David Dungan
About David Dungan
Founder of The Hackett Group; Vice Chairman and Chief Operating Officer; director since 2000; age 71 as of March 14, 2025 . Prior to Hackett, he led KPMG’s World Class Finance Practice (1994–1997) after joining KPMG in 1986 . Performance context: five-year TSR rose from $100 to $216 by FY2024 (+116% cumulative), while adjusted diluted EPS was $1.68 in 2024 and net income was $29.63M . 2024 incentive plan used adjusted diluted EPS; actual was below “Goal” ($1.71) but above “Commence,” driving partial payouts .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Hackett Group | Managing Director | 1997–Mar 2000 | Co-founded the firm and led growth into business consulting . |
| The Hackett Group | Chief Operating Officer | Mar 2000–present | Scaled global operations and service delivery . |
| The Hackett Group | Vice Chairman | Feb 2006–present | Executive leadership; board interface on strategy and performance . |
| KPMG (Strategic Services Consulting) | National Partner-in-Charge, World Class Finance Practice | May 1994–Feb 1997 | Built finance transformation capabilities; senior P&L responsibility . |
| KPMG | Various executive roles | 1986–May 1994 | Progressive leadership roles in consulting/business services . |
External Roles
No current external public company directorships or committee roles disclosed for Dungan in the latest proxy biographies .
Fixed Compensation
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary | $525,000 | $525,000 | $630,000 |
| Actual Cash Bonus (Non-Equity Incentive) | $1,143,576 | $337,176 | $568,126 |
Notes:
- 2024 salaries for CEO/COO last increased in 2024; CFO last increased in 2020 .
Performance Compensation
| Component | Metric/Goal | Weighting/Opportunity | 2024 Target(s) | 2024 Actual/Payout | Vesting |
|---|---|---|---|---|---|
| Annual Cash Incentive | Adjusted diluted EPS | COO: 96% of salary at “Goal”; 168% at “Superior”; 0% at “Commence” | Goal: $1.71; Superior: $1.78 (10%/15% YoY over prior) | EPS $1.68 → partial payout; $568,126 cash to Dungan | N/A (cash) |
| Annual Equity Incentive (RSUs) | Adjusted diluted EPS | COO: 153% of salary at “Goal”; 225% at “Superior”; 0% at “Commence” | Same as above | 32,024 RSUs; grant-date value $1,004,908 | 1/3 per year over 3 years |
| ACV Growth Program (RSUs) | Annual Contract Value growth | Earned between 5%–15% ACV growth range | Min 5% (Commence); Goal 15% | Earned; Dungan RSU grant fair value $99,457 | 1/3 per year over 3 years |
| One-Time Stock Price Award (PSUs) | 20-day VWAP hurdles: $30/$40/$50 | 33.33%/33.33%/33.34% of award upon each hurdle; annual equity for 2025–2028 cut by 50% | Hurdle #1: $30; Hurdle #2: $40; Hurdle #3: $50 | 413,115 PSUs granted (fair value $6,355,086). $30 hurdle achieved in Q4’24; 137,705 units earned | Cannot vest until 1st/2nd/3rd anniversary of 9/16/2024 grant; requires continued service |
Additional program design:
- Primary performance metric is adjusted diluted EPS; payouts interpolated/extrapolated between thresholds; program in place since 2005 .
- For 2025, EPS remains the performance metric; ACV program discontinued .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (most recent disclosed %) | 2.5% (685,110 shares) as of March 15, 2023 . |
| Outstanding Unvested RSUs at FY2024-end | 507,472 units; market value $9,267,887 . |
| 2025 Scheduled Vesting | 194,832 units expected to vest in 2025, including 137,705 tied to the $30 stock price hurdle . |
| 2024 Stock Vested (shares; value) | 57,652; $1,346,751; net after tax withholding received: 36,175 . |
| One-Time Stock Price Award (grant) | 413,115 PSUs granted 9/16/2024; earn 33.33%/$30, 33.33%/$40, 33.34%/$50; vest no earlier than 1/2/3-year anniversaries . |
| Hedging/Pledging | Hedging prohibited; pledging by directors/officers prohibited without prior Audit Committee approval . |
| Ownership Guidelines | Formal stock ownership guideline applies to CEO (6x salary); no disclosed guideline for COO . |
Insider selling pressure considerations:
- First Stock Price Award tranche (137,705 PSUs) may vest in September 2025, contingent on continued employment; 2024 vesting used share withholding for taxes (net shares received 36,175 of 57,652), which typically reduces open-market selling but still increases float upon delivery .
