David Ludwig
About David Ludwig
David Ludwig, age 68, is President of Heritage Global’s Financial Assets division (NLEX and Heritage Global Capital) and a Class II director since March 2021. He developed NLEX into a leading broker of charged‑off consumer debt and has supervised sales of over 6,000 portfolios with face value of $250 billion; he holds a B.S. in Economics from the University of Illinois . Company performance during his senior leadership shows revenue of $60.5M in 2023 and $45.4M in 2024, with net income of $12.5M and $5.2M respectively; TSR on a fixed $100 investment moved from $125.67 (2022) to $148.66 (2023) and $98.93 (2024) .
Company performance
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income ($) | $15,493,000 | $12,475,000 | $5,182,000 |
| TSR – Value of $100 Investment ($) | 125.67 | 148.66 | 98.93 |
| Metric | 2023 | 2024 |
|---|---|---|
| Revenues ($) | $60,545,000 | $45,361,000 |
| Operating Income ($) | $14,319,000 | $9,066,000 |
| EBITDA ($) | $14,833,000 | $9,657,000 |
| Adjusted EBITDA ($) | $15,609,000 | $10,910,000 |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| National Loan Exchange (NLEX) | Founder; President | Early 1990s–2014; continues within HGBL | Built leading U.S. broker of charged‑off consumer debt; supervised sales of 6,000+ portfolios, $250B face value |
| Heritage Global Inc. | President, Financial Assets division | 2020–present | Leads Brokerage (NLEX) and Specialty Lending (HGC); HGC has issued $154.5M in loans since 2019 (HGBL share $68.1M) |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Industry conferences/media | Featured speaker; quoted in NYT, LA Times; consultant/expert witness | Various | Thought leadership in debt sales industry; recognized pioneer |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $400,000 | $400,000 |
Performance Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Bonus formula | 12% of Financial Assets division net operating income, per Employment Agreement (effective June 1, 2023) | 12% of Financial Assets division net operating income |
| Payout ($) | $1,312,553 (cash) | $1,045,593 (cash) |
| Target metric | Not disclosed | Not disclosed |
| Vesting | Cash; no equity component disclosed for Ludwig | Cash; no equity component disclosed for Ludwig |
Incentive design detail
- Performance metric: Net operating income of Financial Assets division (NLEX + HGC) .
- Weighting: Payout equals 12% of division NOI (formula-based rather than percentage weighting in a balanced scorecard) .
- Committee oversight: Compensation Committee approves executive compensation; awards linked to profitability to discourage inappropriate risk-taking .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 987,304 shares (includes 75,000 shares issuable under options exercisable within 60 days) |
| Ownership % of common | 2.5% (based on 35,452,279 shares outstanding as of April 7, 2025) |
| Vested vs unvested equity | Options exercisable and unexercisable positions listed below; no RSUs disclosed for Ludwig in 2023–2024 |
| Pledging/hedging | Company not aware of any pledging arrangements; anti‑hedging policy prohibits short sales and puts/calls |
| Ownership guidelines | Not disclosed |
Outstanding equity awards (as of 12/31/2024)
| Instrument | Exercisable | Unexercisable | Strike | Expiration | Vesting schedule |
|---|---|---|---|---|---|
| Stock options | 21,250 | — | $0.70 | Jun 1, 2029 | Vested 25% annually beginning Jun 1, 2020 |
| Stock options | 45,000 | — | $1.41 | Jun 1, 2030 | Vests 25% annually beginning Jun 1, 2021 |
| Stock options | 30,000 | 10,000 | $2.81 | Jun 1, 2031 | Vests 25% annually beginning Jun 1, 2022 |
Employment Terms
| Term | Detail |
|---|---|
| Employment agreement | Effective June 1, 2023; bonus equals 12% of Financial Assets division NOI |
| Severance (without cause) | Pro‑rata bonus for year of termination, plus payment of the greater of (i) annual base salary or (ii) 4% of net revenues NLEX receives on forward‑flow contracts entered during Ludwig’s tenure for the 12 months after termination |
| Change‑of‑control | Not disclosed |
| Clawback | Mandatory recoupment policy adopted Nov 7, 2023 per SEC/Nasdaq Rule 10D‑1; applies to current/former executive officers |
| Anti‑hedging | Prohibits short‑term/speculative trades, shorts, and options; officer trades must be pre‑cleared by the Secretary |
| Insider trading procedures | Insider trading policy filed with 2024 10‑K; repurchases follow established procedures |
Board Governance and Service
| Item | Detail |
|---|---|
| Board class & tenure | Class II director; appointed March 4, 2021 |
| Independence | Not independent (employee-director); only Dove and Ludwig are non‑independent |
| Committees | No committee memberships listed for Ludwig; Audit, Compensation, and Corporate Governance committees composed solely of independent directors |
| Attendance | 100% Board and committee meeting attendance in 2024 (aggregate for directors) |
| Leadership structure | Chairman separate from CEO; no Lead Independent Director given current size; Chairman Samuel Shimer |
Dual‑role implications: Ludwig’s employee-director status reduces independence; mitigation comes from fully independent committees and exclusion of employee-directors from committee membership and director pay .
