Raghu Rao

About Raghu Rao

Raghu Rao, 63, is Interim Chief Executive Officer and a director of Sonnet BioTherapeutics, serving on the board since November 2019 and appointed Interim CEO on July 31, 2025; he holds an MBA (GWU, 1991), M.S. in Computer Science (Virginia Tech, 1986), and B.Tech in Electrical Engineering (IIT Madras, 1984) . He is a serial entrepreneur and former Chairman & President of InfoZen, where he managed over $1B of U.S. federal contracts, and previously chaired three Vistage CEO advisory boards; his experience spans large-scale IT programs (e.g., USA.gov, TSA Gateway, Cancer.gov) and multiple corporate and non-profit boards . Sonnet’s pay-versus-performance disclosure shows cumulative TSR values of $29.14/$100 for FY2024 (versus $8.81 FY2023; $16.15 FY2022) and net losses of $(7.44)M, $(18.83)M, $(29.72)M, respectively, consistent with a clinical-stage profile without product revenue; the Compensation Committee notes it does not use net income in evaluating pay . Rao was previously deemed independent as a director but, consistent with Nasdaq rules, is not included among independent directors following his executive appointment .

Past Roles

External Roles

Fixed Compensation

Performance Compensation

• Cash/transaction incentives and discretionary awards | Metric/Vehicle | Weighting | Target/Formula | Actual/Payout | Timing/Vesting | |---|---|---|---|---| | Strategic transaction bonus | N/A | 5.0% of gross revenue from a strategic transaction; excludes proposed Rorschach I LLC/Hyperliquid transaction | N/A | As earned; at Board discretion for goals | | Discretionary bonus | N/A | Board discretion | $100,000 approved | Granted July 31, 2025 |

• Equity awards | Grant Date | Instrument | Shares/Units | Vesting | Notes | |---|---|---|---|---| | July 11, 2025 | RSUs | 20,000 | 100% on earlier of Closing (transaction) or Jan 8, 2026 | Under 2020 Omnibus Plan | | FY2022 director RSUs | RSUs | Aggregate 1,010 (as of 9/30/22) | 100% on Jan 1, 2023 (for FY2022 awards) | Director program grants; ASC 718 values disclosed |

The company states it prohibits hedging and generally prohibits pledging/margin use absent pre-approval; no specific hedging/pledging by Rao is disclosed .

Equity Ownership & Alignment

• Recent participation: Rao purchased 1,953 shares and 3,906 warrants in the Oct 27, 2023 underwritten offering at $12.80/share with accompanying warrants (reverse-split adjusted) .
• Director RSU holdings: 373 RSUs outstanding as of Sep 30, 2024 (director grants) .
• Policy: Hedging prohibited; pledging/margin generally prohibited unless pre-approved by CFO; policy filed with FY2024 10-K .

Employment Terms

Board Governance

• Service history: Director since November 2019; nominee for 2025–2026 term as Interim CEO and Director .
• Committees:
  • Historical: Audit Committee member and designated “audit committee financial expert” (FY2022–FY2023) .
  • Current: Audit Committee in 2025 composed of Bhatt (Chair), Dyrness, and McNeill—Rao no longer serves on Audit post-CEO appointment, consistent with independence requirements .
• Meeting cadence/attendance: In FY2024, Board met 5x; Audit 4x; Compensation 1x; Nominating acted by written consent 1x; all directors attended ≥75% of meetings/committees .
• Independence: Previously determined “independent”; as of 2025, independent directors are Bhatt, Dyrness, McNeill—Rao is not independent as an executive .
• Leadership structure: No Chair of the Board or Lead Independent Director; Board periodically evaluates structure; CEO (Rao) provides operational leadership .

Director Compensation

• Director RSU program: policy sets cash fees and director equity; director options vesting schedules and change-in-control acceleration described in Company policy; RSUs vest per grant terms (e.g., 100% on Jan 1, 2023 for FY2022 awards) .
• Audit Committee report lists Rao as a member during FY2024 reporting period (report signed by Bhatt, Dyrness, Rao), before committee refresh post-CEO appointment .

Compensation Structure Analysis

• Increased at-risk event-driven cash: Interim CEO deal emphasizes 5% of gross revenue from strategic transactions and a large one-time $100k discretionary bonus—tilting incentives toward M&A/transaction execution rather than operating metrics (e.g., revenue/EBITDA), consistent with clinical-stage strategy but introduces deal-centric bias .
• Near-term equity vesting: 20,000 RSUs vest upon “Closing” or by Jan 8, 2026, potentially creating short-term selling pressure around vest events; aligns pay with deal closure timeline .
• Governance safeguards: Anti-hedging and restricted pledging policies reduce misalignment risk; 280G best-net cutback avoids tax gross-up optics .

Related Party Transactions

• Public offering participation: Rao purchased 1,953 shares and 3,906 warrants in the October 27, 2023 offering (reverse-split adjusted), signaling personal capital at risk .

Say-on-Pay & Compensation Committee

• Compensation Committee composition: Independent directors Dyrness (Chair) and Bhatt; responsibilities include CEO pay setting and equity plan administration; no interlocks reported .
• Say-on-Pay cadence: Board recommends triennial say-on-pay frequency .

Equity Compensation Plan Information

• As of Sep 30, 2024: 17,152 securities to be issued upon exercise/settlement under shareholder-approved plans; no other plans outstanding .

Performance & Track Record Context

Company notes compensation decisions are not based on net income given clinical-stage status and lack of product revenue .

Investment Implications

• Alignment and deal-driven incentives: Rao’s interim CEO package places explicit weight on monetizing strategic transactions (5% of gross revenues from deals) plus a significant discretionary bonus, and includes RSUs that vest at closing—this increases the likelihood of aggressive transaction execution but may bias toward near-term deal completion over long-horizon value creation .
• Selling pressure risk: 20,000 RSUs vest at closing/Jan 8, 2026; together with director RSUs and warrants, near-term vesting/issuance events could create incremental supply, particularly if liquidity is thin .
• Governance checks and independence: Anti-hedging/pledging policy and removal from Audit Committee upon becoming CEO mitigate conflict risks; absence of a Chair/Lead Independent Director concentrates leadership and may elevate governance risk perception among institutions .
• Skin-in-the-game: Rao’s continued equity exposure (beneficial ownership including warrants and offering participation) supports alignment, though position remains <1% of shares outstanding .