David Kostman
About David Kostman
David Kostman (age 60) is Chief Executive Officer and a Class III Director of Outbrain Inc. (ticker: OB), serving as Co‑CEO from October 2017 through March 2024 and sole CEO since April 2024; he has been a director since July 2014. He holds a B.A. in Law from Tel Aviv University and an M.B.A. from INSEAD . OB’s executive incentive design ties annual bonuses primarily to Ex‑TAC Gross Profit and Adjusted EBITDA, with a 2024 company performance score of 86.6%, and long-term PSUs tied to stock-price hurdles (e.g., $6.20 target achieved in Q1 2025) to align pay with performance . In February 2025, OB closed the Teads acquisition, after which the Compensation Committee approved a one-time $1,000,000 discretionary bonus for Kostman recognizing deal execution and financing .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Lehman Brothers | Managing Director, Global Internet Group | 1994–2000; 2006–2008 | Led Internet investment banking coverage; senior capital markets and M&A execution |
| Verticalnet (Nasdaq: VERT) | President, International Division; Chief Operating Officer | 2000–2002 | Operational leadership at a Nasdaq-listed B2B marketplace company |
| Delta Galil USA (subsidiary of Delta Galil Industries) | Chief Operating Officer; Chief Executive Officer | 2003–2006 | Turnaround/execution leadership in branded apparel operations |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| NICE Ltd. (Nasdaq: NICE) | Director; Chairman of the Board | Director since 2001 (except Jun 2007–Jul 2008); Chairman since Feb 2013 | Ongoing public company board chair responsibilities |
| Unity Software Inc. (NYSE: U) | Director | Since Nov 2022; resignation effective Jun 9, 2025 | Joined post ironSource acquisition; resignation tendered |
| American Friends of NATAL | Board member | Not specified | Non-profit governance role (PTSD resiliency) |
| Retalix Ltd. (Nasdaq: RTLX) | Director | Prior service | Former public company board tenure |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $430,000 | $430,000 |
| Target Bonus (% of salary) | 80% | 85% |
| Non-Equity Incentive Paid ($) | $255,936 | $326,289 |
Notes:
- Bonus design: For 2024, CEO target bonus was 85% of base salary, weighted 80% to financial metrics (Ex‑TAC Gross Profit and Adjusted EBITDA) and 20% to personal qualitative metrics; company performance score was 86.6% .
- Discretionary event bonus: Separate one-time $1,000,000 cash bonus approved in April 2025 for Teads deal execution and financing .
Performance Compensation
Annual bonus metrics and outcome
| Item | 2023 | 2024 |
|---|---|---|
| Financial metrics used | Ex‑TAC Gross Profit; Adjusted EBITDA | Ex‑TAC Gross Profit; Adjusted EBITDA |
| Company performance score (%) | 68.0% | 86.6% |
| CEO target bonus structure | 80% financial / 20% qualitative | 80% financial / 20% qualitative |
| CEO bonus actually paid ($) | $255,936 | $326,289 |
Equity awards and vesting
| Grant Date | Type | Originally Granted (#) | Unvested as of 12/31/2024 (#) | Vesting schedule | Performance target status |
|---|---|---|---|---|---|
| 04/19/2022 | RSUs | 75,000 | 23,437 | Quarterly over 16 quarters | N/A |
| 06/05/2023 | RSUs | 112,500 | 63,281 | Quarterly over 16 quarters | N/A |
| 06/04/2024 | RSUs | 200,000 | 150,000 | Quarterly over 16 quarters | N/A |
| 06/04/2024 | PSUs (market-based) | 800,000 | 800,000 | Quarterly over 12 quarters; requires stock-price hurdles by 12/31/2026 | $6.20 price target achieved in Q1 2025; portion released |
Additional details:
- PSUs vest only when stock-price targets are met for 20 of 30 consecutive trading days and service conditions are satisfied; unmet targets at change-in-control are forfeited if acquisition price is below the hurdle .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership (shares) | 701,730 (includes 481,142 common + 220,588 options exercisable within 60 days) |
| Ownership as % of outstanding | 0.74% (based on 94,293,190 shares outstanding 3/31/2025) |
| Options (exercisable) | 220,588 at $10.95 strike, expiring 12/24/2030 |
| Stock price at 12/31/2024 | $7.18 (closing price) |
| Option moneyness (12/31/2024) | Strike $10.95 vs. price $7.18 (out-of-the-money) |
| Unvested RSUs (as of 12/31/2024) | 23,437 (2022 grant); 63,281 (2023 grant); 150,000 (2024 grant) |
| Unvested PSUs (as of 12/31/2024) | 800,000 (market-based) |
| Hedging/shorting restrictions | Prohibited under Insider Trading Policy (no hedging, short sales, options/derivatives) |
| Pledged shares | None disclosed for Kostman; pledge disclosed for Chair Yaron Galai (2,200,000 shares) |
Employment Terms
| Provision | Non‑CIC Termination | Change‑in‑Control (CIC) + Qualifying Termination |
|---|---|---|
| Base salary (contract) | $400,000 (subject to increase) | $400,000 (subject to increase) |
| Target bonus (contract) | Not less than 80% of base salary | Not less than 80% of base salary |
| Cash severance | 0.5x base salary | 1.0x base salary + 1.0x target bonus |
| Pro‑rata bonus for year of termination | Yes (pro‑rated to days worked; paid ~60 days post‑termination) | Yes (same formula) |
| COBRA subsidy | 12 months | 18 months |
| Equity vesting/acceleration | RSUs/PSUs subject to limited post‑termination vesting (six‑month window for RSUs & certain PSUs scheduled within six months) | Full vesting of all equity awards; market‑based PSUs vest automatically if acquisition price meets/exceeds applicable targets; restriction limiting to pre‑2021 awards removed Aug 2023 |
| Option exercise extension | Vested pre‑2021 options exercisable up to 24 months after termination (varies by scenario) | |
| Notice period | Six months’ notice by either party for termination without cause/without good reason | |
| Restrictive covenants | 12‑month non‑compete; 12‑month non‑solicit (employees/customers); confidentiality | |
| Clawback policy | Company-wide clawback adopted Nov 2023 per SEC/Nasdaq standards (mandatory recovery on restatements; discretionary recovery for misconduct) |
Board Governance
- Role and service: CEO and Class III Director; not a member of Audit, Compensation, or Nominating & Corporate Governance Committees .
