Lawrence Firestone
22nd Century GroupAbout Lawrence Firestone
- Chairman and Chief Executive Officer of 22nd Century Group since December 1, 2023; age 67; B.S. in Business Administration (Accounting) from Slippery Rock University .
- 2024 turnaround actions included deep operating cost reductions and ~$18 million of debt paydown; management targets profitability in 2025 and debt-free status in 2026 .
- Board structure: combined CEO/Chair with a Lead Independent Director; all committees comprised of independent directors .
Company performance context
| Metric | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Total Stockholder Return index (start=100) | 140 | 42 | 0.56 | 0.01 |
| Net Income (Loss), $000s | (32,609) | (59,801) | (140,775) | (15,164) |
Operating metrics
| Metric ($USD) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues | $27,882,000* | $32,204,000* | $24,382,000* |
| EBITDA | $(32,670,000)* | $(40,896,000)* | $(12,817,000)* |
*Values retrieved from S&P Global.
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Eastside Distilling (NASDAQ: EAST) | Chief Executive Officer | n/a | Public company CEO experience; turnaround and commercialization exposure |
| Qualstar (NASDAQ: QBAK) | Chief Executive Officer | n/a | Public company leadership; operations and restructuring background |
| Advanced Energy Industries (NASDAQ: AEIS) | Chief Financial Officer | n/a | Scaled finance, public capital markets execution |
| Applied Films (NASDAQ: AFCO) | Chief Financial Officer | n/a | Public company finance leadership |
| Oakland Manager (private) | Chief Financial Officer | n/a | Cannabis retail/wholesale finance ops |
| FirePower Technology (private) | Chairman | n/a | Manufacturing leadership and governance |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| CVD Equipment (NASDAQ: CVD), Amtech (NASDAQ: ASYS), HyperSpace Communications (NYSE: HYPR), Qualstar, Eastside Distilling | Director (prior) | n/a | Multiple public boards; cross-industry experience |
Fixed Compensation
Multi-year CEO pay (actuals)
| Year | Salary | Bonus | All Other Comp | Total |
|---|---|---|---|---|
| 2024 | $411,219 | $0 | $15,460 (fringe $8,104; 401k $7,356) | $426,679 |
| 2023 | $32,692 (start 12/1/23) | $0 | $0 | $32,692 |
Base salary levels
| Executive | 2024 Base | 2025 Base | Y/Y change |
|---|---|---|---|
| Lawrence D. Firestone (CEO) | $425,000 | $425,000 | 0% |
Notes: No employment agreements with executive officers are currently in place .
Performance Compensation
Annual bonus design (effective FY2025)
| Component | Detail |
|---|---|
| Target bonus | 100% of base salary ($425,000) for CEO |
| Weighting | 80% Company; 20% individual |
| Funding formula | Bonus pool funded at 25% of Adjusted EBITDA above $2.0M; up to 150% of target |
| Individual goals | At least 5 measurable, strategic quarterly objectives |
Long-term equity (granted for FY2025)
| Award | Shares | Vesting | Sizing methodology |
|---|---|---|---|
| Non-qualifying stock options (NQSOs) | 90,043 | Equal annual installments over 3 years | Award value ≈ target cash bonus; 75% options / 25% RSUs; share count based on 30-day avg close $3.54; grant-date price reference $2.01 |
| RSUs | 30,014 | Equal annual installments over 3 years | As above |
Observations
- No FY2024 performance-based bonus was paid; Compensation Committee withheld performance pay due to insufficient revenue/profit levels .
- All previously outstanding RSUs for NEOs were canceled as of December 31, 2024; no equity grants in FY2024 .
Equity Ownership & Alignment
Beneficial ownership
| Holder | Shares owned | % of outstanding | Reference point |
|---|---|---|---|
| Lawrence D. Firestone | 402 | <1% (based on 4,095,322 outstanding) | As of April 28, 2025 |
| Prior share count (pre 12/17/2024 reverse split) | 54,250 | n/a | As of Oct 18, 2024; equates to ~402 post 1-for-135 split |
Policies and alignment
- Insider Trading Policy prohibits hedging/short-selling; trading on MNPI prohibited .
- No pledging disclosures noted in the proxy; stock ownership guidelines not disclosed .
- 2025 LTI (options/RSUs) vests over 3 years, increasing alignment if granted/retained .
Employment Terms
| Topic | Terms |
|---|---|
| Employment agreement | None; “Currently, we do not have any employment agreements with our executive officers.” |
| Severance | Not disclosed in proxy; no contract-based severance multiples provided |
| Change-of-control (equity) | If awards are not assumed/substituted, options/SARs vest; unvested stock/RSUs vest; performance shares/units settled per plan formula; generally single-trigger on non-assumption |
| Excise tax treatment | No tax gross-up; “best-net” cutback or full payment, whichever is better after-tax |
| Clawback | Compensation Recovery Policy adopted June 22, 2023; compliant with Nasdaq 5608(a) |
| Non-compete/solicit | Plan allows cancellation/recoupment for covenant breaches; contract-level NC/NS not disclosed |
| Pensions/Deferred comp | No pension or non-qualified deferred comp plans; 401(k) safe-harbor 3% contribution |
Board Governance
Board and committees (independence and roles)
| Body | Members | Roles/Notes |
|---|---|---|
| Board leadership | Chair & CEO: Lawrence D. Firestone; Lead Independent Director: Andrew Arno | Combined Chair/CEO with LID oversight |
| Audit Committee | Andrew Arno (Chair), Lucille S. Salhany, David Keys (after AM) | All independent; financial experts designated (Arno/Keys) |
| Compensation Committee | Lucille S. Salhany (Chair), Andrew Arno, David Keys (after AM) | All independent; reviews CEO pay; grants equity |
| Nominating & Governance | Andrew Arno (Chair after AM), Lucille S. Salhany, David Keys | All independent |
Board practices and activity
- 12 board meetings in 2024; all directors attended ≥75% of meetings; executive sessions of independent directors held regularly .
