Patrick Lorton
Executive Vice President and Chief Operating Officer, Software; Chief Technology Officer at Schrodinger
Executive
About Patrick Lorton
Patrick Lorton (age 41) is Executive Vice President and Chief Operating Officer, Software (since Jan 2024) and EVP, Chief Technology Officer (since Mar 2021). He has been with Schrödinger for 15+ years, previously serving in engineering leadership roles; he holds a B.S. in Computer Science and B.A. in Mathematics and Chemistry from Indiana University Bloomington . Company performance highlights relevant to his remit include 2024 software revenue of $180.4M (+13% YoY) and total revenue of $207.5M, alongside strong customer ACV growth; 2024 TSR (value of $100 investment) was 60.43, reflecting stock underperformance versus 2023 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Schrödinger, Inc. | EVP & COO, Software | Jan 2024–present | Compensation committee recognized “critical role in growing our software business” (additional 2024 grants) . |
| Schrödinger, Inc. | EVP & CTO | Mar 2021–present | Technology leadership of software platform . |
| Schrödinger, Inc. | SVP & CTO | Apr 2017–Mar 2021 | Led engineering and product development . |
| Schrödinger, Inc. | VP of Engineering | Jan 2016–Apr 2017 | Scaled engineering organization . |
| Schrödinger, Inc. | Director of Software Engineering | Jan 2015–Jan 2016 | Led software delivery teams . |
| Schrödinger, Inc. | Associate Director of Software Engineering | Dec 2012–Jan 2015 | Managed engineering projects . |
| Schrödinger, Inc. | Project Leader | Jan 2011–Dec 2012 | Delivered core software initiatives . |
| Schrödinger, Inc. | Scientific Developer | Sep 2006–Dec 2012 | Early technical contributor . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Indiana University Bloomington | Chemistry Research Assistant | Dec 2005–Sep 2006 | Academic research foundation . |
| Indiana University Bloomington | Computer Science Research Assistant | Aug 2004–Jul 2006 | Computational research skills . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Base Salary ($) | $370,000 | $410,000 | $460,020 (12.2% increase) | $500,000 |
| Target Bonus (% of Base) | — | — | 50% | 50% |
| Actual Bonus Paid ($) | $142,080 | $147,600 | $264,512 (115% of target) | — |
Performance Compensation
Annual Performance-Based Cash Incentive (Corporate Scorecard, 2024)
| Corporate Goal | Target Weight | Stretch Weight | Achievement | Weighted Performance |
|---|---|---|---|---|
| Software revenue growth vs 2023 | 50.0% | 8.0% | 100.0% | 50.0% |
| Drug discovery revenue | 3.0% | N/A | Below target | — |
| Reduce annual increase in operating expenses | 5.0% | 5.0% | 100.0% target and stretch | 10.0% |
| Generate data supporting SGR‑1505 and SGR‑2921 | 24.0% | N/A | 112.5% | 27.0% |
| Initiate Phase 1 for SGR‑3515 | 9.0% | N/A | 100.0% | 9.0% |
| Early program development goals | 4.0% | 2.0% | 100.0% | 4.0% |
| External business initiatives | 5.0% | 10.0% | 100.0% target and stretch | 15.0% |
| Total Achievement | 100% target; 25% stretch | — | 115% overall | — |
Result: Lorton’s cash incentive paid 115% of target for 2024 .
Equity Incentives Granted
| Year | Award Type | Quantity | Exercise Price | Vesting | Performance Metric Design |
|---|---|---|---|---|---|
| 2024 | Stock Options | 60,000 (3/4/24) | $25.24 | 25% on 3/4/2025; monthly thereafter to 3/4/2028 | Time-based |
| 2024 | Stock Options | 30,000 (3/21/24) | $27.51 | 25% on 3/21/2025; monthly thereafter to 3/21/2028 | Time-based |
| 2024 | PRSUs | 10,000 (target) (3/4/24) | N/A | Vests after measurement ending 12/31/2025, certification post FY2026 10‑K | Evenly weighted software, therapeutics group, operating metrics; threshold 50%, max 150% |
| 2024 | PRSUs | 5,000 (target) (3/21/24) | N/A | Same as above | Same design |
| 2025 | Stock Options | 50,000 (3/3/25) | $21.24 | 25% on 3/3/2026; monthly thereafter | Time-based |
| 2025 | RSUs | 12,500 (3/3/25) | N/A | Equal annual installments over 4 years | Time-based |
| 2025 | PRSUs | 12,500 (target) (3/3/25) | N/A | Measurement ending 12/31/2026; certification post FY2027 10‑K | Evenly weighted software, therapeutics group, operating metrics; 50%–150% payout curve |
PRSUs – Payout Status
| Grant | Metric | Weighting | Target | Actual | Payout | Vesting Timing |
|---|---|---|---|---|---|---|
| 2024 PRSUs (15,000 target total) | Software performance | 33.3% | Company-set | Not yet certified (measurement ends 12/31/2025) | Not yet certified | After FY2026 10‑K |
| 2024 PRSUs | Therapeutics group performance | 33.3% | Company-set | Not yet certified | Not yet certified | After FY2026 10‑K |
| 2024 PRSUs | Operating performance | 33.3% | Company-set | Not yet certified | Not yet certified | After FY2026 10‑K |
| 2025 PRSUs (12,500 target) | Same metrics | 33.3% | Company-set | Not yet certified (measurement ends 12/31/2026) | Not yet certified | After FY2027 10‑K |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 314,877 shares (36,991 common shares held directly; 277,886 options exercisable within 60 days of 4/1/2025) . |
| Ownership as % of outstanding | Less than 1% . |
| Unvested RSUs (12/31/2024) | 6,128 shares; market value $118,209 (at $19.29) . |
| Unvested PRSUs (12/31/2024) | Threshold counts shown; target totals 15,000 across 2024 grants; measurement ongoing . |
| In-the-money vs underwater options (12/31/2024) | $17.00 strikes are in-the-money at $19.29; strikes above $19.29 (e.g., $23.29, $25.24, $27.51, $27.76, $102.48) underwater at year-end . |
| Stock ownership guidelines | Executives must hold 2.0x base salary; compliance measured annually; as of 4/21/2025 Lorton meets requirement . |
| Hedging/pledging | Hedging prohibited; pledging generally prohibited; no pledges reported for Lorton (only Dr. Friesner has an approved pledge) . |
| Insider plan (selling pressure) | Adopted Rule 10b5-1 plan on May 21, 2025 for option exercises and sales up to 50,000 shares; plan runs until Aug 15, 2026 . |
Employment Terms
- Employment agreement dated Sep 11, 2006; at-will; either party may terminate at any time with 30 days’ notice; if company terminates immediately, 30 days salary and benefits continue .
