Chun K. Hong
About Chun K. Hong
Chun K. Hong, 64, is Netlist’s founder-President/CEO and sole director, roles he has held since June 2000; he became Chairman in January 2004 and the sole board member in August 2020. He holds a B.S. in Economics from Virginia Commonwealth University and an M.S. in Technology Management from Pepperdine University. Company performance context is provided in the tables below; the proxy’s pay-versus-performance disclosure shows multi-year TSR and market cap trends for 2022–2024.
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Infinilink Corporation | President & COO | — | Executive leadership in DSL equipment prior to Netlist founding. |
| Viking Components, Inc. | Executive Vice President | — | Senior leadership in memory subsystems manufacturing. |
| LG Semicon Co., Ltd. | General Manager of Sales | — | Sales leadership at a public semiconductor manufacturer. |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No other public company directorships disclosed in the last five years. |
Fixed Compensation
| Metric | FY 2023 | FY 2024 |
|---|---|---|
| Base Salary ($) | 450,000 | 450,000 |
| Target Annual Bonus (% of Salary) | Up to 100% at Board discretion | Up to 100% at Board discretion |
| Actual Annual Bonus ($) | — (no bonus paid) | — (no bonus paid) |
| Perquisites ($) | 93,732 (auto, vehicle, country club, health club, tax/estate planning) | 109,914 (auto, vehicle, country club, health club, tax/estate planning) |
Performance Compensation
Equity Grants (RSUs)
| Grant Type | Grant Date | Shares Granted | Grant Date Fair Value ($) | Vesting Schedule |
|---|---|---|---|---|
| RSU | 1/25/2022 | 300,000 | 251,250 (market value of unvested at FY24) | Restrictions lapse in eight equal semi-annual installments from grant date. |
| RSU | 3/16/2023 | 374,250 | 313,434 (market value of unvested at FY24) | Restrictions lapse in eight equal semi-annual installments from grant date. |
| RSU | 5/14/2024 | 750,000 | 628,125 (market value of unvested at FY24) | Restrictions lapse in eight equal semi-annual installments from grant date. |
| Annual Stock Awards (SCT) | 2023 | — | 1,509,475 | RSUs under equity plan; no options granted in FY2024. |
| Annual Stock Awards (SCT) | 2024 | — | 997,500 | RSUs; Company did not grant stock options in FY2024. |
Stock Options
| Grant Date | Options Exercisable (#) | Options Unexercisable (#) | Exercise Price ($) | Expiration | Vesting Schedule |
|---|---|---|---|---|---|
| 1/6/2015 | 300,000 | — | 0.84 | 1/6/2025 | 16 equal quarterly installments; unvested options accelerate on certain terminations. |
| 1/18/2016 | 300,000 | — | 0.70 | 1/18/2026 | 16 equal quarterly installments. |
| 2/14/2017 | 300,000 | — | 1.02 | 2/14/2027 | 16 equal quarterly installments. |
| 1/13/2021 | 937,500 | 62,500 | 0.72 | 1/13/2031 | 16 equal quarterly installments. |
Incentive Metrics and Payout Determination
| Element | Metrics | Weighting | Target | Actual | Payout Mechanics |
|---|---|---|---|---|---|
| Annual Cash Bonus | Discretionary; up to 100% of salary based on individual and Company objectives set by Board. | Not disclosed | Not disclosed | No bonus paid in FY2024. | Board discretion; no formulaic disclosure. |
| Long-Term Equity | Time-vested RSUs; no PSUs disclosed. | N/A | N/A | N/A | RSUs vest over 4 years (semi-annual); options historically vest quarterly. |
Equity Ownership & Alignment
Beneficial Ownership Snapshots
| As-of Date | Shares Beneficially Owned | % of Class | Notes |
|---|---|---|---|
| 6/18/2024 | 6,885,735 | 2.7% (out of 257,746,289) | Includes 1,775,000 options exercisable within 60 days; 100,000 RSUs vesting within 60 days; 5,010,735 outstanding shares (incl. Hong-Cha Trust). |
| 3/21/2025 | 6,898,235 | 2.5% (out of 273,994,997) | Includes 1,787,500 options/RSUs exercisable/vesting within 60 days; 5,110,735 outstanding shares (incl. Hong-Cha Trust). |
| 7/9/2025 | 11,353,559 | 3.9% (out of 292,451,926) | Includes 1,600,000 options exercisable within 60 days; 100,000 RSUs vesting within 60 days; 9,653,559 outstanding shares (incl. Hong-Cha Trust). |
- Insider trading/pledging policies: Speculative transactions (options/shorts) prohibited; pledging permitted with prior notice/approval; blackout trading windows apply; 10b5-1 plans permitted.
