Karl Khoury

About Karl Khoury

Karl Khoury (age 55) is an independent director of Vital Farms, Inc., serving since January 2015. He is a co‑founder and partner at Arborview Capital (since March 2008) and previously was a partner at Columbia Capital. His background is finance and growth investing focused on sustainability. Khoury is not designated as the Audit Committee Financial Expert; Vital Farms classifies him as independent under Nasdaq rules.

Past Roles

External Roles

Board Governance

• Independence, tenure, and roles: Independent director; Director since 2015. Vital’s Board has 8 members; 6 are independent. Roles of Executive Chair and CEO are separate; Lead Independent Director is Denny Marie Post. A 12‑year tenure limit for non‑employee directors was adopted in Nov 2024.
• Committee assignments (2024): Audit Committee member; Compensation Committee member. Audit Committee met 6 times; Compensation Committee met 5 times. Overall director attendance in 2024 was 98%, and each incumbent director met or exceeded the 75% attendance threshold.
• Executive sessions: Independent directors held five executive sessions of the Board in 2024.
• Policies overseen by committees: Incentive Compensation Recoupment (Clawback) Policy adopted Nov 2023; stock ownership guidelines for directors/officers; Insider Trading Policy prohibiting hedging and restricting pledging.

Fixed Compensation

• Policy framework: As of Sept 30, 2024, the annual cash retainer for non‑employee directors increased to $60,000. Prior policy included $50,000 base cash retainer and additional committee/leadership retainers. Members could elect to convert cash retainers into fully vested RSUs at grant.

• 2024 director equity: Annual RSU grant value under prior policy: $90,000 (vesting by next annual meeting). Under the amended policy (effective Sept 30, 2024), annual RSU grant value increased to $110,000. Initial RSU grants for new directors: $120,000 value, vesting over three years.

• Cash-to-equity conversion: Non‑employee directors may elect to receive fully vested RSUs in lieu of cash retainers (issued at fair market value on pay date).

Performance Compensation

Directors do not receive performance‑conditioned equity. However, as a member of the Compensation Committee, Khoury oversees pay‑for‑performance structures for executives:

• 2024 Annual Incentive Plan (AIP) metrics and outcomes:

• Long‑term incentives: Since 2024, executive equity mix is 50% PSUs and 50% RSUs. PSU metrics for FY2026 performance are Net Revenue (50%) and Adjusted EBITDA Margin (50%), each with threshold/target/maximum payouts (0%–200%). Targets will be disclosed after the performance period.

Other Directorships & Interlocks

• Public company boards: None disclosed other than Vital Farms.
• Private/non‑profit boards: See External Roles. No related party transactions involving Khoury were disclosed.

Expertise & Qualifications

• Finance and investment expertise from decades in venture capital; sustainability/resource efficiency focus aligned with Vital’s public benefit mission. Serves on Audit and Compensation Committees, though not designated as an “audit committee financial expert” (designated experts are Kelly Kennedy and Glenda Flanagan).

Equity Ownership

• Stock ownership guidelines: Directors must hold shares valued at least 3x their annual cash retainer within five years; all directors were in compliance as of the record date. Hedging is prohibited; pledging is restricted and requires prior Board approval (maximum collateralized loan amount limited to 25% of stock value).
• Beneficial ownership (as of April 14, 2025):

• Pledging status context: Only the Executive Chair, Matthew O’Hayer, disclosed pledged shares (1,900,000), which were approved under the Pledging Policy; no such disclosure for Khoury.

Governance Assessment

• Strengths:

  • Independent director with long tenure (since 2015) and deep finance/investing background relevant to Audit and Compensation oversight.
  • Active committee roles (Audit and Compensation); strong board process: executive sessions, high overall attendance (98% in 2024), formal clawback policy, and stock ownership guidelines.
  • Director compensation structure balanced between cash and time‑based equity; ability to convert cash to stock supports alignment.
  • No related‑party transactions involving Khoury disclosed.

• Watch items (not red flags):

  • Tenure will approach the 12‑year limit (adopted Nov 2024) by 2027; the Board may extend up to three years if in company’s best interests. This supports refreshment while preserving institutional knowledge.
  • Not designated as an audit financial expert; however, committee composition includes two designated experts (Kennedy and Flanagan).

• Red flags:

  • None disclosed specific to Khoury. No pledging/hedging issues and no related‑party transactions involving Khoury were reported.

Appendix: Committee Assignments and Meetings (2024)

Compensation Committee Report was signed by Gisel Ruiz (Chair), Kelly Kennedy, and Karl Khoury.

Director Compensation Details

Policies Relevant to Investor Alignment

• Clawback: Incentive Compensation Recoupment Policy adopted Nov 2023 per SEC/Nasdaq rules.
• Insider Trading: Hedging prohibited; limited, pre‑approved pledging allowed; Rule 10b5‑1 plans are permitted under policy.

Attendance & Engagement

• Board and committee meetings: High engagement with 5 Board meetings and robust committee schedules; all incumbent directors met ≥75% attendance; overall attendance 98% for FY 2024.

Summary Judgment for Investors

Khoury presents as a financially sophisticated, independent director with strong alignment and meaningful committee responsibilities (Audit and Compensation). The compensation framework he oversees emphasizes objective financial metrics (Net Revenue, Adjusted EBITDA/Margin) and demonstrated rigor in 2024 outcomes and PSU design, supporting pay‑for‑performance credibility. No disclosed conflicts or pledging/hedging concerns relate to Khoury, and his share ownership meets policy thresholds, reinforcing alignment with shareholders.