KORU Medical Systems, Inc. (NASDAQ:KRMD), a New York-incorporated company specializing in medical instruments and apparatus, has unveiled a Long-Term Incentive Program (LTIP) to enhance executive retention and performance. The announcement came on Wednesday, following the approval by the Compensation Committee of the Board of Directors on August 15, 2024.
The LTIP, designed under the company’s 2024 Omnibus Equity Incentive Plan, targets key executives and selected employees with annual equity-based awards. The program aims to align the interests of the executives with those of the shareholders by incentivizing company performance. Executive officers including President and CEO Linda Tharby, CFO Thomas Adams, CCO Kenneth Miller, and COO Christopher Pazdan are among the participants.
The LTIP awards consist of restricted stock units (RSUs), performance stock units (PSUs), and nonqualified stock options (Options). The number of shares allocated is based on the company's stock price on the Nasdaq Capital Market on the day before the grant date. For executive participants, the awards are divided into three portions: time-based RSUs, performance-based PSUs, and time-based Options. Other employees will receive 100% of their awards in the form of RSUs.
The PSUs are particularly noteworthy as they vest based on the company’s revenue performance for the fiscal year ending December 31, 2026, with a vesting range from 0% to 150% of the target. The RSUs and Options have a four-year vesting schedule, with one-fourth vesting annually.
On August 15, 2024, executive officers received specific allocations of RSUs, target PSUs, and Options, with President and CEO Linda Tharby receiving the largest share. The Options have an exercise price of $2.33 per share and a ten-year expiration, with a 90-day exercise window post-employment separation.
In the event of a company change in control, unvested RSUs will vest immediately, and a proportion of PSUs will vest at the target number with a payout modifier based on the stock price at the control change time.
Furthermore, the Committee approved a salary increase and enhanced bonus potential for Chief Commercial Officer Kenneth Miller, effective August 18, 2024. His base salary will rise by $25,000 to $385,000, and his bonus potential will increase to up to 60% of his annual base salary.
This report is based on a press release statement and aims to provide shareholders and potential investors with a clear understanding of KORU Medical Systems, Inc.'s new incentive strategy and its implications for executive compensation.
In other recent news, KORU Medical Systems reported a significant increase in its second-quarter revenues, marking a 22% rise to $8.4 million year-over-year. This growth is primarily driven by a 20% increase in its core business revenues and advancements in its Novel Therapies division. The company also received regulatory clearance in Japan for its FreedomEdge infusion system and promoted Chris Pazdan to Chief Operating Officer.
In addition, KORU is aiming for six new drug clearances by 2026 and reported a 65% gross margin for the quarter. The company ended the quarter with a cash balance of $10.5 million and projects a year-end balance over $8 million. KORU has raised its full-year 2024 revenue guidance and gross margin ranges, reflecting its focus on achieving cash flow breakeven by the fourth quarter.
In terms of future expectations, the company anticipates continued growth in the U.S. SCIg market and international expansion. However, it expects higher cash usage in the second half due to capital investments and R&D, as well as a potential slowdown in revenue growth due to seasonal factors. Despite these challenges, KORU remains optimistic about its growth prospects, with plans for expansion into Japan and Canada, and the launch of new Novel Therapies expected in early 2025.
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