David Keys
22nd Century GroupAbout David Keys
David Keys (age 68) is a Class II independent director nominee at 22nd Century Group (XXII) for a term expiring in 2028; the Board has determined he is independent. A CPA and former EVP/CFO of American Pacific Corporation, Keys brings deep audit and finance expertise, including Big Four audit (Deloitte) and multiple accounting certifications (CPA, CVA, CMA, CGMA, CITP, CFF, CFM). If elected, he is slated to chair the Audit Committee and serve on Compensation and Corporate Governance & Nominating, and is designated an SEC “audit committee financial expert.”
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Deloitte (Las Vegas & NYC executive offices) | Audit Group | Not disclosed | Public company audit experience |
| American Pacific Corporation (NASDAQ) | EVP, CFO; Executive Committee of the Board | Not disclosed | Led finance at a public chemical company |
| Independent consultant | Financial & operations consultant | Since 2004 | Advisory mandates across finance/ops |
| AmFed Financial Inc. | Director (prior) | Not disclosed | Not disclosed |
| RSI International Systems, Inc. (NEX: RSY.H) | Director (prior) | Not disclosed | Not disclosed |
| Norwest Bank of Nevada | Director (prior) | Not disclosed | Not disclosed |
| Wells Fargo Bank of Nevada | Director (prior) | Not disclosed | Not disclosed |
| FM Global | Advisory Board member (prior) | Not disclosed | Risk/insurance advisory |
External Roles
| Company | Listing | Role | Tenure | Committees |
|---|---|---|---|---|
| SurgPay, Inc. (SurgPays) | NASDAQ: SURG | Director; Audit Committee Chair | Since July 2019 | Audit Chair |
| ARCpoint Inc. | TSXV: ARC | Director; Audit Committee Chair | Current | Audit Chair |
Board Governance
- Classification/term: Class II nominee for election; term through 2028 if elected.
- Independence: Board determined Keys is independent under Nasdaq standards.
- Committee assignments (post-2025 Annual Meeting, if elected):
- Audit Committee: Chair; Keys and Arno meet SEC “audit committee financial expert” definition; all members financially literate.
- Compensation Committee: Member (Chair: Salhany).
- Corporate Governance & Nominating Committee: Member (Chair: Arno).
- Board leadership: CEO Lawrence Firestone is Chair; Andy Arno serves as Lead Independent Director.
- Risk oversight: Audit Committee oversees financial reporting, internal controls, legal/regulatory compliance, and risk management including cybersecurity.
- Engagement: In 2024, the Board held 12 meetings; all then-directors attended ≥75% of meetings; Keys was not yet on the Board.
Fixed Compensation
2025 non-employee director compensation structure (applies to directors, including if Keys is elected):
| Component | Amount (USD) | Notes |
|---|---|---|
| Annual cash retainer | $20,000 | All non-employee directors |
| Chair of the Board or Lead Independent Director (cash) | $20,000 | Incremental |
| Audit Committee Chair (cash) | $10,000 | Incremental |
| Compensation or Governance Chair (cash) | $5,000 | Incremental |
| Board committee membership (cash) | $5,000 | Per committee |
- 2024 non-employee director pay reflected reduced cash and no equity due to restructuring (e.g., Arno $30,000; Salhany $17,500; Johnson $17,500).
- Keys did not serve in 2024; no 2024 fees for him are disclosed.
Performance Compensation
Director equity awards (2025 framework):
| Element | Detail |
|---|---|
| Annual equity award value | $60,000 for Chair of Board/Lead Independent; $35,000 for Board Committee members |
| Instrument mix | 75% non-qualified stock options (NQSOs); 25% restricted stock units (RSUs) |
| Vesting | Annual vesting (time-based) |
- Director equity is service-vested; no performance metrics are tied to director awards. The plan prohibits dividends on unvested equity and disallows option repricing/backdating.
Other Directorships & Interlocks
| Topic | Findings |
|---|---|
| Current public boards | SurgPay (NASDAQ: SURG), ARCpoint (TSXV: ARC) (both Audit Chairs). |
| Compensation Committee interlocks | Company discloses no compensation committee interlocks or insider participation in the last fiscal year. |
| Overboarding policy | XXII limits directors to no more than two other public company boards; Keys’ two seats align with this guideline. |
| Potential conflicts with XXII | None disclosed regarding Keys. |
Expertise & Qualifications
- Accounting and audit: CPA; designated SEC “audit committee financial expert”; Big Four audit foundation.
- Finance leadership: Former public-company EVP/CFO and board executive committee member (American Pacific Corporation).
- Credentials: CVA, CMA, CGMA, CITP, CFF, CFM.
- Governance: Current Audit Chair at two public companies; depth in oversight of financial reporting and internal controls.
Equity Ownership
| Holder | Shares Beneficially Owned | % of Outstanding | Notes |
|---|---|---|---|
| David Keys | 0 | * | Based on the beneficial ownership table; shares outstanding base noted in proxy; Keys a nominee as of June 1, 2025. |
| Hedging/pledging | Hedging prohibited by Insider Trading Policy; no pledging disclosed for directors. |
Governance Assessment
-
Positives
- Independence, audit expertise, and slated Audit Chair role strengthen financial oversight and risk management; Keys is formally designated an SEC audit committee financial expert.
- External Audit Chair experience (SURG, ARCpoint) should enhance audit rigor and committee leadership at XXII.
- Board enforces governance practices (limits on outside boards; annual self-evaluations).
-
Alignment and incentives
- 2025 director pay mixes modest cash with equity (75% options/25% RSUs) with annual vesting; this increases at‑risk compensation versus 2024, potentially improving alignment.
- As of the proxy record, Keys had no reported beneficial ownership in XXII, indicating near-term alignment relies on new director equity grants post-election.
-
Risk indicators and context (board-level signals for investor confidence)
- Capital structure stress: multiple reverse splits in 2023–2024 and a new proposed reverse split (1:2 to 1:100) to maintain Nasdaq listing; heavy dilution risk highlighted.
- Warrant structures with “Zero Exercise Price Exercise” could lead to very large share issuance (e.g., October 24, 2024 amended warrants up to 119.3M shares; May 1, 2025 inducement warrants up to 22.1M shares), implying potential substantial dilution and governance complexity.
- Convertible debenture amendment proposal could result in significant ownership shifts depending on reset conversion price scenarios.
- Related-party exposure was limited: a de minimis $154 revenue item tied to a former executive advisory role; Keys not implicated.
RED FLAGS (company context, not specific to Keys): repeated reverse splits and prospective large-share issuances via warrants/debenture conversion could materially dilute shareholders and pressure governance; demands strong audit and risk oversight—areas where Keys’ role and credentials are directly relevant.