Najeeb Ghauri
About Najeeb Ghauri
Najeeb U. Ghauri, age 71, is NTWK’s Chief Executive Officer and Chairman, a director since 1997, Chairman since 2003, and CEO from 1998–2002 and from 2006–present; he previously served as CFO from 2001–2005. He holds a B.S. from Eastern Illinois University and an MBA from the Peter F. Drucker School (Claremont), with earlier roles at ARCO (1987–1997) and Unilever; he led NTWK’s NASDAQ listing in 1999 and cost-cutting initiatives in 2017 that saved over $8 million, and NTWK’s largest contract in 2015 exceeding $120 million . Operationally, NTWK reported profitability for FY2024 and multi-quarter revenue growth: Q1 FY2024 +12% to $14.2m, Q2 +23% to $15.2m, Q3 +14% with EPS $0.03, Q4 +19% and exceeded full-year revenue target; FY2025 Q1 and Q2 continued modest growth with higher recurring revenues .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| NetSol Technologies | CFO | 2001–2005 | Supported finance leadership pre- and post-NASDAQ listing . |
| NetSol Technologies | CEO | 1998–2002; 2006–present | Led growth, largest contract >$120m (2015); China leadership; 2017 cost savings >$8m . |
| ARCO (Atlantic Richfield) | Marketing team | 1987–1997 | Fortune 500 experience; marketing leadership . |
| Unilever | Brand and Sales Manager | ~5 years | Consumer brand management foundational experience . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| US‑Pakistan Business Council (US Chamber of Commerce) | Vice Chairman | 2006 | Bilateral business advocacy . |
| Pakistan Human Development Fund | Founding Director | Ongoing | Philanthropy: literacy/health/poverty alleviation . |
| Awards | “Sitara‑e‑Imtiaz” (Pakistan) | 2020 | National recognition for IT and philanthropy . |
Fixed Compensation
| Metric | FY 2023 | FY 2024 | FY 2025 Plan |
|---|---|---|---|
| Base Salary ($) | $700,000 | $693,000 | $840,000 |
| Allowances/Perqs ($) | $200,000 | $200,000 | $200,000 (unchanged) |
| Bonus ($) | $0 | $472,890 | N/A disclosed |
| Option Awards ($) | $0 | $20,285 | N/A disclosed |
| Total ($) | $900,000 | $1,386,175 | Annualized comp $1,040,000 incl. salary, perqs, benefits |
Notes: Perqs include car allowance, insurance premiums, home office; see footnote (3) .
Performance Compensation
- Program design emphasizes pay-for-performance tied to revenue and operating income, with long-term equity under the 2025 Equity Incentive Plan; CEO bonuses are paid 60% cash / 40% stock valued June 30 of fiscal year .
FY 2024 Actual
| Component | Metric | Weighting | Target | Actual | Payout | Vesting/Settlement |
|---|---|---|---|---|---|---|
| Annual Bonus | Revenues & Income from Operations (graduated) | Noted as dual metrics | Not disclosed | Not disclosed | $472,890 | 60% cash / 40% stock at June 30, 2024 |
FY 2025 CEO Bonus Schedule (Graduated)
| Category | Weighting | 25% Level | 50% | 100% | 125% | 150% | 175% | 200% |
|---|---|---|---|---|---|---|---|---|
| Net Revenues Increase | 55% | 5% → $82,500 | 10% → $165,000 | 15% → $330,000 | 20% → $412,500 | 25% → $495,000 | 30% → $577,500 | 35% → $660,000 |
| Income from Operations Margin | 45% | 5.0% → $67,500 | 7.5% → $135,000 | 10.0% → $270,000 | 12.5% → $337,500 | 15.0% → $405,000 | 17.5% → $472,500 | 20.0% → $540,000 |
| Total Potential Bonus | — | $150,000 | $300,000 | $600,000 | $750,000 | $900,000 | $1,050,000 | $1,200,000 |
- Baseline revenue for FY2025 is defined as the highest annual revenue achieved beginning with FY2024; cannot be adjusted downward; bonus split 60% cash / 40% stock valued June 30 of fiscal year .
