David R. Bailey
About David R. Bailey
David R. Bailey, 46, has served as OrthoPediatrics’ President & Chief Executive Officer since June 1, 2021 and as a director since November 3, 2021 . He holds a B.S. in Sales & Sales Management from Purdue University and completed Harvard Business School’s Professional Leadership Development program in 2020 . Company performance metrics disclosed in the proxy show cumulative TSR declining from $145 (value of $100 initial investment) in 2021 to $56 in 2024, while peer group TSR stood at $105 in 2021 and $79 in 2024 . Company Adjusted EBITDA improved to $8,519 thousand in 2024 from $5,040 thousand in 2023, alongside a 2024 net loss of $(37,822) thousand (all in thousands) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| OrthoPediatrics | Multiple leadership roles (Domestic & International Sales, Operations; oversight of Trauma & Deformity and Scoliosis) | 2007–2021 (pre-CEO) | Early employee; helped set strategic agenda, raised start-up capital, championed new product development, and established a global distribution network |
| Smith & Nephew Orthopaedics | Sales representative and independent distributor | Not disclosed (prior to 2007) | Commercial experience in orthopedics preceding OrthoPediatrics tenure |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No other public company directorships disclosed for Mr. Bailey in the proxy |
Fixed Compensation
Multi-year compensation (Summary Compensation Table totals):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 415,000 | 500,000 | 550,000 |
| Stock Awards ($) | 689,961 | 1,843,952 | 2,693,771 |
| Non-Equity Incentive Plan Compensation ($) | 161,271 | 364,688 | 402,984 |
| All Other Compensation ($) | 12,200 | 13,200 | 10,133 |
| Total Compensation ($) | 1,278,432 | 2,721,840 | 3,656,888 |
Additional fixed/benefit program features:
- 401(k) safe harbor nonelective employer contribution equal to 4% of eligible compensation (offered broadly, not an executive-only plan) .
- Minimal perquisites; no tax gross-ups on perquisites or change-in-control payments .
- Clawback policy effective November 1, 2023, compliant with SEC Rule 10D-1/Nasdaq, covering erroneously awarded incentive compensation .
Performance Compensation
Annual Cash Bonus Plan (2024)
| Item | Value |
|---|---|
| Target Bonus (% of Base) | 75% |
| Target Bonus ($) | 412,500 |
| Payout (% of Target) | 98% |
| Actual Bonus Paid ($) | 402,984 |
Performance metrics, weights, and threshold mechanics (2024 plan):
- Sales Performance (revenue): 40% weight; threshold 80% of quarterly budget; overachievement allowed .
- Adjusted EBITDA: 25% weight; threshold 80% of quarterly budget; overachievement annualized into discretionary pool .
- Corporate Objectives: 25% weight .
- Individual Performance: 10% weight .
- The Compensation Committee approved payouts at 98% of target with no adjustments to targets set in Nov 2023 .
Long-Term Equity Incentives
| Grant Date | Instrument | Shares | Grant-Date Fair Value ($) | Vesting |
|---|---|---|---|---|
| 6/11/2024 | Restricted Stock | 90,395 | 2,693,771 | 100% cliff on 3/15/2027 (approx. 2 years 9 months from grant) |
Historical vesting realized in 2024:
- Shares vested 3/2/2024: 7,119 shares; value realized $199,830 .
Plan design notes:
- Historically, annual restricted stock awards vested 100% at 3 years; 2024 grants vest 3/15/2027 due to adoption timing of the 2024 Incentive Plan .
- The company emphasizes variable, at-risk pay, with revenue, Adjusted EBITDA, and Free Cash Flow highlighted as key performance linkages in pay-versus-performance disclosures .
Equity Ownership & Alignment
| Ownership Metric | Amount/Status |
|---|---|
| Total Beneficial Ownership | 319,155 shares (1.3% of outstanding) |
| Shares Outstanding Reference | 24,831,427 shares (as of 3/28/2025) |
| Unvested Restricted Shares (voting, non-transferable) | 232,335 shares included in beneficial ownership |
| Stock Ownership Guidelines | Directors are expected to hold shares valued at $225,000 within 3 years (applies to non-employee directors) |
| Anti-Hedging/Anti-Pledging | Hedging and pledging of company stock prohibited for officers and directors |
Implications for alignment and selling pressure:
- Large unvested restricted holdings and 2024’s cliff vest (3/15/2027) create future vesting events that could concentrate potential selling windows; anti-pledging policy reduces collateral-driven sales risk .
- No executive-specific ownership guideline disclosed; director guideline applies to non-employee directors .
