Tavo Espinoza
LIGAND PHARMACEUTICALSAbout Tavo Espinoza
Octavio (“Tavo”) Espinoza, 54, is Chief Financial Officer of Ligand Pharmaceuticals (LGND) since November 2022; he joined Ligand in 2016, served as SVP, Finance from September 2020, and previously held senior finance/accounting roles at Receptos, Illumina, and Intuit. He holds a B.S. in business administration from San Diego State University and is a Certified Public Accountant in California . Company performance during his tenure includes 2024 revenue of $167.1 million vs. $131.3 million in 2023 and a five-year cumulative TSR value of $150.81 for 2024; core adjusted EPS rose to $5.74 in 2024, up more than 40% year-over-year .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Ligand Pharmaceuticals | SVP, Finance → CFO | SVP since Sep 2020; CFO since Nov 2022 | Led finance during business model shift to royalty assets; CFO signs financing and credit agreements |
| Receptos (acquired by Celgene/BMS) | Senior Director, Finance | Mar 2015–Feb 2016 | Public company drug discovery; pre/post-acquisition finance leadership |
| Illumina | Senior Director, Accounting | Prior to 2015 | Scaled accounting at leading genomics tools company |
| Intuit | Senior Manager, Accounting | Prior to Illumina | Operational accounting leadership in software |
| PricewaterhouseCoopers | Public Accounting | Early career | Foundation in audit/accounting; CPA credential |
External Roles
None disclosed (no current public-company directorships or committee roles identified for Espinoza in the proxy) .
Fixed Compensation
| Metric (Tavo Espinoza) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 330,097 | 433,005 | 469,550 |
| Target Bonus (% of base) | 40% | 40% | 40% |
| Actual Annual Bonus ($) | 119,715 | 173,202 | 250,000 |
| All Other Compensation ($) | 7,380 | 7,380 | 7,380 |
| Total Compensation ($) | 3,272,252 | 2,450,631 | 3,298,556 |
Highlights
- 2024 base salary increased 8.4% YoY to $472,600 annualized; target bonus remained 40% of base .
- 2024 corporate bonus funded at 130% of target based on overachievement in revenue, cash flow, BD programs, and operations; Espinoza’s bonus was $250,000 .
Performance Compensation
Annual Cash Incentive (2024)
| Metric | Target | Actual | Achievement | Payout linkage |
|---|---|---|---|---|
| Revenue | $143m (or $130m ex-Apeiron) | $167m | 117% | Contributed to 130% corporate achievement |
| Core cash flow | $94m (or $85m ex-Apeiron) | $105m | 112% | Contributed to 130% corporate achievement |
| BD programs added | ≥5 new programs | 12 programs | 171% | Contributed to 130% corporate achievement |
| Operations | Transaction execution, Captisol deals (≥5), org build-out, IR | Met/Exceeded (e.g., 6 CUAs + 1 license; realignment completed) | 110% | Contributed to 130% corporate achievement |
- Corporate performance achievement set total annual bonus at 130% of target for NEOs; Espinoza paid $250,000 .
Long-Term Equity Incentives (2024 grants; approved Jan 2024)
| Instrument | Grant date | Shares/Units | Terms | Grant-date fair value ($) |
|---|---|---|---|---|
| PSUs | 02/27/2024 | 8,810 at target | Two equally weighted metrics: (1) projected 2028 revenue from assets acquired 1/1/2024–12/31/2025; (2) adjusted EPS CAGR 1/1/2024–12/31/2026; thresholds and up to 200% max; double-trigger CIC handling describes target-setting/vesting continuation | 785,852 |
| RSUs | 02/27/2024 | 7,208 | Time-based vesting in equal installments on Feb 15, 2025/2026/2027; standard CIC terms | 642,954 |
| Stock Options | 02/27/2024 | 29,272 | 10-year term; 6-month cliff then monthly vest over 4 years; exercise price $89.20; underwater shortly after grant due to post-grant price normalization | 1,142,820 |
PSU performance grids (select detail)
- 2028 Acquired-Asset Revenue component: $65m=200%; $55m=150%; $45m=100%; $35m=50%; < $35m=0% (linear interpolation) .
