Russell Kern
Executive Vice President, Chief Scientific Officer and Principal Financial Officer at International Stem Cell
Executive
Board
About Russell Kern
Russell Kern, Ph.D., serves as Executive Vice President, Chief Scientific Officer (CSO) and Principal Financial Officer (PFO) at International Stem Cell Corporation (ISCO) and has been a director since October 2008. He holds a Ph.D. in Human Physiology from the Russian Academy of Medical Sciences; his expertise spans medical genetics, embryology, stem cell biology, and neuroscience, with 40+ publications and notable work in Parkinson’s patient brain physiology in collaboration with NYU Medical School . He has served as CSO since June 2013 and currently signs SEC filings as PFO (e.g., 2025 8-K) . Company performance during 2024: product sales rose 17% to $9.085M with 59% gross margin, and net loss of $0.209M (vs. $0.131M loss in 2023) . Pay-versus-performance disclosure shows a $100 TSR proxy benchmark finishing at $133.33 in 2024 (vs. $33.33 in 2023) alongside the reported net losses, illustrating a volatile equity profile despite improving operating results .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| International Stem Cell Corporation | Chief Scientific Officer | Jun 2013–present | Directs R&D programs, including stem cell derivation and pre‑clinical/clinical evaluation of stem cell-derived cells . |
| International Stem Cell Corporation | Director | Oct 2008–present | Board oversight with deep scientific expertise; elected by preferred class; non-independent due to management role and familial relationship to CEO . |
| International Stem Cell Corporation | Executive Vice President | Current | Senior management leadership supporting R&D and corporate operations . |
| International Stem Cell Corporation | Principal Financial Officer | Current (e.g., signs 2025 8-K) | Senior finance role; executes SEC filings on behalf of ISCO . |
| International Stem Cell Corporation | Vice President, Research & Development (prior role) | — | Earlier managerial/scientific leadership before becoming CSO . |
External Roles
| Organization | Role | Years | Relevance / potential conflict |
|---|---|---|---|
| X-Master, Inc. | President | Current | Entity owned by CEO; its preferred holdings are deemed beneficially owned by both CEO and Kern, contributing to concentrated control . |
| AR Partners LLC | General Manager; Co-owner with CEO | Current | Holds preferred convertible shares deemed beneficially owned by both parties; aligns control interests . |
| S Real Estate Holdings LLC | Owner | Oct 2021–present | Co-tenant on ISCO HQ lease; Kern personally guaranteed the lease; ISCO paid $56,322 in 2024—related party transaction overseen by Audit Committee . |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | 140,000 | 260,000 |
| Bonus ($) | — | — |
| Option Awards Grant-Date Fair Value ($) | 237,237 | — |
| Total ($) | 377,237 | 260,000 |
- ISCO is a smaller reporting company and provides scaled disclosure; compensation decisions are made by an independent Compensation & Governance Committee; no additional board fees are paid to employee-directors .
Performance Compensation
Option Grants (Recent)
| Grant date | Shares | Exercise price ($) | Expiration | Vesting schedule |
|---|---|---|---|---|
| Jun 14, 2023 | 500,000 | 0.14 | Jun 14, 2033 | 3/36 vest on Sep 14, 2023; remainder monthly over 33 months . |
| Nov 6, 2023 | 2,000,000 | 0.12 | Nov 6, 2033 | 3/36 vest on Feb 6, 2024; remainder monthly over 33 months . |
- No options were granted to named executive officers during 2024 .
Outstanding Equity Awards at 12/31/2024 (Options)
| Year Granted | Exercisable (#) | Unexercisable (#) | Exercise Price ($) | Expiration |
|---|---|---|---|---|
| 2016 | 180,000 | — | 3.75 | 2026 |
| 2017 | 60,700 | — | 1.09 | 2027 |
| 2017 | 31,111 | — | 1.10 | 2027 |
| 2018 | 150,000 | — | 1.51 | 2028 |
| 2018 | 100,000 | — | 1.58 | 2028 |
| 2019 | 120,000 | — | 1.51 | 2029 |
| 2021 | 250,000 | — | 0.39 | 2031 |
| 2022 | 888,889 | 111,111 | 0.45 | 2032 |
| 2023 | 250,000 | 250,000 | 0.14 | 2033 |
| 2023 | 722,222 | 1,277,778 | 0.12 | 2033 |
- Vesting mechanics for 2021–2023 awards: 3/36ths on a stated date (Sep 9, 2021; Jul 25, 2022; Sep 14, 2023; Feb 6, 2024) with remaining monthly vesting over 33 months .
- Equity plan-wide norm since 2017: 1/12 after three months, remainder ratably over the following 33 months (administratively) .
Pay vs Performance (Context)
- ISCO provided Pay vs Performance graphs; a $100 TSR reference equaled $133.33 in 2024 vs $33.33 in 2023; reported Net Income (Loss) was $(209)k in 2024 and $(131)k in 2023 .
Equity Ownership & Alignment
| Beneficial owner | Beneficial ownership (shares) | Percent of beneficial ownership |
|---|---|---|
| Russell Kern | 15,320,299 | 72.46% |
- Footnote context: Percentages are based on 8,004,389 common shares outstanding as of April 22, 2025 plus shares issuable within 60 days under derivative securities; includes shares issuable upon conversion of preferred stock and exercisable options—11,053,973 shares attributed to Kern within 60 days .
