Timothy S. Davidson
Chief Financial Officer, Senior Vice President and Corporate Secretary at NATURAL HEALTH TRENDS
Executive
About Timothy S. Davidson
Timothy S. Davidson serves as Chief Financial Officer, Senior Vice President, and Corporate Secretary of Natural Health Trends Corp., positions he has held since February 2007 (CFO/SVP) and January 2014 (Corporate Secretary) . He is 54 and holds a master’s degree in professional accounting from the University of Texas at Austin and a bachelor’s degree from East Texas A&M University (formerly Texas A&M University at Commerce) . Company pay-versus-performance disclosures show TSR of $112.38 (value of an initial $100 investment) and net income of $572K for 2024, versus TSR $187.07 and net income $568K in 2023, and TSR $112.38 and net income $313K in 2022 . Davidson beneficially owns 391,100 shares (3.4% of outstanding) as of March 14, 2025 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Celion Networks, Inc. | Corporate Controller | 2001–2004 | Finance leadership and corporate controls in telecom |
| IP Communications, Inc. | Manager of Financial Reporting | 2000–2001 | Financial reporting for Dallas-based telecom |
| Arthur Andersen LLP | Audit Manager | 1994–2000 | Audit and assurance experience; managerial role |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| None disclosed in proxy | — | — | No external directorships or public board roles disclosed |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $400,000 | $400,000 |
| Target Bonus (%) | Not designated (Annual Plan participation not designated) | Not designated (Annual Plan participation not designated) |
| Actual Bonus Paid ($) | $9,415 (discretionary special project stipend) | — |
| Perquisites/All Other Compensation ($) | $42,722 (includes spouse airfare of $27,872) | $27,513 (includes spouse airfare of $11,988) |
- The Company did not designate Davidson to participate in the Annual Incentive Plan or 2014 Long-Term Incentive Plan in 2023 or 2024 .
- The Company does not currently grant stock options or similar instruments .
Performance Compensation
Phantom Equity Awards — 2025 Grant (April 1, 2025)
| Component | Weighting | Target | Actual | Payout Mechanics | Vesting |
|---|---|---|---|---|---|
| Financial Results-Based Award | 50% of award (6.25% per quarter) | Quarterly operating profit ≥ $150,000 | Ongoing; not yet disclosed | Cash-settled up to $12.00 per phantom share cap | Two-year period; quarterly eligibility with continuous service each quarter; 12.5% total per quarter |
| Stock Appreciation-Based Award | 50% of award (6.25% per quarter) | (a) Avg closing price in last month of quarter > avg closing price last month of prior calendar year; and (b) quarterly operating profit ≥ $300,000 | Ongoing; not yet disclosed | If (a) met but (b) not met, carried forward; vesting possible in future quarter if excess operating profit covers required thresholds and carry-forward amounts; cash-settled up to $12.00 cap | Same as above; quarterly eligibility with continuous service each quarter |
- Grant sizes: 41,788 phantom shares to Davidson; 124,850 to the President; others to employees/directors .
- Sale restriction: As a condition to grant, employee grantees agreed not to sell or transfer any Company shares they hold until all phantom shares under the award have vested or been forfeited .
Phantom Equity Awards — 2023 Grant (February 7, 2023)
| Attribute | Details |
|---|---|
| Grant size | 41,788 phantom shares |
| Vesting cadence | Eight equal three-month increments; initial increment vested at grant; subsequent increments subject to continuous service and performance criteria |
| Performance condition | Designated by Compensation Committee; satisfied for 2023 increments and last three performance periods in 2024 |
| Value recognition (grant-date fair value) | $112,786 (2023); $92,290 (2024) |
| Compensation Actually Paid — awards granted and vested during year | $108,189 (2023); $93,263 (2024) |
| Cash payout cap | Max $12.00 per phantom share |
| Sale restriction | No sale/transfer of Company shares until phantom shares vest or are forfeited |
Equity Ownership & Alignment
Beneficial Ownership
| As-of Date | Shares Beneficially Owned | % of Outstanding |
|---|---|---|
| March 22, 2024 | 391,100 | 3.4% |
| March 14, 2025 | 391,100 | 3.4% |
- Shares outstanding reference: 11,516,773 (3/22/2024) and 11,513,075 (3/14/2025) .
Vested vs Unvested
| Date | Unvested Phantom Units | Estimated Market/Payout Value ($) |
|---|---|---|
| 12/31/2023 | 20,892 | $122,427 |
| 12/31/2024 | Fully vested for 2/7/2023 grant by year-end | — |
- Options: The Company does not currently grant stock options, stock appreciation rights, or similar option-like instruments .
- Hedging: Employees and directors are prohibited from entering into hedging transactions on Company stock .
- Pledging: No pledging of shares disclosed in the proxy .
- Ownership guidelines: No executive stock ownership guideline disclosures identified in the proxy .
- Sale restrictions: 2023 and 2025 phantom awards include sale/transfer restrictions on currently held shares until awards fully vest or are forfeited .
Employment Terms
| Topic | Key Terms |
|---|---|
| Employment Agreement | Provides base salary and eligibility for incentive plans and standard U.S. benefits . |
| Severance (no change of control) | If terminated by Company without “cause” or voluntarily by executive for “good reason,” continuation of salary plus health/medical coverage for up to one year, ending earlier upon engaging in “competitive activity” (per separate non-competition agreement) or breach . |
| Change-of-Control Economics | Double trigger: termination without cause from 30 days pre–change in control through 18 months post–change in control → lump sum equal to two years of salary plus health/medical coverage costs, paid 30 days after termination . |
| Cash Incentive Plans — Excise Tax Gross-Up | If Section 4999 excise tax would apply in connection with change in control, Company will pay an Excise Gross-Up Payment to deliver the net amount that would have been distributable absent the excise tax . |
| Restricted Stock (future awards) | Forfeiture upon termination; accelerated vesting upon death/disability or change in control; Compensation Committee may elect to pay tax gross-up for income/employment taxes associated with vesting . |
| Phantom Equity (future awards) | Forfeiture upon termination except specified limited circumstances; acceleration upon termination without cause on or within 12 months following a change in control . |
| Insider Trading Policy | Company maintains an insider trading policy; prohibits hedging; communications channel to Corporate Secretary for Board communications . |
Investment Implications
- Alignment and performance levers: Davidson’s incentive mix is equity-heavy via phantom shares with explicit quarterly operating profit thresholds ($150k/$300k) and a stock appreciation test, creating direct linkage to both profitability cadence and stock price momentum; awards are cash-settled and capped at $12, limiting windfall risk .
- Selling pressure moderated: Phantom awards include a contractual restriction against selling or transferring any currently held Company shares until vesting completes or forfeiture, which should dampen near-term insider selling pressure during the two-year vesting horizon .
- Retention and change-of-control: Double-trigger change-of-control protection (2x salary plus health benefits) enhances retention amid strategic uncertainty; however, the presence of excise tax gross-ups in Cash Incentive Plans and potential tax gross-ups on restricted stock vesting are shareholder-unfriendly governance signals .
- Skin in the game: Beneficial ownership of 391,100 shares (3.4%) indicates meaningful equity alignment; combined with hedging prohibitions, incentives push toward operational execution and TSR improvements rather than short-term cash extraction .
- Pay vs performance context: Company net income remained positive across 2022–2024, while TSR fluctuated; phantom vesting in 2025–2026 is explicitly conditioned on quarterly operating profit and stock appreciation versus the prior year’s baseline, informing traders about likely management focus on quarterly profitability and support for stock price into period-end windows .