David L. Klenk
About David L. Klenk
David L. Klenk is President, Chief Executive Officer and Chief Financial Officer of Electro‑Sensors, Inc. (ELSE) and has served as a director since 2013; he is age 60 as of the 2025 proxy . Under his leadership, ELSE’s net sales rose 9.6% to $9.373M in 2024 from $8.555M in 2023, while net income increased 62% to $446K in 2024 from $275K in 2023; cumulative TSR on a fixed $100 investment was 107.44 for 2024 (proxy “Pay Versus Performance”) . ELSE’s Board maintains an independent chair (Joseph A. Marino) with Klenk participating as an executive director; all standing committees are independent, balancing his dual executive-director role .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Electro‑Sensors, Inc. | President, CEO, CFO, Director | 2013–present | Executive leadership across operating and finance; Board service with participation on the Business Development Committee pursuing strategic alternatives |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Not disclosed | — | — | No other external directorships or roles disclosed in company filings |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary (actual, $) | 241,769 | 249,692 | 258,154 |
| Bonus (actual, $) | 50,000 (discretionary) | 10,000 (discretionary) | 20,000 (discretionary) |
| Option Awards (grant-date FV, $) | 0 | 37,216 | 0 |
| All Other Compensation ($) | 35,537 | 39,264 | 38,762 |
| Total Compensation ($) | 327,306 | 336,172 | 316,916 |
- Current base salary set by Compensation Committee: $271,000 effective January 1, 2025 .
Performance Compensation
| Year | Metric | Weighting | Target (as % of base) | Actual Outcome | Vesting/Timing |
|---|---|---|---|---|---|
| 2022 | Financial (revenue levels) | 75% | ~21% | Revenue targets not achieved; $50,000 discretionary payout based on “Adjusted Net Income” and merger work | Cash award; year-end |
| 2022 | Strategic initiatives (customer/product expansion) | 25% | ~21% combined plan | See above discretionary payout | Cash |
| 2023 | Financial (revenue levels) | 40% | ~20% | Revenue targets not achieved; $10,000 discretionary payout for managing merger termination and banker engagement | Cash |
| 2023 | Strategic initiatives | 60% | ~20% combined plan | See above discretionary payout | Cash |
| 2024 | Financial (revenue levels) | 40% | ~19% | Revenue targets not achieved; $20,000 discretionary payout for business development work | Cash |
| 2024 | Strategic initiatives (business development) | 50% | ~19% combined plan | See above discretionary payout | Cash |
| 2024 | Discretionary | 10% | ~19% combined plan | Discretionary portion used; $20,000 total | Cash |
| 2025 (plan) | Financial (revenue levels) | 40% | ~18% | Not yet disclosed | Cash, annual |
| 2025 (plan) | Strategic initiatives (business development) | 50% | ~18% | Not yet disclosed | Cash, annual |
| 2025 (plan) | Discretionary | 10% | ~18% | Not yet disclosed | Cash, annual |
Equity Ownership & Alignment
| Item | FY 2024 | As of Feb 27, 2025 |
|---|---|---|
| Total beneficial ownership (shares) | — | 70,373 (incl. options exercisable within 60 days, vested RSUs, ESOP) |
| Ownership (% of outstanding) | — | 2.0% |
| Options – exercisable (#, strike, expiry) | 50,000 @ $3.41 exp 2/8/2026 | 60,000 exercisable within 60 days included in beneficial tally |
| Options – exercisable/unexercisable (#, strike, expiry) | 10,000 exercisable / 15,000 unexercisable @ $4.25 exp 8/27/2033 | Included (exercisable count within 60 days in beneficial tally) |
| RSUs – vested (#) | 7,000 vested during 2024 | 7,000 vested RSUs included in beneficial tally |
| RSUs – unvested (#, market value) | 28,000; $144,704 market value at 12/31/2024 | — |
| ESOP shares | — | 3,373 ESOP shares |
| Ownership guidelines | Not disclosed | Not disclosed |
| Hedging/pledging/margin | Hedging, short sales, margin, and puts/calls discouraged; minimum six‑month hold for open-market purchases; pre‑clearance required; Rule 10b5‑1 plans permitted under strict conditions |
- Stock option and RSU vesting cadence: 2023 grants vest 20% on grant or first anniversary, then 20% annually thereafter; RSUs totaled 35,000 for Klenk in 2023 .