- Adjusted EPS CAGR component: $4.06 (2023) to $7.93 (2026)=25% CAGR=200%; to $7.02=20%=150%; to $6.17=15%=100%; to $5.40=10%=50%; <10%=0% (linear interpolation) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 91,638 shares (<1% of outstanding) comprising 8,393 common shares + 83,245 shares via options exercisable within 60 days as of record date |
| Outstanding unvested RSUs (as of 12/31/2024) | 16,443 RSUs (1,539 from 6/10/2022; 3,666 from 12/13/2022; 4,030 from 2/23/2023; 7,208 from 2/27/2024); market value $1,761,867 at $107.15/share |
| Outstanding PSUs (target) | 2024 PSUs: 8,810 (market/payout value $943,992); 2023 PSUs: 7,390 ($791,839); 2022 PSUs: 3,432 ($367,739) |
| Options outstanding (select lots) | Multiple grants from 2016–2024; most recent 6,098 exercisable/21,508 unexercisable at $89.20 (exp. 2/26/2034) |
| Hedging/pledging policy | Insider policy prohibits purchase/writing of puts/calls and other hedging under a 10b5-1 plan; otherwise no additional hedging policy disclosed; pledging not specified |
| Ownership guidelines | Director ownership guidelines exist (≥3× annual retainer); no executive officer ownership guidelines disclosed in proxy |
Employment Terms
| Provision | Economics / Terms |
|---|---|
| Role and tenure | CFO since November 2022; executive officer biography and prior roles disclosed |
| Severance (non-CIC) | Covered under company severance plan; table estimates for Tavo: salary $160,563 and benefits continuation $20,438 if termination without cause (12/31/2024 assumption) |
| Change-in-control (CIC) – double trigger | 1× base salary + 1× greater of max target bonus in termination year/CIC year + 12× COBRA premiums; all outstanding stock awards vest; option post-termination exercise extended to 9 months (not beyond original expiry) |
| CIC payments (illustrative values at $107.15/share) | Salary $472,600; bonus $189,040; option acceleration $1,639,598; stock award acceleration $3,865,436; benefits $73,577; total $6,240,251 (assuming termination without cause or resignation for good reason within 24 months post-CIC) |
| CIC definition | Merger/asset sale or tender offer/contested board change; equity accelerates if awards not assumed/replaced; PSUs convert to target and vest based on continued service through staggered periods if CIC occurs before performance periods end |
| Clawback | Nasdaq/SEC-compliant clawback for erroneously awarded incentive comp upon accounting restatement; applies to stock price/TSR-based comp as well |
| No tax gross-ups; no fixed-term contracts | Company does not provide tax gross-ups for parachute payments; no fixed-term employment agreements |
Performance & Track Record
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenue ($) | 196,245,000 | 131,314,000 | 167,133,000 |
| EBITDA ($) | 41,353,000* | 46,342,000* | 58,260,000* |
Values marked with an asterisk were retrieved from S&P Global.
Additional performance signals
- 2024 highlights: royalty revenue +28% YoY; core adjusted EPS to $5.74/share; strong BD execution (Apeiron/Qarziba, Agenus BOT/BAL royalty financing) .
- Pay-versus-performance TSR (value of $100 investment): 2022: $92.32; 2023: $98.71; 2024: $150.81 .
- Say-on-pay approval ~86% in 2024, indicating shareholder support for NEO pay design .
Compensation Committee Analysis
- Committee composition: Haas (Chair), LaMattina, Aryeh; independent consultant Aon retained; annual risk assessment and peer group refresh (middle-market PE + life sciences comparators) .
- Positioning: CEO equity above 75th percentile; other NEOs (incl. CFO) equity around 75th percentile reflecting retention/incentive needs and performance .
Investment Implications
- Pay-for-performance alignment: CFO compensation is heavily at-risk via options/PSUs tethered to revenue generation from acquired assets and adjusted EPS CAGR—favorable alignment with Ligand’s royalty-acquisition strategy and earnings growth focus .
- Near-term selling pressure: RSUs vest on Feb 15 in 2025/2026/2027; options granted at $89.20 were underwater shortly after grant, potentially moderating exercise-related selling near term .
- Retention/transaction risk: Double-trigger CIC benefits and full equity acceleration upon qualifying termination post-CIC could incent management to pursue value-creating transactions; tabled CIC values for CFO total ~$6.24m at 12/31/2024 price .
- Governance safeguards: No tax gross-ups, robust clawback, prohibition on options-based hedging; however, absence of explicit executive ownership guidelines and no disclosed pledging policy reduce visible “skin-in-the-game” discipline (CFO <1% ownership) .
- Performance momentum: 2024 revenue and adjusted EPS growth support bonus overachievement and PSU target attainability; monitoring 2024–2026 EPS CAGR and 2028 acquired-asset revenue targets is key to future PSU payouts and potential upside leverage .