Employment Terms
Key provisions of Mr. Bailey’s employment agreement (executed Oct 15, 2024):
| Term | Provision |
|---|---|
| Term & Renewal | Initial 3-year term; auto-renews annually unless 30 days’ prior non-renewal notice |
| Base Salary | $550,000 per year |
| Annual Bonus Eligibility | Participation in annual bonus plan (per company plan) |
| Restrictive Covenants | Confidentiality, invention assignment; non-compete and non-solicit for 30 months post-termination |
| Severance (without cause/for good reason) | 30 months’ base salary + 2.5x average of last 3 years’ bonuses, paid over 30 months; unpaid earned bonus; pro-rata current-year bonus (if earned); up to 12 months subsidized healthcare; release required |
| Change-in-Control | Same severance economics if terminated or title changed within 12 months post-CIC (double trigger) |
| Clawback Compliance | Compensation subject to clawback as required by law/Nasdaq policy |
Board Governance (Director Service, Roles, Independence)
- Director since November 3, 2021; term currently expiring at 2027 annual meeting class .
- Committees: Compensation (Schlotterback, Dyer, McDonald), Audit (Hughes, Riccitelli, Schlotterback), Corporate Governance (Infante, McDonald, Riccitelli); Mr. Bailey is not listed on these committees .
- Board leadership: roles of CEO and Chairman are separated; Chairman is Mark C. Throdahl; Lead Independent Director is Terry D. Schlotterback .
- Attendance: The Board reported no director attended fewer than 75% of meetings in 2024 .
- Director Compensation: As an executive, Mr. Bailey does not receive additional director compensation .
Dual-role implications:
- Separation of CEO and Chair, plus a Lead Independent Director, mitigates typical CEO/Chair concentration concerns; Mr. Bailey serves as an employee (non-independent) director, consistent with Nasdaq independence framework disclosures .
Related Party Considerations (Governance/Risk Signals)
- Squadron (27.8% holder)–affiliated transactions: Structure Medical supply payments of $1.0M (2024) and $1.1M (2023); license/transactions with Vilex LLC ($0.2M sales; $0.1M inventory/services in 2024) .
- Real estate mortgage with Tawani Enterprises (affiliate of Squadron managing committee member): monthly P&I $15,543 at 5%; balance $0.6M at 12/31/2024 (matures Aug 2028) .
- These transactions involve significant shareholders/board designees (Squadron), indicating ongoing related-party oversight needs .
Compensation Committee & Practices (for benchmarking pay-for-performance)
- Compensation Committee: Terry D. Schlotterback (Chair), Jimmy D. McDonald, George S.M. Dyer; all independent and non-employee directors .
- Market positioning: 2024 base pay adjustments sought to approximate the 50th percentile based on a 2022 competitive analysis by NFP .
- Governance features: significant at-risk pay; multi-year vesting; no executive SERP; no gross-ups; anti-hedging/anti-pledging; no option repricing; clawback policy adopted .
Investment Implications
- Pay-performance alignment: 2024 CEO pay was equity-heavy ($2.694M of $3.657M total), with bonuses tied primarily to revenue and Adjusted EBITDA; payout at 98% of target suggests near-target operational execution in 2024 despite a reported net loss .
- Retention and potential selling windows: Substantial unvested restricted stock (232,335 shares) and a 2024 grant that vests 3/15/2027 create strong retention but also future vesting-related liquidity windows; anti-pledge/hedge policies reduce risk of forced selling prior to vest dates .
- Change-in-control economics: 30 months’ salary plus 2.5x average bonus is a sizable severance construct and, combined with double-trigger CIC protection, can influence negotiation dynamics in strategic scenarios .
- Governance risk offsets: CEO/Chair separation and a Lead Independent Director help mitigate dual-role risks; however, meaningful related-party transactions with a 27.8% shareholder (Squadron) require continued robust oversight .
- Performance track record metrics: Company TSR fell to $56 by 2024 (from $145 in 2021), while Adjusted EBITDA improved to $8,519 thousand in 2024; monitoring future compensation outcomes versus TSR and cash flow metrics remains critical for assessing pay-for-performance discipline .
Appendix: Additional Detail Tables
2024 Bonus Performance Framework
| Metric | Weight | Threshold Mechanics / Notes |
|---|---|---|
| Sales Performance (Revenue) | 40% | Threshold 80% of quarterly budget; overachievement allowed |
| Adjusted EBITDA | 25% | Threshold 80% of quarterly budget; overachievement pooled for discretionary bonuses |
| Corporate Objectives | 25% | Annual objectives |
| Individual Performance | 10% | Individual goals |
Pay vs Performance Snapshots
| Year | Company TSR (Value of $100) | Peer Group TSR (Value of $100) | Net (Loss) Income ($000s) | Adjusted EBITDA ($000s) |
|---|---|---|---|---|
| 2021 | 145 | 105 | (16,260) | (182) |
| 2022 | 96 | 78 | 1,258 | 227 |
| 2023 | 79 | 76 | (20,974) | 5,040 |
| 2024 | 56 | 79 | (37,822) | 8,519 |
Notes: Company-selected measure was Adjusted EBITDA; amounts for net (loss) income and Adjusted EBITDA are in thousands .