Houston Frost

About Houston Frost

Houston Frost, Ph.D., age 43, is Senior Vice President and Chief Product Officer at Usio, serving since December 2014 after co-founding Akimbo Financial in 2010 and previously working in fixed income strategy at JPMorgan; he holds a Ph.D. in Chemical and Biological Engineering from Northwestern University (2007) and a B.S. in Chemical and Biological Engineering from the University of Colorado (2003) . During the 2022–2024 period, Usio’s pay-versus-performance table shows improving net income ($-5.483M → $-0.475M → $3.305M) and TSR volatility ($61.80 → $100.00 → $54.68), providing context for incentive alignment while highlighting execution risk in a small-cap payments business . Frost beneficially owns 679,108 shares (2.5% of outstanding), including 16,000 rights to acquire within 60 days as of April 21, 2025, signaling meaningful alignment with shareholders .

Past Roles

External Roles

Fixed Compensation

Notes:

• Other compensation includes 401(k) match and life insurance; Frost’s 401(k) match was $8,308 in 2023 and $3,138 in 2024; life insurance premiums $609 each year .

Performance Compensation

Additional plan mechanics:

• 2025 Comprehensive Equity Incentive Plan provides double‑trigger acceleration upon change‑in‑control for awards not assumed/substituted or if terminated/Good Reason within 24 months; performance targets deemed achieved at 100% of target on acceleration unless otherwise specified .
• Prohibition on option repricing without shareholder approval .
• Company adopted a clawback policy effective November 6, 2023 .

Equity Ownership & Alignment

Insider policy:

• Hedging and pledging of Company securities are prohibited for all employees, officers, directors, and designated consultants, enhancing alignment and limiting leverage risks .

Employment Terms

• Status: At‑will since January 1, 2017; salary increased to $200,000 effective November 22, 2021, from $172,000 effective October 12, 2020 (current compensation reflected in proxy tables) .
• No Severance Agreement: None of the Named Executive Officers other than Hoch and Carter are entitled to severance/change‑of‑control cash benefits; Frost is not covered by such provisions .
• Equity Acceleration: Multiple legacy awards provide vesting “or earlier upon a change of control” (single-trigger language in award footnotes), while the 2025 Plan uses double‑trigger acceleration mechanics for awards granted under that plan .
• Clawback: Company clawback policy compliant with Dodd-Frank/Nasdaq adopted November 6, 2023 .
• Non‑compete/Non‑solicit: Not disclosed for Frost; such terms are explicitly described only for Hoch/Carter agreements .

Vesting Schedules and Insider Selling Pressure

• Near‑term vestings likely to create taxable events/selling pressure: 1,000 RSUs vesting 2/8/2025; 12,000 RSUs vesting on 6/21/2025–2027; 100,000 restricted shares cliff‑vesting on 11/22/2027 .
• Long‑dated cliffs reduce near‑term overhang: 150,000 (4/1/2030), 25,000 (11/18/2031), 100,000 (11/21/2034), 40,000 (6/21/2034) restricted stock .
• Insider reporting: Two Section 16 forms for Frost were filed late for two transactions in 2024, a minor process red flag but not indicative of misconduct .

Performance & Track Record

• Value Creation Context: Usio net income improved from a loss in 2022 and 2023 to a $3.305M profit in 2024, while TSR moved from 61.80 (2022) to 100.00 (2023) to 54.68 (2024), reflecting both operational progress and share price volatility typical of smaller issuers .
• Strategic Roles: Product and prepaid leadership at Usio; founder experience at Akimbo; institutional strategy background at JPMorgan; current directorship at Trans Pecos Banks .

Compensation Structure Analysis

• Shift in mix: Frost’s salary rose (~13% YoY), while equity grant fair value declined materially ($196,000 in 2023 to $80,600 in 2024), reducing reported total compensation from $413,335 to $320,813 and increasing cash share of pay .
• Award design: Predominantly time‑based restricted stock (10‑year cliff) and RSUs (3‑year ratable), with change‑of‑control acceleration mechanics; no disclosed performance share metrics or cash bonus targets for Frost, indicating lower explicit pay‑for‑performance sensitivity in variable compensation design for his role .
• Clawback and no‑repricing guardrails: Strengthens governance and mitigates risk of shareholder‑unfriendly modifications .

Say‑on‑Pay & Shareholder Feedback

• 2025 proxy includes a Say‑on‑Pay advisory vote covering NEO compensation (non‑binding; board recommends FOR); historical approval percentages not disclosed in the 2025 proxy .

Equity Incentive Plan Dilution Context

• 2025 Plan authorized 5,250,000 shares with 10‑year 5% annual evergreen; company estimates potential dilution of ~42% when combining new plan capacity with outstanding unvested/unexercised awards, consistent with small‑cap norms per Company’s disclosure .

Investment Implications

• Alignment: Frost’s 2.5% beneficial stake and prohibition on pledging/hedging indicate credible alignment; long‑dated cliffs suggest retention incentive into 2030–2034, reducing near‑term turnover risk .
• Near‑term flow dynamics: RSU tranches (2025–2027) and the November 2027 cliff may create periodic taxable events and potential Form 4 activity; monitor vesting windows for incremental selling pressure signals .
• Pay design: Predominantly time‑based equity with no disclosed performance metrics or cash bonus targets reduces direct linkage to financial KPIs for Frost; however, company‑level clawback and double‑trigger CIC terms improve governance quality .
• Risk flags: Minor late Section 16 filings for Frost in 2024; no legal proceedings disclosed; no severance entitlement implies lower shareholder burden in adverse scenarios but could increase retention risk if market opportunities arise .
• Monitoring priorities: Track RSU vest dates, any new grants under the 2025 Plan, and insider activity around vesting; watch company TSR and net income trends as indirect indicators of value creation under Frost’s product leadership .