Kendall Larsen
About Kendall Larsen
Kendall Larsen is Chairman, President and CEO of VirnetX Holding Corporation, roles he has held since July 5, 2007; he previously held the same positions at VirnetX Inc. since its inception in August 2005. He is 68 years old and holds a B.S. in Economics from the University of Utah . The board highlights his day-to-day leadership and deep company-specific experience as reasons for combining CEO and Chairman roles, with no lead independent director in place . Recent “Pay vs. Performance” disclosure shows persistent net losses and a low reported TSR outcome for the last three fiscal years .
Company performance snapshot (fiscal years)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| TSR of fixed $100 investment (year-end) | $25.78 | $20.30 | $22.77 |
| Net Income (Loss) | $(36,260,000) | $(27,871,000) | $(18,175,000) |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| VirnetX Holding Corporation | Chairman, President & CEO (Director since 2007) | Since 2007 | Led licensing strategy, product development and litigation matters cited by comp committee in performance assessments |
| VirnetX Inc. | Chairman, President & CEO | Since Aug 2005 | Founding leadership through early development and financing |
| VirnetX Inc. (pre-incorporation) | Pre-incorporation activities | Apr 2003–Jul 2005 | Company formation groundwork |
| Osprey Ventures, L.P. | Limited Partner | Apr 2002–Apr 2003 | Venture investing in business and consumer tech |
| Phoenix Technologies Ltd. | SVP & GM, Security Products Division | Oct 2000–Apr 2002 | Led a key security business unit |
| RSA Security; Xerox; Rolm/IBM; Novell; General Magic; Ramp Networks | Senior executive positions | Not disclosed | Broad senior operating experience across leading tech firms |
External Roles
| Category | Detail |
|---|---|
| Public company boards (current) | Does not hold director positions with other reporting or registered investment companies |
| Other public/private/non-profit roles | Not disclosed in the proxy |
Board Governance and Director Service
- Board seat and tenure: Director since 2007; currently Class I director (term expires 2026) .
- Leadership: Combined CEO and Chairman; board cites benefits to strategy development and information flow; no Lead Independent Director .
- Independence: CEO/Chair is not independent; all other directors (Angelo, Feiner, O’Brien, Chow) are independent under NYSE/SEC rules .
- Committees: Only independent directors serve and chair Audit (Chair: O’Brien), Compensation (Chair: Feiner), and Nominating & Corporate Governance (Chair: Angelo) .
- Meetings/attendance: Board met 6 times in 2024; no director attended fewer than 75% of applicable meetings .
Fixed Compensation
Kendall Larsen’s cash compensation and targets (most recent years)
| Component | 2023 | 2024 |
|---|---|---|
| Base Salary | $789,867 | $821,461 |
| Target Bonus % of Salary | 75% (set for 2024; 2023 target not stated) | 75% |
| Actual Bonus % of Salary | 50% (implied by $394,933/2023 salary) | 75% |
| Actual Bonus Paid ($) | $394,933 | $616,096 |
| Other Cash/Perqs | $887,426 (incl. special “Additional Payment” linked to 2023 dividend and vacation payout) | $63,189 (unused vacation payout) |
Notes: In March 2023, the board approved a special cash dividend to stockholders and a corresponding “Additional Payment” to outstanding award holders; Mr. Larsen received $826,667 within “All Other Compensation” for 2023 .
Performance Compensation
Annual Incentive (Cash)
| Metric/Design | Weighting | Target | Actual (2024) | Payout |
|---|---|---|---|---|
| Qualitative objectives (licensing, product development, technical, investment/partnership milestones; direction into government agencies in space/defense) determined at committee discretion | Discretionary | 75% of base salary | Committee deemed objectives met at target for CEO in 2024 | $616,096 (75% of 2024 base salary) |
Design notes: The committee retains full discretion and does not assign specific quantitative weights or dollar values to factors; bonuses are used to reward strategic/operational achievements and overall results, including stock price performance among other factors .
Equity Awards
| Grant Date | Type | Shares Granted | Grant-Date Fair Value | Vesting |
|---|---|---|---|---|
| 11/14/2024 | RSA | 50,000 | $295,000 | 25% annually over 4 years, service-based |
| Prior awards | RSUs | 334; 667 (unvested counts at 12/31/2024) | Market value basis disclosed below | 4 equal annual installments |
| Prior awards | RSAs | 1,818 (unvested at 12/31/2024) | Market value basis disclosed below | Monthly 1/48th vesting |
Equity grant timing: Awards are made in alignment with annual compensation cycle or role changes; the company states it does not time grants around release of MNPI .
Equity Ownership & Alignment
- Beneficial ownership: 523,274 shares (12.17% of outstanding 4,238,581 shares as of Mar 31, 2025) .
- Composition details: Includes 60,628 options exercisable within 60 days (27,946 held by spouse), 15,000 shares via K2 Investment Fund, LLC (Mr. and Mrs. Larsen are sole member-managers), and 74,105 shares held by spouse; excludes certain trust and adult children holdings, which he disclaims .
- Outstanding unvested equity (12/31/2024): RSUs 334 and 667; RSAs 1,818 and 50,000; reported market values at $7.85 close were $2,619.15, $5,236.34, $14,271.30, and $392,500.00, respectively .
