Scot M. Elder
About Scot M. Elder
Scot M. Elder, age 50, is Chief Legal & Compliance Officer and Corporate Secretary of Treace Medical Concepts (TMCI). He joined TMCI as Chief Compliance Officer in October 2021 and was appointed Chief Legal & Compliance Officer in October 2022; he holds a BA in History from the University of Utah and a JD from UCLA Law, and serves on the AdvaMed Steering Committee . Company performance linked to his incentives: 2024 revenue grew 12% YoY to $209.4M, Adjusted EBITDA improved to a loss of ($11.0M) from ($24.4M) in 2023, but annual cash incentives paid out at 12.3% of target as revenue and EBITDA fell below thresholds; the one-year PSU tranche (relative TSR) earned 0% for the 2024 interim period .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Medtronic plc | Vice President & Chief Ethics and Compliance Officer | May 2019–Oct 2021 | Led global ethics and compliance; institutional knowledge in complex litigation and compliance . |
| Medtronic plc | Vice President, General Counsel, Restorative Therapies Group | Not disclosed (12+ years overall at Medtronic) | Senior legal leadership in large device business units . |
| Medtronic plc | Vice President, Chief Counsel, Compliance & Privacy Officer, Surgical Technologies | Not disclosed (12+ years overall at Medtronic) | Oversight of compliance and privacy in surgical technologies . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| AdvaMed | Steering Committee Member | Not disclosed | Industry policy and compliance standards; network across device sector . |
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $309,466 | $376,822 | $409,262 |
| February 2024 Approved Salary ($) | — | — | $415,000 (prior $380,000; +9.2%) |
| Target Bonus (%) | — | — | 50% |
| Target Bonus ($) | — | — | $207,500 |
| Actual Bonus Paid ($) | $190,000 | $106,750 | $25,618 |
| All Other Compensation ($) | $5,015 | $5,292 | $5,676 |
Performance Compensation
Annual Cash Incentive (2024)
| Metric | Weight | Threshold | Target | Maximum | Actual | Payout |
|---|---|---|---|---|---|---|
| Revenue Growth (YoY) | 70% | 12.4% | 24.9% | 37.4% | 11.9% | 0% |
| Adjusted EBITDA (before bonus) ($000s) | 15% | ($7,380) | $1,037 | $9,453 | ($7,689) | 0% |
| Increase in Active Surgeon Count | 15% | 2.5% | 13.8% | 25.2% | 9.8% | 12.3% (weighted) |
| Final Payout | — | — | — | — | — | 12.3% |
Enhancements for 2025: plan narrowed to two metrics—Revenue (60%) and Adjusted EBITDA (40%)—removing surgeon count .
Long-Term Equity Incentives (Design and 2024 Grants)
| Element | Elder Weight/Grant | Vesting | Performance Basis |
|---|---|---|---|
| RSUs (annual) | 61,300 shares granted Jan 10, 2024; ~50% of annual grant mix | 25% annually over 4 years from grant | Time-based . |
| PSUs (annual) | 30,650 shares target granted Jan 10, 2024; 25% of annual grant mix | 3-year period with interim year 1 and 2 earnings (capped at 100% per interim) | Relative TSR vs S&P Health Care Equipment Select Index; Threshold 25th pct=50%; Target 50th pct=100%; Max 75th pct=200% . One-year (2024) earned 0% . |
| Stock Options (annual) | 69,050 options @ $13.46 exercise price; 25% of annual grant mix | 25% annually over 4 years; 10-year term | Stock price appreciation; underwater at $7.44 YE 2024 for Elder (no options below $7.44) . |
| Retention RSUs (Aug 9, 2024) | 129,540 RSUs (target $750,000) | 33% annually over 3 years | Time-based; retention during transformation . |
| Special Litigation Incentive (Sep–Nov 2024) | 200,000 RSUs (Sep 30, 2024) plus milestone cash up to $500,000 and up to 31,100 RSUs (15,550 RSUs granted/vested Nov 11, 2024; $125,000 cash paid) | RSUs vest 33% annually over 3 years (200,000), milestone RSUs vested immediately on approval; cash paid upon milestones | Milestones tied to complex, critical lawsuit; single-trigger acceleration on change-in-control for unpaid cash and unvested RSUs . |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 210,988 shares; less than 1% of outstanding . Shares outstanding: 62,385,101; Elder’s ownership ≈0.34% (calc: 210,988 / 62,385,101) . |
| Unvested Time-Based RSUs | 2,500 (10/25/2021), 1,437 (3/8/2022), 3,300 (10/1/2022), 20,625 (3/10/2023), 61,300 (1/10/2024), 129,540 (8/9/2024), 200,000 (9/30/2024) . |
| PSUs Outstanding (target) | 42,900 (7/24/2023) and 30,650 (1/10/2024); 2024 one-year interim earned 0% . |
| Options Outstanding | Multiple tranches exercisable/unexercisable at strikes $19.15–$24.07 (and $22.13/$22.07); none in-the-money at $7.44 YE 2024 price . |
| Hedging/Pledging | Prohibited; policy bans hedging and pledging/margin accounts . |
| Ownership Guidelines | Adopted Feb 19, 2025: Other Executive Officers must hold 1× salary; compliance measured by 2030; all execs within accumulation period and deemed compliant . |
Upcoming Vesting Dates (Insider Selling Pressure Map)
| Grant | Shares | Vesting Dates | Structure |
|---|---|---|---|
| RSUs (1/10/2024) | 61,300 | 25% on each of Jan 10, 2025, 2026, 2027, 2028 | Time-based . |
| Retention RSUs (8/9/2024) | 129,540 | 33% on Aug 9, 2025, 2026, 2027 | Time-based . |
| RSUs (9/30/2024) | 200,000 | 33% on Sep 30, 2025, 2026, 2027 | Time-based . |
