Form 4: BIO-KEY CEO Granted 45,000 Restricted Stock Units

BIO-KEY International's CEO and Chairman, Michael W. DePasquale, was granted 45,000 shares of restricted common stock under the company's 2023 Stock Incentive Plan.

Summary

• Michael W. DePasquale, the Chief Executive Officer and Chairman of BIO-KEY International, Inc. (BKYI), was granted 45,000 shares of common stock.
• The grant occurred on September 2, 2025, and was made under the Issuer's 2023 Stock Incentive Plan, as amended.
• These restricted shares will vest in three equal annual installments on each of the next three anniversaries of the grant date.
• Vesting is contingent upon Mr. DePasquale's continued employment with or service to BIO-KEY International, Inc. through the applicable vesting date.
• Following this transaction, Mr. DePasquale directly beneficially owns 98,658 shares of common stock.
• This beneficial ownership figure does not include options to purchase an additional 232 shares.

Sentiment

Score: 7

Explanation: The grant of restricted stock to the CEO is a positive signal for executive retention and alignment with long-term shareholder interests, though it represents a minor dilution. It's a standard compensation practice.

Positives

• The grant of restricted stock aligns management's interests with long-term shareholder value through a vesting schedule tied to continued service.
• It demonstrates the company's commitment to retaining key executives by providing equity-based incentives.

Negatives

• The grant of restricted stock at a $0 price represents a form of dilution for existing shareholders, although it is a common practice for executive compensation.

Risks

• Potential for future dilution as the restricted stock vests and becomes part of the outstanding share count.
• Reliance on key personnel, as the vesting of these shares is tied to the CEO's continued employment or service to the company.

Future Outlook

The vesting schedule for the restricted stock, occurring in three equal annual installments over the next three years, indicates an expectation of continued service from the CEO and a long-term incentive structure designed to retain key leadership.

Management Comments

• Management has implemented a long-term incentive structure through the 2023 Stock Incentive Plan, granting restricted stock to the CEO that vests over three years, contingent on continued service.

Industry Context

Executive compensation through restricted stock grants is a standard practice across various industries, particularly in technology and growth-oriented companies, to align executive incentives with long-term company performance and shareholder interests. This grant is consistent with typical compensation strategies for CEOs in similar-sized public companies.

Comparison to Industry Standards

• The use of restricted stock units (RSUs) as a component of executive compensation is a common practice across the technology sector, comparable to how companies like Microsoft (MSFT) or Salesforce (CRM) utilize long-term equity incentives to retain and motivate key leadership, albeit at different scales.
• A three-year annual vesting schedule is a standard duration for such grants, aligning with typical executive compensation packages seen in publicly traded software and cybersecurity firms.
• The grant price of $0 is typical for restricted stock awards, as they represent a direct grant of equity rather than a purchase, a practice consistent with most equity compensation plans.

Stakeholder Impact

• Shareholders: Potential for minor dilution from the issuance of new shares, but also benefit from increased executive alignment with long-term company performance.
• Employees: May signal stability in leadership and a commitment to executive retention.
• Management: The CEO receives a significant equity incentive, aligning personal wealth with company success.

Next Steps

• The 45,000 restricted shares will vest in three equal annual installments on the anniversaries of the September 2, 2025 grant date, subject to continued employment.

Key Dates

Recommendation

This Form 4 reports a routine restricted stock grant to the CEO as part of an existing incentive plan. While it aligns management's interests with shareholders, it does not present new information that would fundamentally alter the investment thesis for BIO-KEY International. It's a standard compensation event, not a catalyst for significant price movement, thus a 'hold' recommendation is appropriate for existing positions.

Keywords

BIO-KEY International, BKYI, Michael DePasquale, Restricted Stock, Stock Incentive Plan, Executive Compensation, Form 4, Insider Transaction, Corporate Governance