- Independence: Board determined eight directors are independent; Kostman is management and not classified as independent .
- Board leadership: Chair (Co‑Founder Yaron Galai) is not independent; Lead Independent Director is Shlomo Dovrat (appointed Feb 2024), separating Chair and CEO roles to balance oversight .
- Board meetings and attendance: Board met 15 times in 2024; all directors then serving attended at least 75% of Board and committee meetings; independent directors hold periodic executive sessions .
Performance & Track Record Highlights
- Major transaction: OB completed Teads acquisition on Feb 3, 2025 for $625.0M in cash and 43.75M shares, funded via a $625.0M bridge facility refinanced with a $637.5M private notes offering; CFO and COO also received discretionary bonuses alongside the CEO for deal execution .
- Board refresh tied to transaction: Altice Teads gained two Board designees (Dexter Goei, Mark Mullen) per the Stockholders Agreement, appointed Mar 12, 2025 .
Equity Incentives Structure Analysis
- Mix shift: Since 2021, annual grants have generally shifted from options to RSUs, lowering risk and increasing certainty of value for executives; market-based PSUs were introduced in 2024 to add stock-performance alignment .
- PSU design: Requires sustained stock-price levels over specified windows; a $6.20 hurdle was achieved in Q1 2025, releasing the vested portion, which can create periodic settlement-related selling pressure when hurdles are met .
- Options position: Legacy options are currently out-of-the-money at 12/31/2024 (strike $10.95 vs price $7.18), reducing near-term exercise incentives .
Equity Ownership & Director Compensation Context
- Beneficial ownership: Kostman beneficially owns 701,730 shares (including options), 0.74% of outstanding; no pledging disclosed for him .
- Non‑employee director pay program (context): Annual cash retainer $40,000 (Chair: $80,000), Audit/Comp/Nominating committee retainers, and annual RSU grants ($175,000, capped at 20,000 RSUs) that vest quarterly over three years; new director RSUs $250,000, capped at 30,000 RSUs . 2024 director compensation table is disclosed for non‑employee directors; employee directors (Kostman) are covered under executive compensation .
Risk Indicators & Red Flags
- CIC acceleration broadened: In Aug 2023 the restriction limiting CIC full vesting to pre‑2021 awards was removed for the CEO, increasing potential transaction-related windfall risk, albeit still double-triggered by termination and CIC timing .
- Hedging policy: Prohibits hedging/offsetting transactions, short sales, and derivatives trading in company securities, reducing misalignment risks .
- Pledging: Pledge observed for Board Chair Yaron Galai (2.2M shares), not for Kostman—relevant to governance but not a direct CEO alignment issue .
- Emerging Growth Company: OB utilizes reduced compensation disclosures and has no required say‑on‑pay advisory vote while EGC status persists (expected to end by Dec 31, 2025), which can limit shareholder feedback on pay .
Investment Implications
- Strong pay-for-performance linkage via 80/20 bonus weighting and market-based PSUs ties CEO compensation to operating performance and stock price; the Q1 2025 PSU release at $6.20 confirms alignment and may drive periodic settlement-related selling pressure when hurdles are achieved .
- Retention is supported by quarterly RSU/PSU vesting schedules and robust CIC protections (cash and full equity acceleration), particularly post-Aug 2023 change; this increases incentives to remain through strategic transactions but raises potential deal-windfall optics .
- Ownership is material but not controlling (0.74%); options are currently out-of-the-money, suggesting equity incentive value is primarily in time-based RSUs and PSUs rather than exercisable options, moderating near-term exercise-driven selling risk .
- Board separation of Chair/CEO and presence of a Lead Independent Director provide governance counterweights to the CEO/director dual role; Altice Teads designees add significant holder oversight post-Teads acquisition .