Krish S. Krishnan

About Krish S. Krishnan

Krish S. Krishnan (age 60) is Chairman and Chief Executive Officer of Krystal Biotech and has served as CEO and Board Chair since inception; he holds a B.S. (IIT), M.S. (Univ. of Toledo), and MBA (Wharton) . Under his leadership, 5‑year cumulative TSR reached ~183% vs 13.6% for the Nasdaq Biotechnology Index; 2024 net product revenue was $290.5M with 93% gross margins, and 2024 net income was $89.2M; CHMP issued a positive opinion for VYJUVEK in Feb‑2025 (EC decision anticipated 2Q25) .

Past Roles

External Roles

Fixed Compensation (CEO)

• March 1, 2025 update: base salary increased to $853,000; target bonus remains 80% .

Performance Compensation

• 2024 annual cash bonus: CEO payout = 110% of target based solely on corporate performance (corporate multiplier 110%) .
• 2024 long‑term equity: PSUs and RSUs; all 2024 PSU performance criteria achieved; PSU vesting in two equal tranches; RSUs vest 25% annually over 4 years .

Comp structure shifts:

• 2024: Emphasis on PSUs + RSUs (no new stock options) for NEOs, increasing certainty of time‑based vesting (RSUs) alongside performance‑based equity (PSUs) .
• 2023: PSUs + stock options introduced for CEO and NEOs .

Equity Ownership & Alignment

Outstanding equity (as of 12/31/2024):

• Options outstanding (CEO): 45,900 exercisable/15,300 unexercisable @ $78.89 (exp. 2/25/2031); 25,000/25,000 @ $63.55 (2/27/2032); 12,500/37,500 @ $81.91 (2/27/2033) .
• Unvested share‑based awards (CEO): RSAs 10,200 ($1,597,932); PSUs (2023) 12,500 ($1,958,250); RSUs (2024) 35,000 ($5,483,100); PSUs (2024) 52,500 ($8,224,650); valued at $156.66/sh on 12/31/24 .

Employment Terms

• Employment agreement: At‑will; agreement dated July 1, 2017 (served without compensation from 4/15/2016 to 6/30/2017) .
• Current comp terms: Base salary raised to $853,000 effective 3/1/2025; target bonus 80% of base .
• Key policies: Executive Incentive Compensation Recoupment (Clawback) Policy adopted Aug 4, 2023 (NASDAQ Rule 10D‑1 compliant) ; anti‑hedging/pledging policy .
• Perquisites: Limited; in 2024, $120,000 living expense reimbursement and $13,800 401(k) match for CEO .

Change‑in‑Control (CIC) economics (Executive CIC Severance Plan adopted Aug 2, 2024):

• Double‑trigger: Benefits payable upon qualifying termination without cause or for good reason within 24 months post‑CIC .
• CEO benefits include: cash severance = 2.0× (base + target bonus or 3‑yr avg bonus if greater), prorated current‑year target bonus, any unpaid prior‑year bonus, up to 24 months COBRA, and equity acceleration (if awards assumed/replaced, acceleration upon qualifying termination; if not assumed/replaced, accelerate at CIC); performance equity settles at greater of target vs actual through CIC .
• Example quantum (as of 12/31/2024): Cash severance $2,923,200; pro‑rata bonus $649,000; healthcare $33,771; accelerated equity $30,416,456; total ~$34.0M .
• Cutback: Modified cutback to avoid 280G excise taxes (no gross‑ups) .

Board Governance (Service, roles, dual‑role implications)

• Board service: Class III director; term expires at 2026 annual meeting; Chairman of the Board since inception; also chairs the Commercial Advisory Committee .
• Combined Chair/CEO structure with a Lead Independent Director (Daniel Janney) providing counterbalance and defined responsibilities (executive sessions each meeting) .
• Independence context: Seven of nine directors are independent; Krish S. Krishnan and Suma M. Krishnan (Founder & President, R&D, and director) are spouses—this family and dual executive/director structure requires effective lead independent oversight and committee independence (all standing committees are independent) .
• Board operations: 4 Board meetings in FY2024; >75% attendance for all directors except Mr. Ganorkar (who committed to improved attendance in 2025) .
• Director pay: CEO receives no additional director compensation .

Say‑on‑Pay & Shareholder Feedback

Compensation committee and advisors: Independent committee; engaged Compensia as independent consultant; peer group updated in 2024 to reflect commercial‑stage rare disease/gene/cell therapy comparables .

Performance & Track Record (selected KPIs and milestones)

• 5‑yr TSR (2020–2024): 183.0% vs 13.6% for Nasdaq Biotechnology Index; value of $100 initial investment grew to $282.95 (company) vs $113.59 (peer index) .
• 2024 results and commercial execution: Net VYJUVEK product revenue $290.5M; cumulative since mid‑2023 launch $341.2M; 93% gross margins; strong access with 97% of covered lives and >510 reimbursement approvals by Feb‑2025 .
• International and pipeline execution: EU GMP certified; CHMP positive opinion (Feb 28, 2025; EC decision expected 2Q25); Japan application under priority review (decision 2H25 expected) .
• 2024 net income: $89.159M (thousands) .

Compensation Structure Analysis (signals for alignment and risk)

• Pay‑for‑performance architecture evident: 2024 bonus linked entirely to corporate scorecard for CEO (110% payout) and material use of PSUs that required achievement of detailed operating/clinical targets (all achieved) .
• Shift in equity mix: 2024 moved from options to RSUs+PSUs; RSUs reduce downside risk and can dampen performance leverage; PSUs maintain performance linkage—net effect is somewhat lower risk to the executive vs options, partially offset by PSU performance linkages .
• Strong shareholder support (96%+ say‑on‑pay) and robust governance features: independent compensation committee, formal clawback policy, prohibition on hedging/pledging, no option repricing, and no excise tax gross‑ups .
• Dual‑role and related‑party context: Combined Chair/CEO and spouse serving as President R&D and director increases perceived entrenchment risk; mitigated by a lead independent director and independent committees .

Related‑Party & Policy Highlights

• Spousal relationship: Suma M. Krishnan (Founder & President, R&D) is spouse; both are directors .
• Related‑party transaction policy in place; audit committee reviews material related‑party transactions .
• Insider Trading Policy and anti‑hedging/pledging prohibitions (no margin/pledging; no derivatives) .

Director/Executive Ownership Snapshot (as of 3/25/2025)

Investment Implications

• Alignment: High equity exposure (6.2% ownership) with meaningful unvested PSUs and RSUs supports long‑term alignment; anti‑hedging/pledging and clawback policies are shareholder‑friendly .
• Near‑term flow watch: Significant vesting events around late Feb each year (e.g., ~47,500 shares on 2/28/2025 across PSU/RSU tranches) can create sell‑to‑cover activity; monitor Form 4s for any 10b5‑1‑driven or discretionary sales .
• Retention/M&A dynamics: CIC plan is double‑trigger and sizable (illustrative ~$34.0M as of 12/31/24), which can stabilize leadership but increases potential M&A transaction costs; absence of tax gross‑ups is positive .
• Governance risk: Combined Chair/CEO and spousal executive/director arrangement heightens independence concerns; continued strong lead independent oversight and committee independence remain key .
• Execution track record: Commercial traction (>$290M 2024 revenue at 93% gross margin), international progress (CHMP positive opinion), and 5‑yr TSR outperformance underpin pay outcomes and reduce pay‑for‑performance controversy risk .