Ted Karkus
About Ted Karkus
Chairman and Chief Executive Officer of ProPhase Labs since June 2009, age 64 as of the 2024 proxy. MBA, Columbia University (Beta Gamma Sigma honors), BA, Tufts University (magna cum laude). Track record includes turnaround support for ID Biomedical culminating in a $1.4B sale to GSK (2005) and the sale of Cold-EEZE for $50M to Mylan (2017). Pay-versus-performance disclosures show negative net income in 2023 alongside a low cumulative TSR versus prior years, indicating mixed recent performance.
| Metric | 2021 | 2022 | 2023 |
|---|---|---|---|
| Net Income ($USD thousands) | 6,273 | 18,463 | (16,782) |
| Value of $100 Investment (TSR) | $78.28 | $157.14 | $44.34 |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| ID Biomedical | Turnaround/strategic support | Not disclosed | Contributed to turnaround; company sold to GSK for $1.4B |
| Fahnestock & Co. | Senior Vice President, Director of Institutional Equities | 2 years | Built institutional investor network |
| S.G. Warburg | Institutional equity salesperson | 4 years | Developed large institutional client base |
External Roles
No current public-company directorships or external committee roles disclosed.
Fixed Compensation
| Component ($USD) | 2022 | 2023 |
|---|---|---|
| Base Salary | $675,000 | $675,000 |
| Annual Bonus (Discretionary) | $200,000 (awarded Mar-2022 for 2021 contributions) | $200,000 (awarded Mar-2023 for 2022 contributions) |
| Other Compensation (vehicle allowance + 401k match) | $27,200 | $27,200 |
| Total | $902,200 | $3,367,200 |
Compensation program emphasizes base salary stability and discretionary annual bonuses; there are no pre-established bonus targets and the committee assesses performance annually.
Performance Compensation
| Equity Awards | Grant Date | Shares/Options | Strike | Expiration | Vesting |
|---|---|---|---|---|---|
| Stock Options | Apr 4, 2023 | 500,000 | $9.00 | Apr 4, 2030 | 5 equal annual installments starting Apr 4, 2023 (100,000/yr), subject to continued service |
| Annual Incentive Detail | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| CEO annual bonus (discretionary) | N/A | N/A | Performance assessed post year-end | $200,000 (2023 bonus for 2022; 2022 bonus for 2021) | Immediate |
Compensation philosophy: committee uses equity to align long-term value; integrated an annual equity grant cadence in 2024 to reduce volatility and drive retention. No fixed ownership targets; exercise prices set at FMV on grant date.
Equity Ownership & Alignment
| Ownership Metric | 2024 Snapshot | 2025 Snapshot |
|---|---|---|
| Shares Beneficially Owned | 3,215,329 (includes 138,600 held by son) | 3,215,329 (includes 138,600 held by son) |
| Percent of Outstanding | 16.7% (based on 19,078,529 shares) | 7.6% (based on 41,879,017 shares) |
| Options – Exercisable | 100,000 as of 12/31/2023 | Not updated |
| Options – Unexercisable | 400,000 as of 12/31/2023 | Not updated |
| Ownership Guidelines | No set target level for options/stock ownership | No change disclosed |
| Pledging/Hedging | Policy prohibits short sales, margin purchases, and derivatives other than company-granted options; hedging discouraged |
Note: No pledged shares disclosed; insider trading windows and restrictions apply.
Employment Terms
- Agreement: Amended & Restated CEO Employment Agreement approved Feb 16, 2018; effective Feb 23, 2018 (subject to shareholder approval). Base salary $675,000; discretionary bonus eligibility and standard executive benefits.
- Severance (non-cause/non-good reason resignation): 2.5x current base salary; 50% lump sum within 5 business days; 50% in 12 monthly installments; full acceleration of unvested equity at termination (subject to terms). COBRA premiums for up to 18 months.
- Change-in-Control: If termination occurs within 18 months post-CIC or in contemplation of CIC (that occurs), one-time cash payment of $2,500,000; full equity acceleration.
- Clawback: If a mandatory restatement due to CEO misconduct reduces formula-based bonuses/shares within prior 3 years, repayment equals diminution net of taxes; neutral net effects across periods result in no clawback.