- Hedging policy: Company states it does not have a hedging policy for employees, officers and directors.
Outstanding Unvested RSUs at FY 2024 Year-End
| Grant Date | Unvested RSUs (#) | Market Value of Unvested RSUs ($) |
|---|---|---|
| 1/25/2022 | 300,000 | 251,250 |
| 3/16/2023 | 374,250 | 313,434 |
| 5/14/2024 | 750,000 | 628,125 |
Employment Terms
| Term | Details |
|---|---|
| Employment Agreement | In place since September 2006; base salary plus specified benefits (tax/estate planning reimbursements, professional/country club membership, employment-related legal fees, auto/vehicle expenses, health club). Auto-renewal for one-year terms unless 6 months’ notice; CEO may resign with 6 months’ notice; company may terminate with 30 days’ notice. |
| Bonus Opportunity | Discretionary annual cash bonus up to 100% of base salary based on individual and Company objectives. |
| Severance (without Cause/for Good Reason, incl. upon Change of Control) | One year of base salary, medical premium reimbursement, pro-rated bonus; any unvested stock options accelerate; excise tax gross-up for 280G “excess parachute payments.” |
| Death/Disability | Lump sum equal to half of annual base salary; stock options vest as they would have after one additional year; 25% of option shares (or remaining unvested amount) immediately vest. |
| Estimated CIC/Termination Payments (as of 12/28/2024) | $450,000 salary, $29,690 medical premium reimbursement, and $35,012 fair value of unvested stock options that would accelerate (if terminated without cause/for good reason, including upon CoC). |
| Non-Compete/Non-Solicit | Not disclosed. |
Board Governance
| Topic | Details |
|---|---|
| Board Composition | Sole director through FY2024; 2025 proxy nominates expansion to three directors (Hong, Blake Welcher, Jun Cho). |
| Leadership Structure | CEO also serves as Chairman; Board believes combined role enhances accountability/strategy execution. |
| Committees | No compensation committee; compensation decisions handled by the Board/sole director; outside consultants not engaged in FY2024. |
| Audit Oversight | In FY2024, in absence of an audit committee, Hong (as sole director) reviewed audited financials and auditor independence (Audit Committee Report). |
| Board Meetings | No formal board meetings held during FY2023; actions by written consent; sole director did not attend 2023 annual meeting. |
| Director Compensation | FY2024: only one director (Hong); he received no additional compensation as a director; non-employee director annual cash retainer is $40,000. |
Director Compensation (For Directors)
| Element | Amount |
|---|---|
| Annual Cash Retainer (Non-Employee Director) | $40,000 |
| Committee/Chair Fees | Not disclosed. |
| Equity Grants | Permitted under equity plans; director grant limits exist in 2025 Equity Plan summary. |
| Director Ownership Guidelines | Not disclosed. |
| Hong Director Pay | No additional compensation for director service. |
Related Party Transactions
| Party | Relationship | FY2024 Compensation |
|---|---|---|
| Paik K. Hong | Brother of Chun K. Hong; EVP Sales & Operations | $250,000 salary; $1,400 weekly fitness training; $3,000 401(k) match; 100,000 RSUs ($133,000 grant-date fair value). |
| FY2023 Comparison | — | $233,334 salary; $14,950 fitness training; $3,000 401(k) match; 50,000 RSUs ($182,500 grant-date fair value). |
Performance & Pay-versus-Performance
Financial performance and pay-versus-performance metrics:
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues ($) | 161,637,000 | 69,205,000 | 147,103,000 |
| EBITDA ($) | -12,739,000* | -18,817,000* | -16,925,000* |
| Net Income (Loss) ($000s) | (33,370) | (60,398) | (53,865) |
| Company TSR ($100 invested) | 361 | 590 | 263 |
| Market Capitalization ($ millions) | 261 | 468 | 224 |
| PEO Compensation Actually Paid ($) | (3,634,867) | 3,447,726 | (609,287) |
*Values retrieved from S&P Global.
