/2022: 40,600 exercisable; 20,300 unexercisable; $1.62 strike; expires 6/10/2032; RSUs 20,300 (market value $32,886) .
- Grant 3/20/2023: 9,970 exercisable; 19,940 unexercisable; $3.96 strike; expires 3/20/2033; RSUs 12,398 (market value $49,096) .
Employment Terms
| Term | Description |
|---|---|
| Employer/Agreement | Employment agreement with subsidiary DDH LLC; at‑will; base salary eligibility for annual bonus and LTI; expense reimbursement; participation in benefit plans . |
| Restrictive Covenants | Includes non‑competition, non‑solicitation, non‑disparagement, confidentiality, and IP covenants . |
| Severance (no CIC) | If terminated without cause or resigns for good reason prior to change in control: base salary continuation for 12 months (subject to release) . |
| Severance (CIC, double trigger) | If terminated without cause or resigns for good reason upon or following change in control: base salary continuation for 24 months plus lump‑sum equal to target bonus for year of separation (subject to release) . |
| Clawback | Company adopted Clawback Policy; following 2023 restatements, Compensation Committee determined no erroneously awarded compensation subject to recovery for relevant periods . |
Board Governance
- Board service: Director since 2021; current board size five .
- Independence: Smith is an employee‑director (not independent); independent directors are Cohen, Leatherberry, and Locke, as determined October 14, 2024 .
- Leadership structure: CEO Mark Walker also serves as Chairman; Lead Independent Director is Antoinette R. Leatherberry (since Jan 2022) .
- Committees:
- Audit Committee: Cohen (Chair, financial expert), Leatherberry, Locke; 12 meetings in FY 2024 .
- Compensation Committee: Locke (Chair), Cohen, Leatherberry; 5 meetings in FY 2024 .
- Nominating & Corporate Governance Committee: Leatherberry (Chair), Cohen, Locke; 4 meetings in FY 2024 .
- Dual‑role implications: With CEO also Chair and two founders (Walker, Smith) as management directors, governance relies on lead independent director and committee independence to mitigate concentration of control and potential conflicts, especially given DDM’s voting power .
Performance Compensation
Award mechanics under the 2022 Omnibus Plan:
- Options: Typically up to 10‑year term; ISOs/NQSOs designations; vesting per award agreement; special rules for 10% owners (higher strike and 5‑year term for ISOs) .
- RSUs/Restricted Stock: Service‑based vesting; terms set by Compensation Committee; dividend equivalents may be granted (not for options/SARs) .
- Administration: Compensation Committee administers awards for employees; Board administers non‑employee director awards; broad authority to set terms/interpret plan .
Compensation Structure Analysis
- Shift in pay mix: For FY 2024, Smith received fixed cash salary ($500,000) and modest stipend ($25,000) with no bonus payout and no equity grants in the year, versus FY 2023 with meaningful non‑equity incentive and equity awards; this indicates higher fixed pay mix in 2024 driven by zero payout under performance program .
- Annual incentive calibration: Metrics remained revenue and EBITDA with unchanged target % (75% of salary) and 0–150% range; payouts fell from 85% of target in 2023 to 0% in 2024, signaling plan sensitivity to performance .
- Equity award cadence: Outstanding options/RSUs from 2022 and 2023 grants vest ratably over three years; no disclosure of repricing or award modification; option expiries in 2032/2033 reduce near‑term selling pressure risk .
Related‑Party Transactions and Structural Considerations
- DDM/TRA: DRCT operates via DDH LLC with a Tax Receivable Agreement (TRA) under which DRCT pays DDM 85% of realized (or deemed) tax benefits from basis adjustments; upon certain changes of control, payments may be based on assumptions and could exceed actual tax savings, potentially impacting liquidity and creating differing interests between DDM (indirectly owned by Walker/Smith) and other stockholders .
- Governance controls: Audit Committee reviews related‑party transactions to ensure arm’s‑length terms; no transactions >$120,000 since Jan 1, 2024 other than those disclosed; committee applies standards to protect shareholders .
Risk Indicators & Red Flags
- Pledging/Hedging: Prohibited for directors/executives/employees under Insider Trading Policy (reduces alignment risks from hedging) .
- Concentrated Voting Power: DDM holds 100% of Class B; combined directors/executives/5% holders controlled ~62.8% voting power as of Mar 31, 2025; later ~46.9% as of Aug 31, 2025, still indicating significant insider control .
- Clawback/Restatement: Company restated certain 2023 quarters and 2022 items; Compensation Committee concluded no recovery under Clawback Policy for the period, signaling oversight but no compensation reversal .
Equity Awards Detail (Keith Smith as of Dec 31, 2024)
| Instrument | Grant Date | Exercisable (#) | Unexercisable (#) | Exercise Price ($) | Expiration | RSUs Unvested (#) | RSUs Market Value ($) | Vesting Schedule |
|---|---|---|---|---|---|---|---|---|
| Stock Option | 6/10/2022 | 40,600 | 20,300 | 1.62 | 6/10/2032 | 20,300 | 32,886 | Equal annual over 3 years |
| Stock Option | 3/20/2023 | 9,970 | 19,940 | 3.96 | 3/20/2033 | 12,398 | 49,096 | Equal annual over 3 years |
Employment & Severance Economics Summary
| Scenario | Cash Severance | Bonus/Other | Trigger Type |
|---|---|---|---|
| Termination without cause or resignation for good reason (no CIC) | 12 months base salary continuation | None disclosed beyond benefits/expense reimbursements | Single trigger (qualifying separation) |
| Termination without cause or resignation for good reason upon/following CIC | 24 months base salary continuation + lump‑sum target bonus for year of separation | Subject to release; standard restrictive covenants apply | Double trigger (CIC + qualifying separation) |
Investment Implications
- Alignment: Smith’s substantial voting power via DDM and continued service‑vesting RSUs/options align him with long‑term equity value creation, while policy prohibitions on hedging/pledging reduce misalignment risks .
- Pay‑for‑performance sensitivity: 2024 zero payout under the revenue/EBITDA‑based annual incentive after an 85% payout in 2023 indicates tighter linkage to company performance; watch for reinstatement of equity grants and bonus payouts as leading indicators of momentum .
- Retention/Change‑in‑Control: Double‑trigger protection at 24 months base salary plus target bonus is competitive and could elevate acquisition‑related costs; retention risk appears limited given founder status and governance structure .
- Governance/Control Risks: CEO as Chair, plus founder management presence on board and TRA obligations to DDM, present potential conflicts and cash flow claims under certain scenarios; independent committees and lead independent director partially mitigate but do not eliminate control risk .