Russell Diez-Canseco

About Russell Diez-Canseco

Russell Diez-Canseco is President and Chief Executive Officer of Vital Farms (since May 2019) and has served on the Board since December 2019. He previously held roles at Vital Farms including President & COO (2015–2019), COO (2014–2015), and VP of Operations (2014). He holds an MBA from Harvard Business School and an A.B. in Economics from UC Berkeley; age 53 per the 2025 proxy biography . In 2024, Vital Farms delivered a one-year TSR of 140.22% and expanded its farm network by ~125 farms; management highlighted progress on net revenue and adjusted EBITDA as key drivers .

Company performance (annual):

Values marked with * retrieved from S&P Global.

Past Roles

External Roles

Fixed Compensation

Performance Compensation

• 2024 Annual incentive plan design: two metrics, equally weighted – Net Revenue (50%) and Adjusted EBITDA (50%); payout curves 0–200% by metric .

• 2024 Results and payout: | Metric | Weight | Target | Actual | Achieved | Payout for metric | |---|---:|---:|---:|---:|---:| | Net Revenue | 50% | $560.0M | $606.3M | 108.27% | 155.2% | | Adjusted EBITDA | 50% | $61.4M | $86.7M | 141.2% | 200.0% | | Overall payout | — | — | — | — | 175% of target (approved; reduced from 178% calc.) |

• 2024 Annual bonus paid (approved in Feb 2025): salary base $725,000; bonus $1,268,750 .

• Long‑term equity (granted March 11, 2024): | Award | Grant date | Target shares | Vesting | Performance metrics | Max payout | |---|---|---:|---|---|---:| | PSUs | 3/11/2024 | 95,283 | Cliff vest after FY2026 performance period, service through vest | FY2026 Net Revenue (50%) and Adjusted EBITDA Margin (50%); each 0–200% with straight‑line interpolation | 200% | | RSUs | 3/11/2024 | 95,283 | 3 equal annual installments starting 3/11/2025, service-based | — | — | | Grant date fair value | 3/11/2024 | — | — | — | $3,999,980 total (PSUs $1,999,990; RSUs $1,999,990) |

• Legacy options remain outstanding; 2024 program shifted to RSUs/PSUs (no options in 2024 LTIs), increasing direct linkage to multi-year operational goals .

Equity Ownership & Alignment

• Beneficial ownership (as of April 14, 2025): 840,793 shares (1.9% of outstanding); includes 246,844 options exercisable or becoming exercisable within 60 days .

• Outstanding equity and vesting (as of 12/29/2024): | Instrument | Grant date | Status | Quantity | Exercise price | Expiry / Vest | |---|---|---|---:|---:|---| | Stock options | 8/28/2019 | Exercisable | 249,448 | $5.33 | 8/28/2029 | | Stock options | 7/30/2020 | Exercisable | 18,750 | $22.00 | 7/30/2030 | | Stock options | 3/22/2021 | Exercisable | 71,564 | $25.78 | 3/22/2031 | | Stock options | 3/10/2022 | Unexercisable | 39,800 | $12.81 | 3/10/2032 | | RSUs (time‑based) | 3/10/2022 | Unvested | 8,327 | — | Time-vesting; value $310,972 (12/27/2024) | | Options | 3/13/2023 | Exer/Unexer | 25,821 / 102,922 | $15.31 | 3/13/2033 | | RSUs (time‑based) | 3/13/2023 | Unvested | 24,385 | — | Time-vesting; value $910,658 (12/27/2024) | | RSUs (time‑based) | 3/11/2024 | Unvested | 95,283 | — | 3 tranches; value $3,558,344 (12/27/2024) | | PSUs (performance) | 3/11/2024 | Target unearned | 95,283 | — | Vests on FY2026 metrics; target value $3,558,344 (12/27/2024) |

• 2024 equity activity: Exercised 1,251,106 options ($34,073,926 value realized); 22,945 RSUs vested ($482,274) .

• Policies and alignment:

  • Stock ownership guidelines: CEO minimum 3x base salary; five-year compliance window; all officers and directors in compliance as of record date .
  • Hedging prohibited; pledging generally prohibited except under a tightly controlled Board pre‑approval policy (max loan-to-collateral 25%); 1.9 million pledged shares disclosed for Executive Chairperson Matthew O’Hayer; no pledges disclosed for Mr. Diez‑Canseco .

Employment Terms

• Employment agreement originally October 2018; amended and restated April 2022; at‑will; target bonus 100%; monthly auto allowance $500; base increased to $750,000 in Feb 2025 .

