Andrew LaFrence
About Andrew LaFrence
Andrew D. C. LaFrence, 62, is Chief Financial Officer and Senior Vice President of Finance at Nortech Systems (NSYS), appointed effective December 1, 2023. He is a CPA with a BS in Accounting from Illinois State University and brings ~40 years of finance and accounting experience, including CFO/COO roles at public and private life sciences companies and 26 years at KPMG leading the Minneapolis Life Sciences practice . Company performance during his tenure includes TSR equivalent value of $143.51 on a $100 investment for FY2024, following $131.38 in FY2023 and $170.85 in FY2022, with net income of ($1.3) million in FY2024, $6.9 million in FY2023, and $2.0 million in FY2022 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Vyant Bio, Inc. | CFO; later President & CEO | 2021–2023 | Led finance; elevated to CEO to steer strategy in drug discovery for neuro disorders |
| KORU Medical Systems | CFO (brief tenure) | 2023 | Short-term finance leadership following Vyant Bio tenure |
| StemoniX, Inc. | CFO & COO | 2019–2021 | Operated a drug discovery platform; role through merger with Vyant Bio |
| Biothera Pharmaceuticals, Inc. | SVP & CFO | 2018–2019 | Senior finance leadership in biotech |
| Surmodics, Inc. (NASDAQ: SRDX) | CFO | ~2013–2018 (over 5 years) | Led public-company finance function in medtech |
| KPMG | Partner; led Minneapolis Life Sciences practice | ~1987–2013 (26 years) | Auditing/advisory leadership; sector expertise |
External Roles
No external public company board roles for LaFrence are disclosed in NSYS filings. (Not disclosed in 2025 DEF 14A or the 12/5/2023 8-K) .
Fixed Compensation
| Year | Base Salary ($) | Target Bonus (%) | Actual Bonus Paid ($) |
|---|---|---|---|
| 2024 | 318,654 | 45% of base (plan criteria set annually) | — (no non‑equity incentive shown) |
| 2023 | 26,250 (partial year from Dec 1 start) | 45% of base (prorated while employed) | — |
Notes:
- Employment agreement sets annualized base at $315,000, adjustable only with his consent; target bonus 45% of base under the Company’s Incentive Bonus Plan, with metrics determined annually by CEO/Committee/Board .
Performance Compensation
Equity and Options
| Award Type | Grant Date | Shares/Units | Grant Date Fair Value ($) | Strike Price ($) | Term/Expiration | Vesting |
|---|---|---|---|---|---|---|
| Non‑qualified Stock Option | December 2023 (effective Dec 1); plan grant referenced Dec 3 | 40,000 | 221,102 (recognized in 2023 SCT) | 9.04 | Expires 12/03/2033 | Equal annual installments over 5 years (first tranche vested in 2024) |
Vesting detail (as disclosed):
- “Vests equally over five years from the grant date (12/04/2023)” → implies 8,000 options vest each year on anniversaries through 2028 ; option grant described in the agreement as vesting in equal annual installments over five years .
Outstanding as of Dec 31, 2024:
- Exercisable: 8,000; Unexercisable: 32,000; strike $9.04; expiration 12/03/2033 .
Annual Incentive Plan
- Bonus metrics are determined each calendar year; payout target 45% of base salary; specific revenue/EBITDA/TSR or ESG metrics for LaFrence not disclosed in filings .
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Total Beneficial Ownership (as of March 19, 2025) | 8,000 shares; <1% of class |
| Shares Outstanding (entitled to vote) | 2,760,993 |
| Options – Exercisable | 8,000 (at $9.04, exp. 12/03/2033) |
| Options – Unexercisable | 32,000 (same terms) |
| Vested vs Unvested Equity | Options vest 8,000 per year; 8,000 vested by YE 2024; 32,000 unvested |
| Pledged as Collateral | Not disclosed |
| Hedging/10b5‑1 | Not disclosed for LaFrence specifically; company adopts clawback; insider policies not itemized in proxy for hedging/pledging |
Insider selling pressure:
- No Form 4 activity for LaFrence is cited in the proxy’s delinquent filings section (late filings listed for other individuals); we attempted to fetch Form 4 data but could not due to an API authorization error, so no recent insider sale/purchase analysis is included .
