David R. Folsom
About David R. Folsom
David R. Folsom is President & Chief Executive Officer (since Jan 2020) and a director of Sotherly Hotels Inc. (director since 2011; President since 2011; COO 2006–2019). He is 61 as of the 2025 Annual Meeting, a U.S. Naval Academy graduate with an MBA from Georgetown, a former U.S. Marine Corps officer, and previously an investment banker in BB&T Capital Markets’ Real Estate Securities and Debt Capital Markets groups; he helped take Sotherly public in 2004 . Recent pay-versus-performance disclosure shows a three-year TSR index of $44.56 on a $100 base by 2024 with net income of $1.30M in 2024, $3.94M in 2023, and $32.54M in 2022, indicating pressure on shareholder returns and earnings vs. 2022 levels . Revenues grew from FY2022–FY2024 while EBITDA was roughly stable over that period (see Performance table).
SOHO performance snapshot (FY, USD)
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues | $109,553,906 | $114,748,834 | $119,079,903 |
| EBITDA | $39,779,337* | $37,479,223* | $38,524,368* |
| Net Income | $32,536,521 | $3,941,421 | $1,302,369 |
| TSR Index ($100 start at 12/31/21) | $86.60 | $71.29 | $44.56 |
| *Values retrieved from S&P Global. |
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Sotherly Hotels Inc. | CEO | 2020–present | Leads strategy and operations execution |
| Sotherly Hotels Inc. | President | 2011–present | Oversees strategic plan implementation |
| Sotherly Hotels Inc. | COO | 2006–2019 | Led operations during portfolio development |
| Paragon Real Estate | Vice President | 2005 | Distressed multifamily investing |
| BB&T Capital Markets | Investment Banker | 2001–2005 | 70+ equity/debt/preferred deals; SOHO IPO lead team in 2004 |
| U.S. Marine Corps | Commissioned Officer | Not disclosed | Leadership/operations experience |
| College of William & Mary | Adjunct Professor | 2012 | Hospitality/finance education |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| The Sotherly Foundation | Director | Current (not dated) | Company-affiliated veterans charity |
| Our Town Hospitality, LLC | Director; ~6.21% owner (affiliate) | As of 2025 | Manages all 10 wholly owned hotels; related party arrangements governed by OTH Master Agreement |
Fixed Compensation
Multi-year CEO compensation (as disclosed in Summary Compensation Table):
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $502,711 | $537,595 | $553,723 |
| Cash Bonus ($) | $110,000 | $70,000 (part of total “Bonus” line) | $70,000 (part of total “Bonus” line) |
| Stock Awards ($) | $49,955 | $70,023 (38,000 RS) | Included in “Bonus” line via 57,000 sh at $0.95 = $54,150 |
| “Bonus” Column Total ($) | $110,000 | $130,464 (cash $70k + stock $60,464 equiv) | $124,150 (cash $70k + stock $54,150) |
| All Other Comp ($) | $69,153 | $76,987 | $71,271 |
| Total ($) | $731,818 | $815,069 | $749,144 |
Additional salary decision for 2025: Base salary set at $571,719 (cost-of-living increase) .
Notes:
- Company pays discretionary ESOP allocations; equity awards under 2022 Plan; no stock options granted .
- CEO pay ratio (2024): 2.21:1 ($749,144 CEO vs $338,905 median) .
Performance Compensation
Short-term and long-term incentives and mechanics:
- Cash bonus target: 25%–35% of base salary; Committee can award above/below target considering retention needs and achievement of corporate/personal goals. 2024 CEO cash bonus paid: $70,000 . Metrics/weightings/targets are not specifically disclosed for 2024 .
- RSU/time-based restricted stock:
- 38,000 restricted shares granted 1/23/2023; vest 7,600 shares each March 31, 2023–2027 .
- Committee approved a 57,000-share stock award on 12/23/2024 as a non-cash bonus for 2024; 30,000 shares vested on 12/31/2024 (remainder not specified) .
- No stock options outstanding or granted in 2024 .
Vesting detail (realized in 2024):
| Award | Vesting Date(s) | Shares Vested | Value on Vest ($) |
|---|---|---|---|
| 2023 RS (7,600) | 3/31/2024 | 7,600 | $11,020 (at $1.45) |
| 2024 stock award | 12/31/2024 | 30,000 | $27,942 (at $0.9314) |
Equity Ownership & Alignment
As of September 18, 2025, Folsom beneficially owns 703,086 common shares (3.4% of outstanding 20,490,501), including 501,660 held by the David R. Folsom Revocable Trust and 87,331 ESOP-allocated shares; 15,200 unvested RS under the 2023 grant remain (7,600 vest on 3/31/2026 and 7,600 on 3/31/2027) . No pledging of common shares by any directors or named executive officers; the insider trading policy prohibits hedging/short sales .
Outstanding/unvested equity (year-end 2024 reference):
| Item | Amount |
|---|---|
| Unvested restricted stock at 12/31/2024 | 22,800 sh; $21,236 at $0.9314 |
| Unvested restricted stock at 9/18/2025 | 15,200 sh; vests 3/31/2026 & 3/31/2027 (7,600/yr) |
| Options | None outstanding |
| Shares pledged | None (all directors/NEOs) |
Employment Terms
| Term | Key Provisions |
|---|---|
| Agreement term | Extended through Dec 31, 2027 (amended Jan 12, 2023) . |
| Severance (no cause/Good Reason or upon Change in Control) | Lump sum equal to 3x prior-year salary + actual bonus; immediate vesting of equity; five years of life/health/disability insurance premiums; plus accrued comp/expenses . |
| Change-in-control trigger | “Or if there is a change of control” language indicates single-trigger benefits (i.e., CIC alone triggers benefits) . |
| Non-renewal by company | 1x prior-year salary + actual bonus, paid within 5 days; two years of COBRA premiums . |
| CIC/termination table (as of 12/31/2024 assumption) | Cash $2,004,178; accelerated vest $21,236; other benefits $196,965; total $2,222,379 . |
| Clawback | Company has a compensation recovery policy; no restatements requiring recovery during/after 2024 . |
| Pension/deferred comp | None in 2024 . |
Board Governance
- Board service history: Director since 2011 (current) . Committees are composed entirely of independent directors; as CEO, Folsom does not serve on Board committees .