Say-on-Pay & Shareholder Feedback
- The 2025 proxy includes an advisory vote on executive compensation; the Board recommends “FOR” the proposal. Frequency of say-on-pay votes is every three years (as set in 2019); next frequency vote slated for 2031.
- Annual meeting voting 2023–2024 showed director re-election and auditor ratification; say-on-pay results not reported in those 8-Ks.
Compensation Structure Analysis
- Mix shift: Compensation heavily equity-based via time-vested RSUs; no PSUs disclosed, indicating limited direct linkage to objective, multi-year performance metrics.
- Options vs RSUs: Company did not grant stock options in FY2024; compensation relies on RSUs that vest over time (lower risk vs performance-vested structures).
- Governance of pay: No compensation committee; decisions centralized with sole director; no compensation consultants used in FY2024.
- Clawback/tax: Agreement includes excise tax gross-up if payments are “excess parachute payments”—a shareholder-unfriendly feature.
Vesting Schedules and Insider Selling Pressure
- RSUs vest in eight equal semi-annual installments from grant dates; for Hong, grants on 1/25/2022, 3/16/2023, and 5/14/2024 follow this cadence.
- Near-term supply: 100,000 RSUs for Hong were scheduled to vest within 60 days after July 9, 2025; 1.6 million options were or would be exercisable within 60 days as of that date.
- Trading controls: Insider trading policy enforces blackout windows and encourages 10b5-1 plans; pledging is permitted with prior approval.
Board Service History and Dual-Role Implications
- Service history: Director since inception (June 2000); Chairman since January 2004; sole director from August 2020 through FY2024; 2025 proxy proposes two additional directors.
- Committee roles: No compensation committee; audit functions carried by the sole director (Audit Committee Report) in FY2024.
- Independence issues: CEO also serves as Chairman and (historically) sole director, concentrating control and posing independence concerns.
Expertise & Qualifications
- Education: B.S. Economics (VCU); M.S. Technology Management (Pepperdine).
- Industry experience: Executive roles in telecom equipment, memory subsystems, and semiconductor sales; founder-CEO with deep organizational and market knowledge.
Work History & Career Trajectory
| Organization | Role | Tenure/Notes |
|---|---|---|
| Netlist, Inc. | Founder; President, CEO; Chairman; Sole Director | Since June 2000; Chairman since 2004; sole director since Aug 2020. |
| Infinilink Corporation | President & COO | Pre-2000; DSL equipment. |
| Viking Components, Inc. | Executive Vice President | Pre-2000; memory subsystems. |
| LG Semicon Co., Ltd. | GM of Sales | Pre-2000; semiconductor. |
Performance & Track Record (Qualitative)
- IP monetization milestone: Final judgment in Aug 2023 upholding jury verdict awarding $303.15 million against Samsung for willful infringement, covering patents foundational to HBM and DDR5; additional pre/post-judgment interest awarded (case subject to appeals).
- Risk disclosure: Company highlights risk around monetizing IP portfolio and internal control material weakness; Netlist remains dependent on key personnel, including Hong.
Compensation Peer Group and Benchmarking
- Peer group/targets: Not disclosed; Board/sole director exercises judgment; no compensation consultant in FY2024.
Risk Indicators & Red Flags
- Concentration of control: CEO = Chairman and (historically) sole director; Board met via written consents; independence and oversight risks.
- No compensation committee; centralized pay decisions; limited external benchmarking.
- Excise tax gross-up under 280G in CEO agreement.
- Related-party employment (brother in EVP role with equity grants).
- Pledging of company stock permitted with approval; no hedging policy.
- Material weakness in internal controls disclosed.
Investment Implications
- Alignment and supply: Time-based RSUs create steady vesting supply; 100,000 RSUs scheduled to vest within 60 days after July 9, 2025, and 1.6 million options exercisable within 60 days, potentially adding selling pressure without performance gating.
- Governance discount risk: Combined CEO/Chair and historical single-director structure, no compensation committee, and 280G gross-up may warrant governance risk adjustments in valuation or engagement focus.
- Catalyst potential: Ongoing IP enforcement track record, including the $303.15 million Samsung judgment, is a material lever for value creation and capital to fund operations, though appellate risk and timing remain.
- Pay-for-performance: Absence of disclosed PSUs or explicit long-term performance metrics suggests weaker pay-performance linkage; investors may prioritize engagement on introducing performance-based equity and independent oversight.
Note: EBITDA values marked with an asterisk (*) are retrieved from S&P Global.