Dr. Denis Garagić
About Dr. Denis Garagić
Dr. Denis Garagić is Chief Technology Officer (CTO) of Palladyne AI Corp., serving in this role since January 2022 and co‑founder of the company’s AI/ML software business. He holds a Ph.D. in Mechanical Engineering (Ohio State University) and B.S./M.S. in Mechanical Engineering and Technical Cybernetics (Czech Technical University in Prague) . As of March 31, 2025, he is 56 years old; the executive team roster confirms his age and role . Under his tenure as CTO during the company’s pivot to AI/ML, Q3 FY2025 revenue was $0.86M (vs. $0.87M in Q3 FY2024), with nine‑month FY2025 revenue of $3.59M (vs. $7.03M in 9M FY2024); net income for 9M FY2025 was $11.53M (benefiting from warrant liability gains), reflecting a transition period in commercialization and capital structure effects . The company identifies retention of Dr. Garagić as critical to its AI/ML roadmap and does not carry key‑person insurance, elevating key‑person risk .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Palladyne AI (formerly Sarcos) | Chief Scientist, Advanced Systems & AI; promoted to CTO | Chief Scientist until Jan 2022; CTO since Jan 2022 | Co‑founded AI/ML software business; leadership of foundational AI/ML technology development |
| Sarcos (pre‑Business Combination) | Chief Scientist, Advanced Systems & AI | Jun 2020–Business Combination | Led AI/ML programs through public listing transition |
| BAE Systems, FAST Labs | Chief Scientist | Apr 2007–May 2020 | Guided cognitive/anticipatory intelligence solutions for DoD/IC; led DARPA/AFRL programs |
External Roles
No public company directorships or external board roles for Dr. Garagić are disclosed in the 2025 proxy. He is noted as a regular speaker at international AI/ML conferences (no enumerated positions) .
Fixed Compensation
| Metric | FY2023 | FY2024 |
|---|---|---|
| Base Salary (actual paid) | $332,856 | $412,174 |
| Target Annual Bonus % | 50% of base salary (per employment agreement) | 50% of base salary (per employment agreement) |
| Actual Bonus Paid | $118,000 (discretionary) | $364,417 (Retention $318,750; Discretionary $42,500; Patent $3,167) |
Notes:
- Initial base salary in employment agreement: $337,050/year; target bonus 50% of base salary .
Performance Compensation
Annual/Discretionary Cash Incentives (FY2024)
| Metric/Type | Target | Actual Payout | Vesting/Timing | Notes |
|---|---|---|---|---|
| Retention bonus | N/A | $318,750 | Cash | Retention‑focused; not tied to disclosed financial KPIs |
| Discretionary bonus | N/A | $42,500 | Cash | Committee discretion; not formulaic |
| Patent bonus | N/A | $3,167 | Cash | Patent‑linked recognition payment |
Equity Awards – Outstanding (as of 12/31/2024)
| Grant Type | Grant Date | Unvested/Outstanding | Exercise Price | Expiration | Vesting Terms |
|---|---|---|---|---|---|
| Stock Options | 5/29/2020 | 21,372 unexercised | $1.59 | 5/29/2030 | Repriced 4/17/2024; vesting restarted: 25% on 3/29/2025, then 1/12 quarterly |
| Stock Options | 5/20/2022 | 14,204 unexercised | $1.59 | 5/20/2032 | Same restarted schedule as above |
| RSUs | 5/20/2022 | 3,367 unvested | — | — | 25% vested 5/20/2023; 1/12 quarterly thereafter |
| Stock Options | 3/29/2023 | 68,486 unexercised | $1.59 | 3/29/2033 | 25% on 3/29/2025; 1/12 quarterly thereafter |
| RSUs | 3/29/2023 | 25,104 unvested | — | — | 25% vested 3/29/2024; 1/12 quarterly thereafter |
| RSUs (Retention) | 2/23/2024 | 500,000 unvested | — | — | 25% vested 2/23/2025; 1/12 quarterly thereafter |
| Stock Options | 4/24/2024 | 40,000 unexercised | $1.51 | 4/24/2034 | Performance‑eligible 2024 option tranche canceled post‑year‑end for not meeting criteria |
Option repricing/redesign: On April 17, 2024, options for seven senior employees (including Dr. Garagić) were repriced to $1.59 and vesting was restarted, creating $30,848 incremental fair value for his awards; company‑wide incremental fair value ~$0.2M recognized/amortized .
New Performance‑Price RSU Program (Approved by Board 11/15/2025; stockholder approval required)
| Feature | Details |
|---|---|
| Award size for Dr. Garagić | 447,094 RSUs (stand‑alone award; null if shareholders do not approve) |
| Price hurdles (10 tranches; 60 consecutive trading‑day sustain) | $20, $25, $30, $35, $40, $45, $50, $55, $60, $65 |
| Time‑based vesting after price goal met | For tranches: generally 25% at attainment then 25% at 3/6/12 months; tranche 1 uses 6/12/18 months; tranche 9 uses 33.3%/33.3%/33.4% at 0/3/6 months |
| Payout formula | Units vest eligible based on increase in VWAP from grant to vest date per formula in 8‑K |
| Severance linkage | If eligible for severance under employment agreement (without cause/for good reason), vesting occurs for tranches whose price goals were achieved pre‑termination |
| Change‑in‑control | Goals measured at last trading day’s close pre‑closing; tranches meeting goals vest; unmet tranches forfeited |
| Other terms | Section 409A compliance; forfeiture provisions; change‑in‑control treatment/assumption mechanics |
Equity Ownership & Alignment
| Ownership Detail (as of 3/31/2025) | Amount | Notes |
|---|---|---|
| Total beneficial ownership | 161,319 shares (<1%) | Below 1% of 35,712,516 outstanding shares |
| Directly owned common | 94,202 | |
| RSUs vesting within 60 days | 34,600 | Included in beneficial ownership per SEC rules |
| Options exercisable within 60 days | 32,517 | Included in beneficial ownership |
| Shares pledged/hedged | Not disclosed | No pledging disclosure identified in proxy |
Alignment observations:
- Ownership is modest in percentage terms but layered with multi‑year RSUs and options that vest quarterly after 25% cliffs, creating recurring vest events and potential incremental selling windows for tax/liquidity .