Employment Terms
| Term | Detail |
|---|---|
| Start Date & Role | CFO and SVP of Finance effective Dec 1, 2023 |
| Agreement Term | Initial period to Nov 30, 2024; auto‑renews annually unless 90‑day notice |
| Base Salary & Bonus | Base $315,000; bonus target 45% of base; metrics/payouts set annually |
| Equity Grant | 40,000 NQ options; 10‑year term; $9.04 strike; 5‑year equal annual vesting |
| Severance (No Cause/Good Reason) | Base salary for longer of remaining term or 9 months; COBRA contribution for up to 9 months; release required |
| Change‑of‑Control (Double Trigger) | If terminated within 12 months post‑CoC, base salary for 9 months; COBRA contribution up to 9 months; release required |
| Clawback | Compensation subject to clawback per applicable law/exchange rules |
| Restrictive Covenants | Confidentiality; 2‑year non‑solicitation; mutual non‑disparagement; IP/work‑for‑hire; injunctive relief |
| 280G Excise Tax | Benefits reduced to avoid excise tax if needed; no gross‑ups |
| Perquisites | Annual Mayo Clinic physical; club dues up to $1,200; estate planning/tax prep up to $2,000; auto allowance $650/month; phone/internet allowances |
Performance & Track Record
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| TSR – Value of $100 Investment | $170.85 | $131.38 | $143.51 |
| Net Income | $2,010,000 | $6,874,000 | ($1,295,000) |
Context:
- FY2023 net income benefited from a one‑time tax valuation allowance reversal of $2.6 million; FY2024 net loss impacted by $11.2 million net sales reduction and $571k restructuring costs related to facility consolidation .
Compensation Structure Analysis
- Cash vs Equity Mix: 2024 pay was primarily fixed cash salary ($318,654); no bonus reported for 2024; option grant value was recognized in 2023 ($221,102) at hire .
- Risk Profile of Equity: Time‑based stock options vest annually over 5 years (no PSUs or performance options disclosed for LaFrence), which lowers short‑term performance linkage compared to performance‑vested equity .
- Clawback & 280G: Presence of clawback and excise tax cutback provisions indicates shareholder‑friendly governance; no tax gross‑ups .
- Change‑of‑Control Economics: Double‑trigger protection; severance limited to base salary for 9 months plus COBRA, modest relative to market .
Equity Ownership & Alignment
| Component | Detail |
|---|---|
| Ownership as % of Outstanding | <1% (8,000 shares vs. 2,760,993 outstanding) |
| Exercisable vs Unexercisable Options | 8,000 exercisable; 32,000 unexercisable (strike $9.04; exp. 12/03/2033) |
| Ownership Guidelines Compliance | Not disclosed |
| Pledging/Hedging Status | Not disclosed |
Employment Contracts – Additional Terms
- Severance on Non‑Renewal: If the Company does not renew, base salary for 9 months plus specified benefits (release required) .
- Section 409A: Payments structured to comply; potential six‑month delay for certain amounts if required .
Investment Implications
- Alignment: Modest direct share ownership and time‑based options provide long‑term retention incentives; lack of disclosed performance‑vested equity for the CFO suggests limited direct pay‑for‑performance linkage beyond annual bonus determinations .
- Retention Risk: Auto‑renewing agreement with nine‑month base salary severance (double‑trigger on CoC) reduces departure risk but is not overly protective; perquisites are standard, not excessive .
- Trading Signals: No disclosed hedging/pledging and no recent Form 4 analysis available due to data access constraints; monitor future Form 4s for option exercises or open‑market transactions as 8,000 options vested in 2024 and additional tranches vest annually through 2028 .
- Performance Context: TSR recovered in 2024 vs. 2023, but FY2024 net loss and restructuring indicate operational headwinds; bonus outcomes and future equity grants should be assessed against revenue/EBITDA targets once disclosed annually .