- Options: Multiple legacy options outstanding; as of 12/31/2024, no options were in-the-money given the $7.85 stock price (all disclosed exercise prices exceeded $7.85); therefore, no value would be realized on acceleration/exercise at that date .
- Ownership guidelines: None adopted; company asserts existing holdings provide alignment .
- Hedging/derivatives: Insider trading policy prohibits short sales, hedging and derivative transactions (e.g., collars, swaps); insider trading policy referenced as an exhibit to the 10-K .
- Pledging: No explicit disclosure of a pledging prohibition; no pledging disclosed for Mr. Larsen in the proxy .
Ownership breakdown (as disclosed)
| Item | Amount |
|---|---|
| Beneficial ownership (shares) | 523,274 |
| Beneficial ownership (%) | 12.17% |
| Options exercisable within 60 days (incl. spouse) | 60,628 |
| K2 Investment Fund, LLC (held) | 15,000 |
| Spouse-held common shares | 74,105 |
Vesting-related supply considerations
- Annual RSA from Nov 2024 vests 12,500 shares each year for four years, which can create periodic sellable supply as tranches vest .
- Additional legacy RSAs vest monthly (1/48), causing a modest continuous trickle of newly vested shares .
- Near-term option exercises do not appear to add supply pressure given options were out-of-the-money at $7.85 as of 12/31/2024 .
Employment Terms
| Provision | Disclosure |
|---|---|
| Employment agreement | None disclosed for cash/equity severance rights |
| Severance (cash) | None provided in employment agreements |
| Change-in-control (CIC) | Single-trigger: All unvested options, RSUs, RSAs vest immediately prior to a CIC |
| Estimated CIC acceleration value (12/31/2024) | $409,100.40 for Mr. Larsen (equity acceleration value at $7.85) |
| Non-compete / non-solicit / garden leave | Not disclosed in proxy |
| Clawback policy | Compensation committee reviews, approves, and administers a compensation recovery (clawback) policy |
| Stock ownership guidelines | None adopted |
| Insider trading policy | Prohibits short sales and hedging/derivative transactions; policy referenced in 10-K exhibit |
Related Party Transactions (governance red flags)
- Aircraft lease: The company leased an aircraft from K2 Investment Fund, LLC (controlled by Kendall and Kathleen Larsen) for business travel; payments were approximately $1,556,000 (2024) and $1,097,000 (2023). An amended rate of ~$9,800 per flight hour took effect after switching to a more current model; the lease is cancelable on 30 days’ notice and was approved by the board and audit committee .
- Family employment: Spouse (Chief Administrative Officer) and multiple family members employed; compensation approved by the compensation committee, with amounts for 2024 disclosed (e.g., Kathleen Larsen: $522,778 salary, $261,389 bonus, $40,214 vacation payout, $182,400 stock awards) .
Compensation Structure Analysis
- Mix and trend: Cash increased in 2024 (4% salary raise) and bonus paid at target (75% of salary) despite ongoing net losses; equity shifted toward time-based RSAs (50,000 granted in Nov 2024) rather than options, lowering performance sensitivity versus options and emphasizing retention .
- Goal-setting and pay-for-performance: Annual incentive relies on broad discretionary, qualitative objectives without disclosed weightings or thresholds, enabling payouts at target based on committee judgment rather than formulaic financial targets .
- Governance design: Single-trigger CIC acceleration of all equity is shareholder-unfriendly relative to double-trigger market norms; no stock ownership guidelines; combined CEO/Chair without a lead independent director .
- Risk mitigants: Insider trading policy prohibits hedging/derivatives; compensation committee oversees a clawback policy .
Performance & Track Record
- Pay versus performance indicators show net losses in 2022–2024 and a low reported TSR value for a fixed $100 investment over the measurement period, suggesting limited shareholder value creation during the period disclosed .
- The committee cited progress in product development, licensing, technical milestones, and government-oriented initiatives (space/defense) as rationale for 2024 incentive outcomes .
Director Compensation (as director)
- Employee directors (including Mr. Larsen) do not receive additional board fees; non-employee director compensation and equity are disclosed separately .
Say-on-Pay & Shareholder Feedback
- 2025 ballot includes advisory vote to approve NEO compensation; no historical say-on-pay approval percentages disclosed in the proxy .
Compensation Committee and Advisors
- Committee members (all independent): Chair Feiner; members Angelo, O’Brien, and Chow (appointed March 2025) .
- Consultant: Compensia engaged periodically to review practices and compare proposed adjustments to market data .
Investment Implications
- Alignment and retention: A 12.17% beneficial stake supports alignment, but lack of ownership guidelines and single-trigger equity acceleration dilute governance quality; vesting of the 50,000-share RSA (12,500/year) and monthly-vesting RSAs could create periodic and continuous supply, respectively, while deep OTM options are unlikely to add near-term selling pressure .
- Pay quality: Discretionary bonus design with target payouts amid sustained losses and shift to time-based RSAs weaken pay-performance linkage and may invite say-on-pay scrutiny; monitor 2025 vote and any investor engagement disclosures thereafter .
- Governance risk: Combined CEO/Chair with no lead independent director, extensive related-party aircraft leasing, and family employment heighten governance and reputational risk; these factors can influence governance-focused investors and weigh on sentiment multiples .
- Event/flow catalysts: Watch annual RSA vest dates (Nov 14 anniversaries) and monthly RSA flows for potential incremental liquidity; a CIC would fully accelerate unvested equity under current plan terms .