- Equity Incentive Plan 2025 reserves 1,100,000 shares; awards may be options, SARs, restricted stock, performance shares, with broad performance criteria including revenue, EBIT, EPS, TSR; change-in-control may accelerate vesting at Committee discretion .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (4/30/2025) | 903,363 shares; 7.71% of outstanding (11,709,543 shares) |
| Options (as of 6/30/2024) | 50,000 exercisable; strike $2.15; expiry 1/1/2025 |
| Unvested Stock/Equity Awards | None outstanding at FY2024 year-end; no stock grants in FY2023–FY2024 |
| Hedging/Pledging | Company policy prohibits short sales, options trading, hedging, margin purchases and pledges |
| Ownership Guidelines | Company states guidelines to align exec interests with shareholders (specific multiples not disclosed) |
| Sale Restriction | Named executives prohibited from selling newly issued shares for three months in open market transactions |
Employment Terms
| Term | CEO Agreement Key Provisions |
|---|---|
| Term | Five-year term; auto-renew for 12 months unless 6-month notice |
| Base & Annualized Comp | FY2024 annualized $900,000; FY2025 $1,040,000 including salary, allowances, perqs, benefits |
| Severance (No Cause/Good Reason) | Salary continuation for 48 months at current rate; immediate vesting of options; continuation of health benefits for 48 months; cash/tax-equivalency payment if benefits cannot be continued |
| Change-of-Control (Termination) | 2.99x prior 12 months’ salary; plus higher of prior-year bonus or 1% of consolidated gross revenues; optional cash-out of in-the-money options; plus standard severance benefits |
| Good Reason / Cause | Defined (material duty changes, salary reduction, relocation; crime, failure to perform, competitive/injurious activities) |
| Non-Compete/Non-Solicit/Confidentiality | Included in agreement (durations not disclosed) |
Potential Payments (Illustrative as of 6/30/2024)
| Benefits and Payments | Termination After Change of Control | Termination Upon Death or Disability | Termination Without Cause / For Good Reason |
|---|---|---|---|
| Base Salary Continuance | $2,800,000 | $116,667 | $2,800,000 |
| Health-Related Benefits | $39,216 | — | $39,216 |
| Salary Multiple Payout | $2,093,000 | — | — |
| Bonus or Revenue One-time Payout | $613,931 | — | — |
| Net Cash Value of Options | $107,500 | — | — |
| Total | $5,653,647 | $116,667 | $2,839,216 |
Board Governance
- Roles: CEO and Chairman (dual role); Board determined this structure appropriate due to small-cap profile; majority of directors are independent; committees are fully independent .
- Attendance: Board met twice in FY2024; committees met Audit 5x, Compensation 1x, Nominating 1x; 100% attendance across Board and committees .
- Committee Membership (FY2024): Audit Chair Syed K. Kazmi; Compensation Chair Mark Caton; Nominating & Corporate Governance Chair Michael Francis; Committee rosters below .
| Director | Audit | Compensation | Nominating & Corporate Governance |
|---|---|---|---|
| Najeeb Ghauri | — | — | — |
| Mark Caton (I) | Member | Chair | Member |
| Syed K. Kazmi (I) | Chair | Member | Member |
| Michael Francis (I) | Member | Member | Chair |
| Malea Farsai | — | — | — |
- Independence: Caton, Smith, Kazmi determined independent; independence standards disclosed; majority independent Board .
- Director Compensation: CEO and Corporate Counsel (Farsai) not paid director fees; independent directors receive 50% cash / 50% stock; FY2024 fees were $106,000 each for Caton, Kazmi, Francis .
Compensation Committee Analysis and Shareholder Feedback
- Peer group used for benchmarking includes American Software, BSquare, Cass Information Systems, Digital Turbine, Everbridge, Mitek Systems, SPS Commerce; target around mean market range (≈50th percentile); CEO total direct compensation assessed below mean, prompting long-term, performance-based elements .
- Say-on-Pay approval: 91% support at June 13, 2024 AGM; committee continues alignment through revenue and operating income metrics; prohibition on option repricing without shareholder approval .