• Severance and change‑in‑control (CIC) economics (double‑trigger within 12 months post‑CIC): | Scenario (as of 12/27/2024) | Salary continuation | Bonus | Equity acceleration | Health benefits | Option exercise window | |---|---:|---:|---:|---:|---| | Termination without cause or good reason following CIC | 24 months base ($1,450,000) | Target bonus ($1,450,000) + pro‑rata current‑year + unpaid prior‑year actual | 100% (including performance awards) – est. $11,582,698 | Up to 18 months ($31,827) | 3 months | | Termination without cause or good reason (non‑CIC) | 24 months base ($1,450,000) | Prior‑year actual only | — | Up to 18 months ($31,827) | 3 months | | Death or disability | 24 months base | Pro‑rata current‑year + prior‑year actual | 100% | Up to 18 months | 12 months (disability) / 18 months (death) | | Retirement | Prior‑year actual + pro‑rata current‑year | — | — | — | 3 months | | 2020 Plan – awards not assumed in a transaction | — | — | Accelerate in full (at 100% target for certain performance awards unless otherwise specified) | — | — |

• Restrictive covenants: post‑termination non‑disclosure, non‑solicitation, non‑competition, and non‑disparagement obligations (durations not disclosed) .

• Clawback: Board‑adopted policy in Nov 2023 complying with SEC Rule 10D‑1/Nasdaq 5608 covering incentive comp tied to financial reporting measures .

Board Governance (Director Service, Committee Roles, Dual‑Role Implications)

• Board service: Director since 2019; not independent due to executive role .
• Committee roles: None; all standing committees (Audit, Compensation, Nominating & Corporate Governance) comprised entirely of independent directors .
• Governance structure: Executive Chairperson and CEO roles are separated; the Board has a Lead Independent Director; 6 of 8 directors are independent .
• Attendance and oversight: Board met 5 times in FY2024; total board/committee attendance 98%; independent directors held 5 executive sessions without management .

Dual‑role implications: CEO also serving as director introduces potential independence concerns, but separation of Chair and CEO, independent committees, ownership guidelines, and regular executive sessions mitigate governance risk .

Compensation Peer Group and Say‑on‑Pay

• Peer group: Compensation Committee, with FW Cook, uses a consumer‑oriented CPG peer set (e.g., CELH, ELF, FRPT, COCO, SMPL, HNST, BYND, ZVIA, etc.) with revenue and market‑cap size guardrails; used as a reference point, not a binding benchmark .
• Say‑on‑pay: First say‑on‑pay vote scheduled at 2025 Annual Meeting (emerging growth company exemption previously) .

Compensation Structure Analysis

• Mix shifts to performance equity: 2024 LTIs replaced options with 50% PSUs/50% RSUs, raising long‑term performance linkage and retention balance .
• At‑risk pay: 86.4% of CEO target comp variable and equity‑heavy (73.1%), indicating strong pay‑for‑performance orientation .
• Payout discipline: Committee approved 175% (vs. calculated 178%) to fund incremental crew bonuses—a signal of balanced stakeholder approach .
• Governance safeguards: Double‑trigger CIC vesting, robust clawback, ownership guidelines, hedging ban, tightly controlled pledging .

Risk Indicators and Red Flags

• Hedging prohibited; pledging permitted only with pre‑approval—no pledges disclosed for the CEO; 1.9M pledged by Executive Chairperson approved under policy .
• No tax gross‑ups on limited perquisites; no severance solely upon CIC (double‑trigger) .
• Related‑party transactions section disclosed, but no CEO‑specific related‑party items surfaced in excerpts provided .
• Compensation risk assessment found no plans reasonably likely to have a material adverse effect .

Director Compensation (context)

Non‑employee directors receive cash retainers (raised to $60,000 effective 9/30/2024) and annual RSUs ($110,000 target) under the updated policy; these do not apply to Mr. Diez‑Canseco as an employee director .

Investment Implications

• Alignment: High proportion of at‑risk and equity‑based CEO pay, PSUs tied to FY2026 net revenue and adjusted EBITDA margin, and strict ownership/clawback policies support pay‑for‑performance and long‑term alignment .
• Retention and supply overhang: Significant unvested RSUs/PSUs plus legacy options create strong retention hooks, but 2024 option exercises (1.25M shares; $34.1M value realized) suggest real liquidity taken; monitor future Form 4 activity for selling pressure around service‑based RSU vest dates and any PSU settlement after FY2026 .
• Change‑in‑control economics: CEO’s double‑trigger severance (24 months base, target bonus, full acceleration) and ~$11.6M equity acceleration sensitivity indicate meaningful deal‑related optionality; any M&A could catalyze equity realization and leadership transition risk .
• Execution record and targets: 2024 outperformance vs. targets produced a 175% annual bonus and a 140% one‑year TSR amid strong revenue and adjusted EBITDA results; PSUs embed ambitious FY2026 goals—watch estimate revisions and margin trajectory to gauge PSU payout probabilities .

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