- Classified board; Firestone nominated as Class II (term to 2028) .
Director compensation
- Employee directors (including Firestone) receive no additional director pay .
- 2025 non-employee director framework: cash retainers and equity awards (75% options/25% RSUs) with annual vesting .
Performance & Track Record
- Strategy: focus on Tier-4 value cigarettes (Smoker Friendly, Pinnacle) and VLN reduced-nicotine premium products; expand distribution post state approvals; pursuit of low nicotine category leadership .
- Financial turnaround narrative: lowered operating expenses to enable a 2025 profitability transition; improved balance sheet with ~$18M debt paydown; targeting debt-free 2026 .
- Capital structure and listing actions: multiple reverse splits (1-for-15 in 2023; 1-for-16 in 2024; 1-for-135 in Dec-2024) to maintain Nasdaq compliance; 2025 reverse split authority again sought -.
Capital Markets Overhang and Trading Signals
- Warrant overhang and potential dilution:
- Oct 24, 2024 amended warrants: if stockholders approve, potential issuance up to 119,329,636 shares under “Zero Exercise Price Exercise” mechanics; exercise price reset/dilution protections present -.
- May 1, 2025 inducement warrants: up to 22,144,186 shares under “Zero Exercise Price Exercise”; includes reverse-split adjustment to $0.75 exercise price scenarios -.
- Convertible debentures (JGB) reset mechanics: Board seeks stockholder approval to reset conversion price again (one-time); illustrative scenarios show potential for majority ownership upon conversion at low prices .
These features can create significant issuance events and volatility around stockholder approvals, reverse splits, and activation of exercisability.
Compensation Structure Analysis
- Shift to at-risk pay (FY2025): 100% target bonus, EBITDA-based pool, and 3-year vesting LTI signal tighter pay-for-performance alignment vs 2024 (no performance pay) .
- Equity mix: 75% options/25% RSUs for executives and directors; emphasizes upside participation with retention .
- Governance safeguards: robust clawback policy; prohibition on hedging; no excise tax gross-ups; equity repricing prohibited .
- Alignment gap: CEO’s current share ownership is minimal (<1%), though 2025 awards, if retained/vested, will increase exposure .
Equity Ownership & Vesting Schedules (detail)
| Item | Detail |
|---|---|
| CEO beneficial ownership | 402 shares outstanding as of 4/28/2025; <1% of 4,095,322 shares |
| 2025 CEO equity grants | 90,043 NQSOs; 30,014 RSUs; equal annual vesting over 3 years |
| Option pricing reference | Share counts set using 30-day avg close $3.54; grant-date price noted $2.01; (exercise price not explicitly disclosed) |
| 2024 equity status | No FY2024 grants; all prior RSUs canceled as of 12/31/2024 |
Employment Terms (severance/CoC)
| Provision | Terms |
|---|---|
| Employment agreement | None |
| Severance multiple | Not disclosed |
| Equity on change-of-control | Single-trigger vest/cash-out if awards not assumed/substituted; if assumed, standard continuity applies |
| Tax gross-up | None; cutback or full-pay best-net |
| Clawback & policies | Nasdaq-compliant clawback; anti-hedging; insider trading compliance |
Investment Implications
- Alignment and incentives: 2025 plan ties bonuses to Adjusted EBITDA and installs 3-year vesting equity, improving pay-for-performance mechanics; however, current personal ownership is de minimis (<1%), with alignment relying on future vesting rather than existing skin-in-the-game .
- Retention risk: Absence of an employment agreement or defined severance may reduce “stickiness,” though multi-year vesting and option upside can help retain the CEO .
- Governance quality: Combined CEO/Chair structure mitigated by a Lead Independent Director and fully independent committees; clawback and no-repricing/no-gross-up provisions are positives - .
- Trading and dilution overhang: Multiple warrant programs with anti-dilution and “Zero Exercise Price Exercise” provisions, plus potential debenture conversion resets and repeat reverse-split authorities, create material issuance risk and event-driven volatility that can pressure shares and influence timing of insider 10b5-1 sales as equity vests - -.
- Performance track: 2024 showed significant net loss reduction and a deleveraging step; management projects profitability in 2025, but TSR history is severely negative across 2022–2024; execution on revenue growth and operating leverage will be critical to translate compensation targets into realized outcomes .
Values retrieved from S&P Global: Revenue and EBITDA table (FY 2022–FY 2024).