| Milestone RSUs (11/11/2024) | 15,550 | Vested on grant (Nov 11, 2024) | Milestone-based . |
| Options (1/10/2024) | 69,050 | 25% annually through 2028; 10-year term to Jan 10, 2034 | Time-based . |
Employment Terms
| Provision | Terms |
|---|---|
| CIC Severance (Double Trigger) | If terminated without cause or resigns for good reason within 3 months before or 18 months after CIC: 12 months salary; 100% of annual target bonus; 18 months COBRA reimbursement; up to $10,000 outplacement; accelerated vesting of unvested time-based equity (performance awards follow PSU CIC conversion rules) . |
| Non-CIC Severance | If terminated without cause or resigns for good reason outside CIC period: 12 months salary; pro-rated target bonus; 12 months COBRA; up to $10,000 outplacement . |
| PSU CIC Treatment | Upon CIC before end of performance period, earned PSUs determined at CIC price convert to time-based RSUs; vesting accelerates upon qualifying termination; illustrative valuations used $7.44 YE price for table . |
| Special Incentive (Elder) CIC Treatment | Unpaid cash and unvested RSUs under Elder’s litigation incentive vest/pay in full immediately prior to CIC closing, if employed through such date (single-trigger for these awards) . |
| Clawback | Nasdaq-compliant clawback recovers erroneously received incentive compensation within 3 fiscal years after a restatement; no fault required . |
| Anti-Hedging/Pledging | Hedging (e.g., collars, short sales, options) and pledging/margin prohibited . |
| Non-Compete/Non-Solicit | Severance eligibility requires attestation that confidentiality, non-solicitation, and non-competition agreement remains in effect and enforceable . |
| Tax Gross-Up | Agreements include full excise tax gross-up under IRC §4999/§280G, plus taxes on the gross-up—shareholder-unfriendly provision (red flag) . |
Illustrative Potential Payments (as of 12/31/2024)
| Scenario | Cash Severance | Equity Value | Welfare Benefits | Outplacement | Total |
|---|---|---|---|---|---|
| Termination w/o Cause or Good Reason (non-CIC) | $622,500 | — | $32,736 | $10,000 | $665,236 |
| Termination w/o Cause or Good Reason within CIC window | $622,500 | $3,778,047 | $49,104 | $10,000 | $4,459,651 |
| CIC (special incentive only) | $375,000 cash (unpaid portion) | $115,692 RSUs (unvested) | — | — | $490,692 |
Multi‑Year Compensation Summary (Pay Mix and Trend)
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | $309,466 | $376,822 | $409,262 |
| Bonus ($) | — | — | — |
| Stock Awards ($) | $200,718 | $2,008,556 | $3,571,932 (includes 200,000 RSUs; milestone RSUs) |
| Option Awards ($) | $616,659 | $659,196 | $413,126 |
| Non‑Equity Incentive ($) | $190,000 | $106,750 | $150,619 (includes $125,000 milestone cash) |
| All Other ($) | $5,015 | $5,292 | $5,676 |
| Total ($) | $1,321,857 | $3,156,616 | $4,550,615 |
Compensation Structure Analysis
- Mix shifted toward time-based RSUs and PSUs in 2024; options persist but were underwater at YE, reducing realizable option value—aligns payouts with stock performance, but increases guaranteed equity via RSUs (retention grants) .
- Special litigation incentive created single-trigger CIC acceleration for Elder’s bespoke awards—strong retention/mission alignment signal but introduces atypical CIC economics vs standard double-trigger severance .
- Ownership guidelines (1× salary for executives) and strict anti‑hedging/pledging policies strengthen alignment and reduce risk of forced sales/structured hedges .
- Prior Say‑on‑Pay support of 91.78% (2024 vote) suggests investors accepted pay design; 2025 plan further tightens to revenue/EBITDA metrics .
Risk Indicators & Red Flags
- Excise tax gross‑up for CIC benefits—shareholder‑unfriendly and uncommon among modern best practices (red flag) .
- Single‑trigger CIC acceleration on Elder’s litigation incentive awards—potentially richer change‑of‑control payout than standard policy (risk of perceptions of entrenchment or pay leakage) .
- Large scheduled RSU vesting blocks (Aug/Sep anniversaries) may create periodic selling pressure; options are underwater at YE 2024, limiting option‑driven exercises/sales .
Investment Implications
- Alignment: Elder’s variable pay is tightly linked to revenue and EBITDA (annual) and relative TSR (PSUs); 2024 underperformance led to a 12.3% payout and 0% one‑year PSU earn‑outs, demonstrating pay‑for‑performance mechanics .
- Retention and Supply Overhang: Significant multi‑year RSU schedules (Aug 9 and Sep 30 grants) imply concentrated quarterly vesting windows that may add technical supply near anniversaries; monitor 10b5‑1 plans and Form 4s around those dates .
- Governance: Anti‑hedging/pledging and ownership guidelines are positives; however, CIC excise tax gross‑ups and bespoke single‑trigger acceleration for litigation incentives warrant scrutiny in a takeover scenario .
- Execution Risk: Elder’s expanded remit over “complex and significant” litigation with milestone‑based incentives indicates key person risk on legal outcomes material to strategy; payouts tied to milestones align incentives but raise CIC payout sensitivity .