- Leadership structure: Roles of Chairman (Andrew M. Sims) and CEO (Folsom) are separated; independent directors oversee compensation and governance, and conduct annual performance reviews of the Chairman and CEO .
- Independence: Board determined directors Caldwell, Gibson, Robertson, Walker, and Zinni are independent under Nasdaq rules; officers (e.g., CEO/Chair) are not counted as independent .
- Meetings/attendance: In 2024 the Board held four regular and one special meeting; no incumbent director attended fewer than 75% of Board/committee meetings .
- Director compensation: Directors who are also officers do not receive separate compensation for Board service .
Director Compensation (as applicable to Folsom)
- As an executive officer, Folsom does not receive additional director retainers/fees; only independent, non-employee directors receive retainers, meeting fees, and annual equity grants .
Compensation Structure Analysis
- Mix and trends: Compensation consists of salary, cash bonuses, stock awards, and ESOP allocations; no stock options (lower leverage, less risk of repricing) .
- Targets and discretion: Cash bonus target remains 25%–35% of salary, but Committee retains wide discretion to adjust based on retention and achievement of corporate/personal goals (specific goals not disclosed), creating potential for discretion-driven payouts .
- Equity design: 2023 award is time-based only (no performance vesting); 2024 included a sizable non-cash stock bonus with partial same-year vesting (30,000 sh), which can add near-term liquidity to the CEO but still aligns via equity ownership .
- Clawback and say-on-pay: Clawback policy exists (no recoveries triggered); 2024 say-on-pay passed with 84.9% approval, indicating investor support at that time .
Related Party Transactions (Governance red flags)
- Our Town Hospitality is the manager for all ten wholly owned hotels and two rental programs; an affiliate of Folsom owned ~6.21% of Our Town’s equity as of Sept 18, 2025; Folsom also serves as an Our Town director. The Audit Committee reviews and approved related-party transactions; agreements were amended/restated in Nov 2024 via the OTH Master Agreement .
- Implication: Ongoing related-party management fees and overlapping roles warrant monitoring of conflicts, fee terms, and performance outcomes .
Say‑On‑Pay & Shareholder Feedback
- 2024 say-on-pay approval: ~84.9% of votes cast supported executive compensation, which the Committee viewed as supportive of current practices .
- Frequency: Board recommends annual advisory votes on executive compensation .
Compensation Peer Group and Consultants
- Benchmarking: Committee considers “market data relating to an identified peer group” and third‑party surveys; however, it did not retain or obtain advice of an external compensation consultant .
Equity Ownership & Alignment Details (beneficial ownership table excerpt)
| Holder | Common Shares | % of Class | Notes |
|---|---|---|---|
| David R. Folsom | 703,086 | 3.4% | Includes 501,660 trust, 87,331 ESOP, and 15,200 unvested restricted shares as of 9/18/2025 |
None of the directors/NEOs have pledged SOHO common stock as collateral . Hedging/short sales prohibited by insider trading policy .
Employment & Contracts (selected economics)
| Scenario (as of 12/31/2024) | Cash | Equity Acceleration | Benefits | Total |
|---|---|---|---|---|
| Without Cause/Good Reason (incl. CIC) | $2,004,178 | $21,236 | $196,965 | $2,222,379 |
| Non-renewal by Company | $668,059 | — | $54,877 | $722,937 |
Change-in-control is single-trigger under current language (“or if there is a change of control”), and Folsom’s agreement also treats complete liquidation/dissolution as a change in control .
Performance & Track Record (context)
- TSR (3-year through 2024) declined to $44.56 on a $100 base, indicating negative investor returns over the period .
- Net income declined from $32.54M (2022) to $1.30M (2024); revenues rose across FY2022–FY2024 while EBITDA remained relatively flat (see Performance table) .
- Committee extended executive agreements and granted 2023 restricted stock for leadership during the COVID-19 period .
Board Service History, Committees, and Dual-Role Implications
- Folsom serves as CEO and director; Board separates Chair and CEO roles with independent committees overseeing compensation and governance, mitigating typical CEO/Chair combined-role concerns .
- Folsom is not independent (as an executive officer) and holds no committee roles; independent directors meet in executive session as needed .
- Attendance: No incumbent director attended fewer than 75% of meetings in 2024 .
Investment Implications
- Alignment: Folsom’s 3.4% stake, ESOP allocations, and prohibition on hedging/pledging promote alignment; vesting cadence of 7,600 shares annually (2026–2027) suggests modest forward insider supply from time‑vested awards .
- Red flags: Single-trigger CIC with 3x cash multiple and five years of benefits, plus significant related‑party exposure to Our Town (ownership and board seat) elevate governance risk and potential agency conflicts; monitor fee terms, performance, and any incremental awards tied to non‑objective metrics .
- Pay for performance: Despite positive revenue trend, declining TSR and net income vs. 2022 create optics risk; however, say‑on‑pay support (84.9%) indicates investor tolerance given company context/scale; watch for any increase in guaranteed or discretionary pay absent clear milestones .
- Retention risk: Contracts run through 2027 with substantial severance economics, reducing near‑term retention risk but potentially raising acquisition or restructuring costs; non‑renewal terms are also meaningful .