- Tax Gross-ups: None for excise tax; payments may be reduced to avoid 4999 excise tax if economically beneficial to executive.
Board Governance
- Roles: Combined Chairman and CEO since June 2009; board cites advantages and has not appointed a Lead Independent Director. Independence status: Karkus is not independent.
- Committees: Audit (Hirsch—Chair; Barr; Gleckel); Compensation (Barr—Chair; anticipated McBrier Chairwoman in 2024); Nominating (Gleckel—Chair; Barr; Hirsch). In 2025, Carolina Abenante appointed independent Director and Chair of Compensation; intended to join Audit post-2025 Annual Meeting.
- Board/Committee Activity: Board convened 9 meetings in 2023; all directors attended >75% of meetings; independent directors held 5 executive sessions. Audit Committee met 5 times; Compensation Committee met 3 times; Nominating Committee met once.
- Director Compensation: Non-employee directors receive $35,000 cash retainers plus annual option grants (40,000 shares; strike set at grant date; quarterly vesting). Employee directors (Karkus) receive no fees for board service.
- Say-on-Pay: 2019 frequency set at triennial; 2022 say-on-pay “overwhelmingly approved”; next say-on-pay in 2025.
Compensation Structure Analysis
- Mix shift: 2023 included a large option grant ($2.465M grant-date FV), increasing equity-at-risk versus 2022.
- Bonus framework: Discretionary, with no pre-set targets; indicates higher committee discretion rather than mechanistic pay-for-performance.
- Equity cadence: 2024 adoption of annual grant cadence to align and retain; can moderate volatility impacts and support retention.
- No excise tax gross-up; CIC payout is substantial ($2.5M cash plus full acceleration), a notable change-of-control economics item.
Related Party Transactions
- Family relationship: Jason Karkus (son) served in subsidiary leadership roles; total 2023 compensation included salary ($200,000), bonus ($300,000), vehicle allowance ($7,800), 401(k) match ($20,800), and $150,000 options vesting over four equal installments from grant date; approved by compensation and audit committees.
Equity Ownership & Insider Selling Pressure Indicators
- Vesting calendar: CEO 2023 option grant vests annually through 2027 (100,000 shares per year), creating predictable potential exercise/sale windows subject to trading policy.
- No pledged shares disclosed; hedging/margin/short sales restricted by policy, limiting immediate selling levers and aligning with long-term ownership.
Director Compensation (for directors; Karkus excluded as employee)
| Director | Cash Retainer | Option Awards (Grant-date FV) | Notes |
|---|---|---|---|
| Barr | $35,000 | $188,000 (40,000 options) | Chair, Compensation Committee |
| Gleckel | $35,000 | $188,000 (40,000 options) | Chair, Nominating Committee |
| Hirsch | $35,000 | $188,000 (40,000 options) | Chair, Audit Committee |
Expertise & Qualifications
Financial structuring, operations, and marketing strategy with capital markets experience; turnaround achievements include ID Biomedical sale and Cold-EEZE brand restructuring and sale. Advanced education and honors from Columbia and Tufts.
Say-on-Pay & Shareholder Feedback
Triennial frequency; high approval in 2022; board and compensation committee maintained program structure post-approval.
Investment Implications
- Alignment: High personal stake (7.6% in 2025; 16.7% in 2024) suggests meaningful skin-in-the-game; annual equity vesting supports retention but can create periodic liquidity events.
- Governance risk: Combined CEO/Chair with no Lead Independent Director raises independence concerns; however, committee structure and independent sessions provide some oversight counterbalance.
- Incentive design: Discretionary bonus without explicit targets reduces transparency of pay-for-performance alignment; equity cadence improves retention signaling.
- CIC and severance: Generous CIC cash ($2.5M) plus equity acceleration and severance multiple (2.5x salary) represent notable parachute economics; absence of excise tax gross-up is shareholder-friendly.
- Trading signals: Ongoing Nasdaq minimum bid price compliance risk and potential reverse split authorization may affect equity volatility and perceived value of option awards; board proposing digital asset-related amendments points to strategic shifts that could alter compensation/equity usage patterns.