- Options outstanding at 12/31/2024: 185,000 company-wide; Klenk specifically holds 50,000 (2016 grant) and 25,000 from 2023; 2024 options activity shows vesting and expirations; plan provides accelerated vesting upon change-of-control .
Employment Terms
| Provision | Details |
|---|---|
| Employment contract | No written employment agreement; base salary $271,000 effective Jan 1, 2025 |
| Severance | Not disclosed in filings; no contract noted |
| Change‑of‑control | 2013 Equity Incentive Plan requires acceleration of vesting upon a change in control |
| Clawback policy | Compensation Recoupment Policy adopted Oct 18, 2023 (Exhibit 97.1 referenced) |
| Non‑compete / non‑solicit | Not disclosed |
| Insider trading policy | Strict pre‑clearance; trading windows; six‑month minimum hold for open‑market purchases; hedging/short sales/margin/puts/calls discouraged; Rule 10b5‑1 plans allowed under defined parameters |
Performance & Track Record
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Net Income ($000s) | 100 | 275 | 446 |
| Value of Fixed $100 Investment (TSR) | 93.97 | 79.00 | 107.44 |
- 2024 vs 2023 operating performance: Net sales up 9.6% to $9.373M; gross profit up 7.9% to $4.582M; operating loss narrowed to $4K; non‑operating income $440K, aided by T‑bill interest; basic/diluted EPS $0.13 .
- Seasonality and risk management: Board oversees liquidity, operations, cybersecurity; Klenk leads management reporting; no material legal proceedings disclosed .
- Section 16 compliance note: The company disclosed late Form 4 filings for Klenk and other directors related to August/September 2023 grants (administrative timing issue) .
Board Governance
- Board structure: Independent Chairman (Joseph A. Marino); independent Audit, Compensation, and Nominating Committees; Klenk serves as President/CEO/CFO and director; no lead independent director .
- Committee roles: Klenk is a member of the Business Development Committee; Audit (Chair Gabbard), Compensation (Chair Gabbard), Nominating (Chair Zipoy) are independent .
- Attendance: Board met five times in 2024; each director attended all Board and committee meetings .
- Independence: Klenk is not independent under Nasdaq rules due to his executive role .
- Say‑on‑pay: 2025 proxy includes advisory vote on compensation and recommends a three‑year frequency for future say‑on‑pay votes .
Investment Implications
- Pay-for-performance calibration: The past three plans tied 40–75% to revenue and 25–60% to strategic initiatives, but actual payouts were discretionary in each year due to missed revenue targets—this suggests the committee emphasizes strategic progress and retains discretion, which can weaken tight pay‑for‑performance linkage near term .
- Equity alignment and sale incentives: Change‑of‑control accelerated vesting plus ongoing annual RSU vesting may create incentives around strategic alternatives; ownership is 2.0% of shares outstanding with meaningful option/RSU exposure, supporting alignment but also potential vesting‑driven sell pressure as tranches deliver .
- Governance mitigants: Independent chair and fully independent key committees help balance Klenk’s CEO+CFO dual role; insider trading policy discourages hedging/shorts/margin and requires pre‑clearance, which reduces misalignment risks .
- Retention and severance risk: No written employment agreement and no severance terms disclosed—reduces change‑of‑control cash obligations but may increase retention risk in a strategic process; clawback policy adopted in 2023 is shareholder‑friendly .
- Performance trajectory: Revenue and net income improved in 2024, underpinning the business; however, pay outcomes remain discretionary due to revenue shortfalls, an area to monitor for future plan design robustness .