- The 2025 performance‑price RSUs explicitly link value to sustained share price levels, strengthening pay‑for‑performance but introducing step‑function vest events that could concentrate selling pressure upon tranche attainment .
Employment Terms
| Term | Details |
|---|---|
| Agreement dates | Employment agreement entered June 2023; amended March 2024; at‑will |
| Base salary (initial) | $337,050/year |
| Target bonus | 50% of base salary |
| Non‑compete/IP | Compliance with Employee IP and Non‑Compete Agreement is a condition to certain vesting/severance outcomes |
| Severance (non‑CIC) | 6 months’ salary continuation; up to 6 months COBRA premium reimbursement or taxable equivalent; release and compliance required |
| Severance (CIC window: 3 months pre‑/12 months post‑CIC) | Lump sum 6 months’ base salary; lump sum 100% of target bonus; up to 6 months COBRA; 100% acceleration of all equity awards with performance awards deemed at target unless otherwise specified |
| 280G excise tax | Best‑net cutback; no gross‑up |
| Equity acceleration outside CIC upon qualifying severance | For the 2025 performance‑price RSUs, tranches whose price goals were achieved pre‑termination vest notwithstanding service requirement |
| 409A | RSU agreement structured to comply with or be exempt from Section 409A; specified employee 6‑month delay rules may apply |
Compensation Structure Analysis
- Mix shift and retention tilt: 2024 cash and equity rose materially versus 2023 (salary $412,174 vs. $332,856; cash bonus $364,417 vs. $118,000; stock awards $295,301 vs. $125,000), with a large retention grant and discretionary components reflecting pivot‑period retention priorities rather than formulaic performance plans .
- Option repricing (red flag mitigant with restart): April 17, 2024 repricing to $1.59 and vesting restarts for seven senior employees including Dr. Garagić reset incentives but can be shareholder‑sensitive; incremental fair value recognized was modest at the individual level ($30,848) and ~$0.2M company‑wide .
- Performance options canceled: 2024 performance options linked to customer acquisitions did not meet criteria and were canceled—yet cash bonuses were still paid (retention/discretionary/patent), indicating limited direct linkage between annual cash outcomes and quantitative operating metrics for 2024 .
- New performance‑price RSUs: 2025 design ties vesting eligibility to sustained stock‑price hurdles with time‑based vesting after attainment, aligning value with long‑term TSR but also creating potential post‑attainment vesting overhang; stockholder approval is an additional governance check .
Performance & Track Record
- Company operating context under his CTO tenure: Q3 FY2025 revenue $0.86M (vs. $0.87M Q3 FY2024) and nine‑month revenue $3.59M (vs. $7.03M 9M FY2024); 9M FY2025 net income $11.53M primarily from non‑operating warrant liability gains as the company advances commercialization of AI/ML platforms .
- Patent/technology maturation: Company highlighted issuance of a core autonomy patent and defense‑sector alignment; not attributed solely to Dr. Garagić but relevant to his domain .
- Key‑person and retention risk: Company explicitly flags high dependence on Dr. Garagić and lack of key‑person insurance, implying elevated retention premium and execution sensitivity .
Equity Ownership & Outstanding Awards (Detail)
| Category | Detail |
|---|---|
| Beneficial ownership breakdown | 94,202 common; 34,600 RSUs vesting within 60 days; 32,517 options exercisable within 60 days; total 161,319 shares (<1%) |
| Plan overhang context | As of 12/31/2024: 3,479,238 securities to be issued on exercise of options/warrants/rights; weighted‑avg option exercise price $1.88; 3,281,597 shares available for future issuance across plans |
Investment Implications
- Alignment and upside leverage: 2025 performance‑price RSUs for Dr. Garagić (447,094 units) hard‑wire pay to sustained share‑price appreciation with a multi‑tranche structure, improving TSR alignment versus 2024’s retention/discretionary bias; requires stockholder approval, enhancing governance .
- Retention risk is material: Explicit disclosure of dependence on the CTO and absence of key‑person insurance suggest elevated retention costs and execution risk; equity‑heavy packages and severance/CIC protections help mitigate voluntary attrition risk .
- Governance watch‑items: 2024 option repricing and vesting restart (including already‑vested options) are shareholder‑sensitive; however, incremental fair value was limited and the restart defers liquidity via new vesting, partially offsetting concerns .
- Near‑term selling pressure dynamics: Quarterly RSU vesting and time‑phased vesting following price‑goal attainment can create predictable liquidity windows; monitor Form 4 filings and vest calendars once price tranches are met .
- Pay‑for‑performance trajectory: 2024 cash bonuses were discretionary/retention‑driven while performance options were canceled, but the 2025 design introduces more explicit market‑based hurdles; investors should track stock‑price sustainment versus tranche thresholds and any severance‑related vesting if leadership changes .
Data sources: 2025 DEF 14A (filed Apr 22, 2025) for biography, compensation tables, ownership, and employment terms ; 8‑K filings (Nov 17, 2025) for performance‑price RSU awards and award agreements ; Q3 FY2025 financials (Nov 12, 2025) for operational context ; risk factor disclosures highlighting key‑person risk .