Related Party Transactions and Compliance
- No related-party transactions above SEC thresholds since July 1, 2023 (other than executive/director compensation) .
- Section 16(a) filings complied for FY2024 .
Risk Indicators & Red Flags
- Generous severance/change-of-control economics: 48 months salary continuation and 2.99x salary CIC multiple plus revenue/bonus kicker; potential pay-for-performance dilution risk if payouts triggered without sustained value creation .
- Anti-repricing safeguards: plan prohibits option repricing without shareholder approval (mitigates governance risk) .
- Hedging/pledging: prohibited by policy (positive alignment); no pledges disclosed .
- Clawback policy: Dodd-Frank compliance noted, but specific clawback terms not disclosed (oversight gap) .
- Equity overhang potential: 2025 Plan reserves 1,100,000 shares for awards; monitor dilution if utilized extensively .
Compensation Structure vs Performance Metrics
- CEO bonus explicitly tied to net revenue increases (baseline defined at highest annual revenue from FY2024 onward) and operating margin thresholds, with graduated payouts; settlement is partly stock to align interests .
- Long-term incentives available under 2025 Plan include PSUs/RSUs/options with broad performance criteria (e.g., revenue, EBIT, EPS, TSR), allowing future alignment if granted; change-in-control may accelerate vesting at Committee discretion .
Vesting Schedules and Insider Selling Pressure
- As of June 30, 2024: CEO held 50,000 options at $2.15 expiring January 1, 2025 (near-term expiry); no unvested stock awards outstanding; bonuses paid partly in stock with a 3-month sale restriction on newly issued shares (reduces immediate selling pressure) .
- No recent Form 4 transactions found in the document catalog (monitor ongoing filings separately) [ListDocuments result: 0 for type 4].
Employment Contracts, Severance, and Change-of-Control Economics
- See Employment Terms and Potential Payments tables above; agreements include non-compete/non-solicit/confidentiality, Good Reason/Cause definitions, immediate vesting of equity upon certain terminations, and tax-equivalency payments if benefits cannot be continued (gross-up feature for benefit substitution) .
Track Record, Value Creation, and Execution Risk
- Strategic wins include multi-country deployments, significant APAC and Europe contracts, a $12m China deployment, and a $16m five-year U.S. retail platform implementation for a German automaker; continued momentum in AI-first transformation via Transcend Platform and AI Labs .
- Execution risks include scaling AI initiatives, managing global delivery centers, and maintaining profitability while investing in sales/marketing and product innovation .
Board Service History and Dual-Role Implications
- Ghauri serves as CEO and Chairman since 2006; Board asserts combined role supports efficient communication and decision-making; independence maintained via majority-independent Board and fully independent committees; however, dual role can raise concerns around board independence and CEO oversight; no Lead Independent Director disclosed .
Director Compensation (for Ghauri)
- Not paid board fees; compensated solely via executive employment agreement .
Compensation Peer Group & Targets
- Peer group listed; committee aims for mean market range (approx. 50th percentile) and adjusts long-term incentives to close gaps in total direct compensation .
Say‑on‑Pay & Shareholder Feedback
- 91% approval; shareholder engagement led by CEO/CFO and IR; investors support alignment of compensation with financial performance (license fees, recurring revenues, U.S. expansion) .
Expertise & Qualifications
- Extensive global leadership in technology and finance; recognized for industry and philanthropic contributions; Board notes his ability to set performance objectives and global operational logistics expertise .
Investment Implications
- Alignment: Bonus design directly ties pay to revenue growth and operating margins; stock settlement and sale restrictions improve short-term alignment; hedging/pledging prohibited (positive) .
- Governance risk: Combined CEO/Chair role necessitates strong independent committees; majority-independent Board partially mitigates, but lack of disclosed Lead Independent Director may concern some investors .
- Retention risk: Robust severance/CIC terms reduce departure risk but elevate potential pay obligations; monitor dilution risk from the 1.1m‑share 2025 Plan if large grants are used to drive retention .
- Trading signals: No recent insider Form 4s in catalog; options were near expiration; watch for stock-settled bonus issuance timing and any equity grants under 2025 Plan as indicators of confidence or potential supply overhang .