Walden C. Rhines

About Walden C. Rhines

Walden C. “Wally” Rhines (age 78) is Chief Executive Officer of Silvaco Group (SVCO) effective August 19, 2025, after serving as an independent director and Audit Committee member since September 2022; he holds a B.S.E. (Univ. of Michigan), M.S. and Ph.D. in materials science (Stanford), and an MBA (SMU Cox) . He previously led Mentor Graphics as CEO (1993–2017) through its sale to Siemens and has chaired Qorvo’s board since November 2023; at Silvaco, Q3 2025 posted record revenue of $18.7M alongside a cost-out plan expected to reduce annualized non-GAAP opex by ≥$15M, framing his initial execution priorities .

Past Roles

External Roles

Fixed Compensation

Upon becoming CEO, Rhines ceased receiving non-employee director compensation and instead is compensated per the CEO agreement .

Performance Compensation

• CEO PRSU Program (high at-risk, stock-price based):
  • PRSUs granted upon achieving 20-trading-day VWAP thresholds of $4.50, $10.00, $12.00, and $15.00 during the service period; grant-date fair values per threshold range from $100,000 to $1,563,159; earned PRSUs vest following continued employment through March 31, 2027; all PRSUs accelerate on specified severance events (see Employment Terms) .

• Director RSUs (prior role): Annual ~$150,000 grant; vest on earlier of 12 months, next AGM, or change in control, creating periodic settlement events but not option-derived selling pressure .

• Clawback: Company has a compensation recovery policy aligned with Rule 10D-1; as CEO, Rhines is subject to recovery of erroneously awarded incentive compensation in restatement scenarios .

• Tax gross-ups: Company states “No excise tax gross-ups” among governance practices .

Equity Ownership & Alignment

Ownership guidelines: Not disclosed in the proxy; anti-hedging/pledging policy in place; Principal Stockholder pledging disclosed separately, highlighting pre-clearance regime but not applicable to Rhines .

Employment Terms

Board Governance

• Status and roles: Director since 2022; Audit Committee member (committee of independent directors); after CEO appointment he is an executive (not independent) .
• Attendance: In 2024 the Board met 16 times; all directors met at least 75% attendance (committee meetings: Audit met 10x; Comp 9x; NCG 7x) .
• Controlled company: SVCO is a Nasdaq “controlled company” (Principal Stockholders ~69.8%); board intends to rely on exemptions for fully independent Compensation and NCG committees; Audit Committee remains fully independent per rules .
• Board leadership: Non-executive Chair (Katherine S. Ngai-Pesic) with Lead Independent Director (Hau L. Lee) structure; regular executive sessions .

Director Compensation (2024)

Program terms: $40k retainer (+$30k LID/Chair if applicable), committee retainers ($15k chair/$5k member), annual RSU grant ~$150k; RSUs vest earlier of 12 months/next AGM/CIC .

Company Performance Context

Values retrieved from S&P Global.*

Additional company disclosures: Q3 2025 revenue reached a record $18.7M with GAAP operating loss of $9.3M; company initiated a cost reduction program expected to reduce annualized non-GAAP opex by at least $15M .

Compensation Structure Analysis

• Strong pay-for-performance tilt: Extremely low base salary ($160k) with the vast majority of CEO expected value tied to stock-price PRSUs (four VWAP hurdles), aligning incentives to shareholder returns; vesting requires continued service to term end, reinforcing retention .
• No single-trigger norm and clawback in place: Company states no single-trigger CIC provisions and has an SEC Rule 10D-1 compliant clawback policy; reduces windfall risk and enhances governance hygiene .
• Director equity cadence: Annual RSUs for non-employee directors vest on a short cycle (≤12 months), creating predictable settlement timing; as CEO, Rhines no longer participates in director grants .
• External commitments governed: Employment agreement explicitly defines permitted outside roles, mitigating conflict/attention risk through formal disclosure and consent framework .

Employment & Contracts (Retention/Transition)

• Term-certain through 3/31/2027 with staggered severance: Scaled lump-sum severance ranging from $500k to $1,000k depending on tenure length, plus PRSU acceleration upon qualifying termination, provides a floor that could modestly reduce departure risk while preserving performance alignment via market-based earn-in .
• Policy overlays: Anti-hedging/pledging and clawback policies apply to officers; pre-clearance for any pledging; enhances alignment and reduces governance red flags .
• Management transition backdrop: CEO transition occurred in Aug 2025; CFO transition (resignation in Apr 2025; new CFO appointed Sept 2025) reflects leadership refresh and execution focus .

Board Service: History, Committees, Independence

• Board tenure: Director since 2022; independent prior to CEO appointment; Audit Committee member throughout service as director .
• Committee meeting cadence: Audit Committee met 10 times in 2024; all directors achieved ≥75% attendance; Audit Committee independence and financial literacy confirmed (audit chair is Molloie; financial expert designation) .
• Dual-role implications: Current structure separates Chair (non-executive) and CEO roles, with a Lead Independent Director; as a “controlled company,” SVCO relies on certain independence exemptions for Compensation and NCG committees, partially offset by a fully independent Audit Committee .

Related Party Transactions and Conflicts

• Rhines-specific: Company disclosed no related party transactions for Rhines under Item 404(a) in connection with his appointment .
• Company-wide (context): Related party arrangements primarily involve Principal Stockholders; oversight via Audit Committee policy .

Compensation Committee and Advisors

• Composition and practice: Compensation Committee met 9 times in 2024; retains independent advisor Compensia to benchmark market practices; committee independence affirmed under Nasdaq standards .

Risk Indicators & Red Flags

• Governance risk: Controlled company status (69.8% voting power by Principal Stockholders) with independence exemptions on comp/NCG committees; mitigations include independent Audit Committee and lead independent director .
• Execution and turnover: CEO and CFO transitions in 2025 create near-term execution risk; management is pursuing cost discipline and integration post acquisitions .
• Hedging/pledging: Policy prohibits hedging and pledging without pre-clearance; no pledging disclosed for Rhines .

Investment Implications

• Alignment: Rhines’ package is heavily equity-levered with explicit share-price hurdles and end-of-term vesting, signaling confidence-based alignment and incentivizing multiquarter value creation; low base salary reduces fixed cash burn .
• Retention and supply overhang: PRSUs vest at term end or accelerate on qualifying severance, limiting near-term selling pressure; prior director RSUs follow an annual cadence, but he no longer receives director grants as CEO .
• Governance watchpoints: Controlled-company exemptions and multiple permitted external roles warrant ongoing monitoring for independence/attention risk, though formalized permitted-activity schedules and a strong Audit Committee/lead independent structure are mitigating .
• Execution swing factors: Record Q3 revenue with ongoing operating losses and a ≥$15M annualized non-GAAP opex reduction initiative set up a clear operating leverage thesis; delivery against revenue growth and cost targets will be key to PRSU trigger realization and equity value creation .

Citations: All bracketed references [doc_id:chunk_idx] correspond to SEC filings and company documents retrieved above.