- Control: Dr. Semechkin and Dr. Kern (directly/through controlled entities) collectively own 5,004,353 preferred shares convertible into 5,435,496 common shares; they control ~72.3% of the voting power of the preferred stock, which votes on an as-converted basis with common on most matters .
- Entities: X-Master, Inc. (owned by CEO; Kern is President) and AR Partners LLC (owned by CEO and Kern; Kern is GM) hold preferred shares deemed beneficially owned by both .
Employment Terms
- Benefits: Group life, health, vision, dental; 401(k) plan without company match; no defined benefit pension or non-qualified deferred compensation .
- Severance: “We do not have severance agreements with Dr. Semechkin or Dr. Kern.”
- Change-in-control: Options under the 2006 and 2010 plans provide for full acceleration of the unvested portion if not assumed or substituted upon a “Change in Control” .
- Equity plan administration and terms summarized in the 2010 Equity Participation Plan section .
Board Governance
- Service history and status: Kern has been a director since October 2008; age 39 (2025 proxy); he is an employee director and the son of ISCO’s CEO, Andrey Semechkin, indicating non-independence .
- Board and committees: In 2024, the Board met once; independent directors (Maier, Wright) met in executive sessions at regular meetings; each director attended at least 75% of Board/committee meetings .
- Audit Committee: Paul V. Maier (Chairman, financial expert) and Donald A. Wright—both independent .
- Compensation & Governance Committee: Donald A. Wright (Chairman) and Paul V. Maier—both independent; committee sets executive pay and administers equity plans .
- Director compensation: Non-employee directors receive cash retainers and option grants; employee directors (including Kern) receive no additional director compensation .
- Voting outcomes (2025 Annual Meeting): Kern and Semechkin were elected by the Series D preferred class; Maier and Wright elected by all shares; say‑on‑pay passed (FOR 7,715,844; AGAINST 73,393; ABSTAIN 2,459); frequency vote favored “3 Years” (7,593,833 votes) . The Board recommended three‑year frequency in the proxy .
Performance & Track Record (Company context during Kern’s tenure)
| Metric | 2023 | 2024 |
|---|---|---|
| Product sales ($000) | 7,789 | 9,085 |
| Gross margin (%) | 59% | 59% |
| Net income (loss) ($000) | (131) | (209) |
- Segment operating snapshot (2024): LCT (biomedical) operating income $2,990k; ISCO (therapeutic) operating loss $(2,456)k; LSC (anti‑aging) operating loss $(602)k .
- R&D focus under Kern: development of neural stem cells/dopaminergic neurons from hpSCs for Parkinson’s, traumatic brain injury and stroke; GMP-grade hpSC lines (UniStemCell) and manufacturing protocols support pipeline ambitions .
Related Party Transactions and Red Flags
- Lease co-tenancy: ISCO and S Real Estate Holdings LLC (owned by Kern) co-lease HQ; ISCO pays 40% of costs; $56,322 paid in 2024; lease personally guaranteed by Kern; Audit Committee reviews related party transactions .
- Related party financing: CEO holds a company note (renegotiated extensions and rate adjustments in 2023–2024); illustrates reliance on insider financing (CEO), though not specific to Kern .
- Concentrated control and family ties: CEO (Co‑Chairman) and Kern (director) are father and son; both share beneficial ownership and preferred voting power, reducing minority holder influence on governance outcomes .
Compensation Committee and Say‑on‑Pay
- Committee composition: Independent members only (Wright—Chair; Maier); one meeting in FY 2024; the committee sets executive officer base salary, incentive/equity awards, and director compensation, and administers equity plans .
- 2025 Say‑on‑Pay: Passed with strong support; frequency vote favored every three years .
Investment Implications
- Alignment and incentives: Kern’s 2023 pay skewed toward equity (large 2023 option grants at $0.12–$0.14) with time‑based monthly vesting through 2026–2027; 2024 pay was all cash (no new options/bonus), which makes recent incentive alignment primarily a function of option value creation rather than annual bonuses tied to explicit operating metrics .
- Retention and potential supply dynamics: Significant unvested option overhang with monthly vesting from 2023 grants; monitor Form 4 filings for any exercises/sales as tranches vest, which could signal liquidity needs or confidence levels .
- Governance risk: Dual insider control (father‑son) with high beneficial ownership and preferred voting concentration, coupled with related party leasing, elevates governance and conflict‑of‑interest risk; however, pay is overseen by an independent committee and employee directors receive no board fees, partially mitigating concerns .
- Execution risk vs. progress: Operating improvements (revenue growth; stable gross margins) contrast with continued net losses, placing a premium on Kern’s R&D execution to translate hpSC science into clinical/commercial milestones; TSR rebounded in 2024 per proxy benchmarks, highlighting equity volatility tied to pipeline and operating milestones .
Appendix: Board Service and Independence Notes
- Kern is a non‑independent, management director (employee; son of CEO) .
- Audit Committee: Paul V. Maier (Chair; financial expert) and Donald A. Wright (independent) .
- Compensation & Governance Committee: Donald A. Wright (Chair) and Paul V. Maier (independent) .
- The CEO is Co‑Chairman of the Board, a dual role that can concentrate authority; independent directors meet in executive sessions at regular meetings .