- Salary may be adjusted at company discretion; current base salary $500,000 (2025) .
- Covenants: assignment of inventions; confidentiality (indefinite); non-solicitation for 1 year post-employment; non-compete applies during employment (no post-employment non-compete) .
- Severance & change-of-control (double-trigger): under Severance Plan, if terminated without cause prior to or >12 months after change in control, 9 months base salary + up to 12 months COBRA; if terminated within 12 months post-CIC or resigns for good reason, lump sum equal to 100% of base salary + 100% of target bonus, up to 12 months COBRA; time-based equity accelerates upon CIC termination; no tax gross-ups .
- Illustrative CIC/termination values (as of 12/31/2024): total $827,767 for CIC+termination (salary, bonus, benefits, and accelerated time-based equity value), $364,543 for non-CIC termination without cause; market value calculations use $19.29/share and options above that assumed with no intrinsic value .
- Clawback policy adopted Oct 2, 2023 covering erroneously awarded incentive-based compensation, with expanded recovery for intentional misconduct or fraud .
Performance & Track Record
- 2024 highlights include software revenue of $180.4M (+13% YoY), total revenue of $207.5M, Novartis multi-target collaboration ($150M upfront and up to $2.272B in milestones plus royalties), expanded collaborations, and product launches (e.g., LiveDesign Biologics) .
- Pay-versus-performance: 2024 TSR value of $100 was 60.43; total revenue identified as the most important financial performance measure linking compensation actually paid to performance .
Compensation Structure Analysis
- Year-over-year cash vs equity: 2024 salary increased to $460,020 (12.2%); equity delivered via options and PRSUs; 2025 added RSUs for all executives (broader mix) .
- Shift toward PRSUs: PRSUs introduced to all executives in 2024 and continued in 2025, aligning payouts to performance; CEO options include premium-priced tranches, reinforcing pay-for-performance philosophy .
- At-risk pay: Significant equity component; PRSU caps at 150% of target; corporate bonus paid 115% of target in 2024 given scorecard results .
- No egregious provisions: No option repricing without shareholder approval; no tax gross-ups; clawback policy in place; hedging banned .
Compensation Peer Group & Say‑on‑Pay
- Peer group spans life sciences and software; compensation generally targeted near the 50th percentile; Aon engaged as independent consultant; no conflicts identified .
- Say‑on‑pay support: >98% approval at 2024 annual meeting, with investor feedback favoring continued use of performance‑based equity .
Risk Indicators & Red Flags
- Insider trading arrangements: 10b5‑1 plan adoption (up to 50,000 shares) indicates potential programmed selling; monitor execution cadence relative to vesting/exercise events .
- Hedging/pledging: Prohibited; no pledges by Lorton (reduces alignment risk) .
- CFO separation disclosed in 2025 with standard severance; not directly related to Lorton but relevant to senior team stability monitoring .
Investment Implications
- Strong alignment: PRSUs tied to software and operating metrics, ownership guideline compliance (≥2x salary), anti‑hedging, and clawback reduce agency risk .
- Retention: Severance plan offers moderate protection; absence of a post‑employment non‑compete and presence of a Rule 10b5‑1 plan suggest normal liquidity management; watch vesting cliffs (2025–2028) for options/RSUs and PRSU certifications in 2026/2027 .
- Trading signals: Underwater option tranches at 12/31/2024 may reduce near‑term realized equity value; in‑the‑money $17.00 options provide exercisable value; PRSU outcomes (software and operating metrics) will be key catalysts for realized pay and potential insider sales .
- Execution risk vs value creation: Company’s software momentum (13% YoY) and enterprise wins support the software mandate under Lorton’s leadership; TSR volatility underscores importance of delivery against PRSU metrics and sustained ACV growth to align realized compensation with shareholder outcomes .