Director Compensation
| Year | Cash Fees ($) | Equity Awards ($) | Notes |
|---|---|---|---|
| 2024 | — | — | Employees (Dove, Ludwig) do not receive director compensation |
Related Party Transactions
- NLEX office lease: Company leased Edwardsville, IL office space owned by Ludwig; payments were ~$114,250 (2024) and ~$113,000 (2023) .
- Family members: Thomas Ludwig (son) served as NLEX General Counsel & SVP; total compensation $693,248 (2024) and $1,772,068 (2023) .
Performance & Track Record
- Division leadership: Financial Assets division combines NLEX brokerage and HGC specialty lending; HGC issued $154.5M in loans since 2019 (HGBL portion $68.1M), with $29.0M net investments outstanding at 12/31/2024 .
- Execution risks: Largest Specialty Lending borrower in default; loans placed on nonaccrual in June 2024; amortized cost in nonaccrual status was $23.5M (HGBL share), undermining near‑term returns in 2025 .
- Brokerage cycle: 2024 gross profit decline driven by a one‑time 1Q’23 principal auction and lower Brokerage volume YoY .
Say‑on‑Pay & Shareholder Feedback
- 2024 advisory vote: 14,556,634 shares voted in favor of NEO compensation for 2023; next advisory vote planned for 2027 per prior frequency decision .
Compensation Structure Analysis
- At‑risk pay orientation: Ludwig’s annual incentive is fully formulaic and tied to division NOI (12% of Financial Assets division NOI), aligning pay with segment profitability .
- Equity mix: No new equity grants to Ludwig in 2023–2024; option overhang remains from prior grants with staggered expirations through 2031 .
- Governance protections: Clawback policy (2023) and anti‑hedging provisions apply to executive officers .
Risk Indicators & Red Flags
- Concentration/default risk: Specialty Lending loans concentrated in a single borrower now in default; nonaccrual status and uncertainty of recovery present execution and earnings risk .
- Related party ties: Office lease payments to Ludwig and high compensation to a family member in NLEX elevate related‑party scrutiny .
- Volatile operating results: Event‑driven business with fluctuating quarterly revenue; EBITDA declined in 2024 vs 2023 .
- Legal proceedings: No material legal matters disclosed .
- Options repricing: No changes/adjustments to options in 2024 (no repricing) .
Equity Ownership & Vesting Schedules (Insider Selling Pressure)
- Near‑term exercisability: Multiple option tranches already vesting 25% annually (2020–2022 start dates) with expirations 2029–2031; creates potential for periodic exercises/sales aligned with liquidity windows .
- Beneficial stake: 2.5% ownership aligns incentives; company reports no pledging arrangements and prohibits hedging .
Employment Terms
| Item | Detail |
|---|---|
| Pro‑rata bonus on termination | Yes (for year of termination) |
| Cash severance | Greater of base salary or 4% of net revenues under NLEX forward‑flow contracts for 12 months post‑termination |
| Change‑of‑control | Not disclosed |
Investment Implications
- Alignment: Ludwig’s incentive structure directly scales with division profitability (12% of NOI), which tightly aligns pay with operating outcomes in NLEX/HGC; absence of RSU/PSU grants in 2023–2024 reduces equity‑driven selling pressure near term .
- Risk: Specialty Lending borrower default and nonaccrual status could compress division NOI and Ludwig’s bonus, signaling execution risk and potential estimate downgrades; watch resolution, recoveries, and portfolio diversification milestones .
- Governance: Employee‑director, non‑independent status is balanced by independent committee oversight and no director compensation; related party lease and family compensation warrant continued monitoring for governance optics .
- Trading signals: Option expirations through 2031 and periodic vesting schedules suggest predictable potential windows for exercises; monitor Form 4 filings around earnings blackouts to gauge selling behavior alongside the company’s ongoing share repurchase program dynamics .