Employment Terms
| Provision | Key Terms for David N. Dungan |
|---|---|
| Term; Covenants | Three-year term with automatic annual renewal; confidentiality, non-compete and non-solicitation provisions . |
| Termination (without cause / good reason) | Lump sum of one year’s salary and bonus; full vesting of all unvested equity . |
| Disability | One year’s salary and bonus; full vesting of all unvested equity . |
| Death | Immediate vesting/settlement of all equity . |
| Change of Control (double-trigger) | Upon termination in connection with or after CoC: 200% of annual salary and bonus (based on average total compensation of prior three fiscal years) in lump sum; full vesting of unvested equity; no excise tax gross-up . |
| Quantified Payouts (as of 12/27/2024) | Death: $7,163,754; Disability: $8,379,951; Good Reason/No Cause: $8,379,951; CoC: $11,657,816 . |
| Clawback | 2024 Compensation Recoupment Policy adopted in line with SEC/Nasdaq rules . |
| Insider Trading Policy | In place and filed with 10-K . |
Board Governance (Director Role)
| Item | Detail |
|---|---|
| Board Service | Director since 2000; current term expires 2027 . |
| Officer/Director Dual Roles | Vice Chairman (executive) and director (non-independent); CEO also serves as Chairman; no Lead Independent Director . |
| Committee Memberships | Audit/Compensation/Nominating committees comprised entirely of independent directors; Dungan is not listed as a committee member . |
| Board/Committee Meetings (2024) | Board: 6; Audit: 5; Compensation: 6; Nominating: 5; no director <75% attendance; independent directors meet in executive session . |
| Director Compensation (employees) | Officers/employees receive no additional Board compensation . |
Director compensation program (outside directors, for governance context):
- 2024: $40,000 cash retainer + $72,000 RSUs (one-year vest) .
- 2025: $40,000 cash; $108,000 RSUs (67% one-year cliff; 33% vest 1/3 annually for 3 years) .
Compensation Structure Analysis
- Strong pay-at-risk: For 2024, 71% of Dungan’s reported total comp (ex-Stock Price Award) was variable (cash + equity) .
- One-time Stock Price Award significantly increases equity leverage but reduces annual equity opportunities by 50% for 2025–2028, aligning to stock price hurdles and retention via time-based vesting constraints .
- Performance metric rigor: 2024 “Goal” and “Superior” EPS targets represented +10% and +15% YoY over prior-year actual, respectively . 2024 results fell short of “Goal” (EPS $1.68 vs $1.71), producing below-target payouts .
Potential dilution and plan share capacity:
- Shareholders asked to approve a 1,950,000 increase to RSU sublimit and total shares available under the 1998 Plan to sustain programs through 2026; absent approval, company may need to shift to cash awards (lower retention alignment) .
- If approved, total shares available under the Plan would be ~2.35M as of Record Date; RSU sublimit cumulative increased; options/SARs remain prohibited from repricing .
Compensation committee and advisers:
- Committee fully independent; periodically engages outside consultants; in 2024 retained PayGovernance for a comprehensive review including the Stock Price Awards; committee determined advisors are independent .
Say-on-pay:
- 2024 say-on-pay received ~99% approval, supporting current pay design .
Multi‑Year Summary Compensation (Reported)
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | $525,000 | $525,000 | $630,000 |
| Stock Awards (grant-date fair value; includes one-time award in 2024) | $1,442,826 | $537,374 | $7,359,994 |
| Non-Equity Incentive (Cash) | $1,143,576 | $337,176 | $568,126 |
| Total | $3,111,402 | $1,399,550 | $8,558,120 |
Ownership and Beneficial Holdings (Trend)
| Date | Shares Beneficially Owned | % of Class | Notes |
|---|---|---|---|
| Mar 14, 2014 | 1,480,871 | 4.8% | Includes trusts; SAR/RSU details in footnotes . |
| Mar 15, 2017 | 1,506,783 | 5.2% | Includes SARs; RSUs . |
| Mar 15, 2022 | 1,267,584 | 4.0% | Includes DND Family Trust; unvested RSUs . |
| Mar 15, 2023 | 685,110 | 2.5% | Excludes unvested RSUs in % calc; trusts noted . |
Note: As of FY2024 year-end, unvested RSUs outstanding: 507,472 (market value $9,267,887) .
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited (pledging requires Audit Committee approval); no pledging by Dungan is disclosed in beneficial ownership footnotes examined .
- Option/SAR repricing: Prohibited under the plan .
- Clawback: Adopted in 2024 per SEC/Nasdaq .
- Dual roles at the top: CEO is Chairman; no Lead Independent Director. Dungan is Vice Chairman and COO; however, all board committees are fully independent, providing checks and oversight .
Investment Implications
- Alignment: High equity exposure via multi-year vesting RSUs and a sizable stock price performance award that only earns/vests with stock price appreciation and service; annual equity reduced during 2025–2028 to offset overhang, signaling confidence while moderating dilution .
- Retention vs supply: Significant 2025 vesting (194,832 units for Dungan; 137,705 tied to the $30 hurdle) may incrementally increase float upon delivery; prior-year vesting showed substantial tax withholding which can mitigate open-market sales optics .
- Pay-for-performance: 2024 EPS outcome below “Goal” led to below-target payouts, evidencing discipline; say-on-pay support of ~99% underscores shareholder acceptance of the program .
- Governance: Absence of a Lead Independent Director and combined CEO/Chair roles present standard governance scrutiny, but independent committee structure and strong attendance offset risk; hedging/pledging controls and clawback strengthen alignment .
- Dilution watch: Proposed plan amendment (+1.95M RSU capacity) is necessary to sustain equity-based alignment; absent approval, cash alternatives could weaken retention/alignment; monitor vote outcome and burn rate .